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

To: gregor_us who wrote (100815)	1/24/2009 7:17:35 PM
From: ggersh	Respond to of 110194

Can't argue with either your facts or reasoning. It only makes sense that treasuries had a once in a lifetime high as all assets seemed to have within the past 2 years. Maybe the last bubble for sometime...And the encore will be the Dollar.... Great point about the correlation between treasury bull market and the Nikkei....I had totally forgotten about that correlation...Events and trading are best when kept simple, rhe KISS principle, keep it simple stupid... BTW, thanks for your input,as I've enjoyed your posts on SI

To: gregor_us who wrote (100815)	1/25/2009 1:32:37 AM
From: Wyätt Gwyön	3 Recommendations Read Replies (2) \| Respond to of 110194

if Nikkei takes out 40K, it will actually be much more impressive in USD terms since Nikkei is quoted in JPY, and JPY probably will go up some more. Nikkei today is actually worth a lot more in USD than it was in the early 80s at the same nominal price. back then JPY was very cheap. so, one of the problems for Nikkei, in fact, is strong JPY. it means Nikkei is not as cheap as it looks. it also means Japanese companies can't make any money. like i mentioned before, that book "The Weight of the Yen" argues that JPY will continue to strengthen, and this will result in a nominal deflation in asset values, until assets are cheap enough that businesses can make money even w/strong JPY. in fact that may be what is going on right now. maybe JPY just keeps getting stronger and Nikkei weaker (and wages weaker), to the point where cos can profit. are we there yet? i don't know. (btw, i sometimes wonder if a positive feedback loop could be developing, where strong JPY reduces exports, thereby reducing income and increasing the need to repatriate foreign assets; as these foreign assets, mainly in USD, are sold to buy JPY, even more upward pressure is applied to JPY, thereby further lowering exports and increasing the demand for forex repatriation.) re: US "saving", my theory is people can't "afford" to be savers the way Japanese have been. in Japan, saving means literally saving up yen one by one, either in a bank or a home safe. you have to save a lot given interest rates are zero. US people can't save in this way because it would take them too long, first to pay back their debt and next to "save" for retirement. it would take the average person centuries to pay off their debt and save for retirement if they save 10% of income and get zero investment return. if you have 50K income and require 30K for retirement and plan on a 30yr retirement, that is 900K you need saved up. saving 10% a year is just 5K, so there's 180 yrs of savings required just to retire. not to mention, if you live in Clownifornia and bought an average house costing 10x your income, that is another 100yrs. of course, the way around all this is to pretend you will get large investment returns. a sufficiently large return assumption will allow you to retire on schedule. let's all hold hands and buy a Prius to celebrate. so, J6P is in bad shape. fortunately he has a pension! oh wait--pensions are engaged in this same deluded practice, but on a much grander scale. they will all need bailing out, but not before they lose a few trillion more trying to make up for lost ground with their huge equity, HF, and other losing positions.

To: gregor_us who wrote (100815)	1/25/2009 11:21:30 PM
From: Hawkmoon	1 Recommendation Read Replies (1) \| Respond to of 110194

3. The collapse of the Anglo-American banking system obviously leads to one place: inability service government issued debt except by monetization. Well.. so then interest rates should be soaring for the T-bills, right? We shouldn't be seeing 3 month T-Bills at nearly zero, or 10-year at 2.62%, right? TIPS should be getting bought up right and left in anticipation of soaring inflation, right? By LOGIC, your argument should be correct, but the above facts suggest something else is going on here. China CONTINUES to buy our government debt because they simply have no where else to invest on this planet except the most liquid and transparent market in the world.. US government debt. In fact, China is now the largest holder of US T-Bills, passing Japan. What I'm speculating on in my analysis is that while it's bad here, it's getting even worse in overseas markets. This "manufacturer financing" where countries like China subsidized our consumption by buying our mortgage and consumer bonds and ABS's, has left these export oriented economies with over-capacity that is no longer being bought up by the US consumer and these exporters are beginning to see tremendous upheaval in their economies and financial sectors because the American consumer has closed their wallets. But they don't have a sufficiently robust, or transparent enough financial system to repatriate that capital. So they are leaving it parked here in the safest place available, US T-Bills. This recession is global. The excesses were NOT just in the US, but around the world. Real Estate bubbles exist in Europe (Spain, Portugal, former East bloc), as well as in China. And let's not forget that just 10 years ago, it was perceived that up to 50% of all outstanding loans in China were non-performing. I'm not so sure that all of this has been resolved. So, in sum.. it would seem that in this period of deflationary pressures and some of the lowest interest rates we've seen in history, the last thing we need is for the American people to save (though it will likely continue due to fear of future). I wish I could concur with your analysis, but I'm just perceiving there are quite a few pieces missing in the puzzle you're assembling (not that I think I can provide them for you). Hawk

To: gregor_us who wrote (100815)	2/2/2009 4:08:45 PM
From: GST	Read Replies (1) \| Respond to of 110194

I read your BLOG -- it is 100% dead-on target IMO. Thanks for your clarity of thought. It totally amazes me that the views you post are not already clearly grasped by the financial community. Many thanks. gregor.us

To: gregor_us who wrote (100815)	2/2/2009 9:18:33 PM
From: Proud Deplorable	Read Replies (1) \| Respond to of 110194

Brilliant piece gregor.us I think that if the Nikkei goes anywhere near 40,000 from here the USD will lose half its value or more from here. IF that is the case I wouldn't risk my money in stocks overseas but rather would, if I were living in the USA, buy gold and silver now because they would double or triple from here and that, in my mind, is a safer way to get the same return. No? "What baffles me about the US Treasury bond bulls is that they think the private economy and the private banking system of the US can collapse, but that the system of public government will be fine and should be bought. " You got that right. Guess these folks don't see the rising unrest and riots all over the world now, Greece, Iceland, Russia, France, Germany...sorry if I missed anyone ;-) "Firstly, although Americans have just started to save again, as a country we still have little to no net savings. And how much saving can we do as a group with unemployment rising? So, there are no savings as yet backing the USD Precisely the reason there will not be a Dow 10,000 anytime soon. Corporations can't increase earnings in this environment. Who's buying stuff these days? Restaurants are going broke too.