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

To: russwinter who wrote (49206)	1/9/2006 10:47:25 AM
From: Tommaso	Respond to of 110194

>>>There are trillions in MBS, ABS, junk bonds, bank repos, commercial paper, that will evaporate, default or have credit downgrades, even if the credit of US Treasuries is not strongly affected.<<< That is certainly true. Or even if they are eventually paid off, it will be in currency of much less value than the original loan (as we all know). I cannot understand why anyone would go on buying and holding these bonds, including U.S. treasuries, with the example of what happened in the period 1950-1980--and much of that period there was intitially a gold backed dollar and low inflation. Much value was lost in 30-year bonds with coupons of under 3% even before the US defaulted on gold redemptions and before interest rates pushed up as high as 13% on AAA paper. The imbalances of both the budget and trade are far more serious now than they were then. U. S. financial institutions are like condos built on a melting Arctic ice pack.