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

To: mishedlo who wrote (49232)	1/9/2006 1:23:37 PM
From: ild	Respond to of 110194

The DOW hits 11,000.

To: mishedlo who wrote (49232)	1/16/2006 12:08:35 AM
From: bond_bubble	Read Replies (1) \| Respond to of 110194

Mish, I think the US Govt is going to default on GSEs as well. In 1970s, the Govt defaulted on gold and pretended as if - nothing happened. I believe, now they will default on GSE and say GSE is not govt -but it is some private corporations!! If that were to happen, do you still see USTreasuries rated higher i.e low interest rates. Wont people fear UST could also default? Just to reiterate, my reason for GSE default is: China/Japan holding lot of GSEs and in a recession, they will try to spend their reserves for govt stimulative programs. Unfortunately, this will cause price spike in raw materials/low order goods (PPI) is USD eventhough there might be deflation in CPI. This is going to be so painful for US since this surging/high PPI will cause huge unemployment. So, the US Govt will try to stop the FCB from cashing GSE bonds - i.e default. By defaulting on GSE bond, ofcourse lot of people (US and foreigners) lose money - but US does not have to take it on the chin alone!!