All Posts Tagged With: "bond"

“You’re kidding, right?” a Daily Reckoning reader wrote after our briefing from last week: “The End of Social Security As We Know It.” “Are you the only ones who believe in the accounting farces that are the Social Security and Medicare ‘Trust Funds’? Every dollar in both of those funds has been spent by the US Treasury…”

So far, almost everything that we thought ought to happen is happening. More or less. The crisis. The feds’ reaction. The market’s lack of reaction to the feds’ over reaction. Then, the feds’ reaction to the markets failure to react. One dumb thing begets another.

John Williams, who keeps track of what is really going on in the economy at his “ShadowStats” outfit, says to expect hyperinflation within 6 to 9 months. Seems too early to us. But a major turn in the bond market and much higher inflation rates are coming. And you don’t want to be holding US bonds.

Zombies join government because it’s a good place to work if you’re brain dead and all you can do is slouch and shuffle. The feds can earn a living without actually doing very much. Well, no one knows whether they are doing anything or not. That’s the beauty of government.

Watch the bonds… We could be seeing the first crack in the bond market. But it seems too early to us. It seems more likely that the bond market will stretch this out…bringing more and more hapless investors on board before finally sinking. Everything takes longer than you expect.

Another week in Australia without a new government. Not bad for a Monday. The current Prime Minister is set to meet with three so-called independent members of Parliament to discuss forming a minority government. This gives us a chance to correct an error we made awhile back.”Every election is a sort of advance auction sale of stolen goods,” wrote HL Mencken. We misattributed that quote to Mark Twain, another great American wit.

In 2007, the writing was on the wall. The famous “perfect storm” had gathered above the US housing market, its eye hovering over subprime loans. As you know, the storm came…and it rained, and rained, and rained… Ultimately, it washed away trillions of dollars in investor wealth.

What is collateral, anyway? The Latin etymology suggests it is something standing side by side with something else, like Collingwood fans sticking together to defend the Magpie name. But in the financial world, we take collateral to mean property, or something equivalent, deposited with a creditor to guarantee the repayment of a debt. The collateral gives the lender security against the risk that the borrower is unable to repay.