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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (48306)	12/28/2005 8:11:52 PM
From: bond_bubble	Read Replies (1) \| Respond to of 110194

Just another possibility for you to think on China: Currently China holds lot of Agency bonds (I dont know why they would go for agency instead of treasury which has only few basis point less of yield). What happens if the GSE goes bankrupt (US govt allows it to happen) and default (which is what happens in a deflation)? China would have no more savings and it would have lost ALL of its savings because it wanted to protect its currency from appreciating - or in other words, China spent all the savings in creating jobs that were only transient until US defaulted!! Would Yuan appreciate in this scenario? Why? Maybe US govt still holds the trump card!!!

To: GST who wrote (48306)	12/29/2005 2:25:26 AM
From: John Vosilla	Read Replies (2) \| Respond to of 110194

While I always respect your thoughts and opinions what good would that really do to go to Shanghai. Markets, cycles, misallocations of capital and crashes happen all the time. I guess if you or I flew into Manhattan in 1929-30 and saw all those gleaming new skyscrapers we'd have been impressed what the future held huh? There is a decent chance the ROE on most of the new investments over there end up as bad as investments in the Empire State Building or Rockefeller Center on the initial go around.