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

To: Mr.Creosote who wrote (75871)	12/17/2006 1:11:03 PM
From: russwinter	Read Replies (1) \| Respond to of 110194

<what does all of this really mean to me as an investor/trader?"> I couldn't disagree more with your whole premise, completely faulty to me. I am talking about a lot more than just the historic gap between rich and poor (although it's important if you want to understand the US economy), I'm talking about many MORE poor on the way. But go ahead and trade on it, and we will see how it works out. If you do, you are just taking big risks, for tiny rewards by my book. Just because prudent investors have been wrong in this late jacked up frothy stage, doesn't mean squat. Prudent people were wrong for a period before 1929, 1989 Japan, and 2000, and even in more minor market tops, and who's calling them on that now? There is no rule that says you have to be in any market. I will simplify it for you, prepare soon for a significant widening or blow out of the credit spreads. The reason for it is that the increasing poor, and even some illusionary wealthy, are going to start defaulting. If you read anything on this thread (??), you will know that's already happening. The spreads shown on my chart in the blog's post illustrate it, and they are priced to perfection, not even normalization yet. Fast or gradually I'm not sure, nor the exact tipping point. The reason I can't pinpoint a tipping point, is that I don't know if FCBs will indiscriminately buy $10 billion in junk for little return next week, or the week after, as they distort and corrupt the market. But, buying because the market is corrupted is a poor bullish case. Either way, the effect: all the EZ credit so many have become used to will evaporate, then watch for a credit seizure because Ponzi finance is essential to Risklove's plans. If that doesn't have an impact, then the market's are truly broken, and nobody should be trading them, period. If you can't see that, or feel it's unimportant, then I have nothing more to add, go for it, make my day.