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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: bond_bubble who wrote (37087)	9/14/2005 12:15:32 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

They asians will sell the bonds frantically when the US hits recession. Exactly why will they sell? To do what with the returns? Mish

To: bond_bubble who wrote (37087)	9/14/2005 9:05:27 AM
From: SouthFloridaGuy	Respond to of 116555

And where will the Asians put it? Possibly high yielding currencies such as NZD, CAD and AUD, and I expect yield conversion to occur between Australiasia/Canada and the US, but those countries' fixed income markets couldn't handle the liquidity. Gold will eventually see some of the spillover when investment prospects diminish to nil, but gold is just not liquid enough either. Also, when US debtors begin to default, how will they pay it back, through gold? No, they have to pay in dollars. So long as the dollar is stable (which is dependent on them), they are making over 4% per year in US bonds. In a world of relatively low inflation (outside of transient commodities inflation) and lack of investment prospects, that ain't bad.