Strategies & Market Trends
The Epic American Credit and Bond Bubble Laboratory
An SI Board Since June 2003
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Emcee:  TH Type:  Moderated
The board will follow the guidelines that Russ laid out below. Posters should recognize that the regular board posters believe that a credit bubble exists. Contrary opinions supported by facts are welcome; however, taunting, belittling, or arguing just to argue by bulls (or bears) won’t be tolerated. Political discussion is welcome as long as it pertains to credit bubbles. Partisan political discussions need to be taken elsewhere.

The board will discuss aspects of the epic American credit and bond bubble and it's ramifications for investors. Emphasis will be on how to profit from (or at least survive) a bond bear market and/or a credit collapse. Basic entry prerequistes to take this lab: 1. the knowledge that bond prices move inversely to interest rates. 2. an understanding that bonds can lose value if credit conditions deteriorate.

Food for thought:

"A sound banker, alas, is not one who forsees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him".
- John Maynard Keynes

"Those who had been riding the upward wave decide now is the time to get out. Those who thought the increase would be forever find their illusion destroyed abruptly, and they, also, respond to the newly revealed reality by selling or trying to sell. And thus the rule, supported by the experience of centuries: the speculative episode always ends not with a whimper but with a bang.
-John Kenneth Galbraith writes in his book "A Short History of Financial Euphoria"

Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
Memoirs of Extraordinary Popular Delusions and the Madness of Crowds, Charles Mackay, - 1841

"I can calculate the motions of heavenly bodies, but not the madness of people."
-Issac Newton 1721, after being ruined by the South Sea Bubble

"To combat depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection or production, we want to create further misdirection- a procedure which can only lead to a much more severe crisis as soon as the credit expansion comes to an end."
-Fredrich Hayek, 1933

Once public opinion is convinced that the increase in the quantity of money will continue and never come to an end, and that consequently the prices of all commodities will not cease to rise, everybody becomes eager to buy as much as possible and restrict his cash holdings to minimum size… If the credit expansion is not stopped in time, the boom turns to crack-up boom: the flight into real values begins, and the whole monetary system founders.”
-- Ludwig von Mises (1949)

"The truth is that liquidity, the only significant weapon remaining in the central bank's arsenal as decision making moves to the markets, will not necessarily go where you want it to go when you need it to go there."
--Martin Meyer writes in The Fed

‘Ponzi’ finance units must increase its outstanding debt in order to meet its financial obligations.”

A transition occurs over the course of an expansion as increasingly risky positions are validated by the booming economy that renders the built in margins of error superfluous - encouraging adoption of riskier positions. Eventually, either financing costs rise or income comes in below expectations, leading to defaults on payment commitments.

--Hyman Minsky

"The length and severity of depressions depend partly on the magnitude of the 'real' maladjustments, which developed during the preceding boom and partly on the aggravating monetary and credit conditions."
- Gotfried Haberler, Prosperity and Depression, 1937

Lab tools:

Glossary of terms common to this site:

Terminology important to understanding the impending US-Asian maladjustment Train Wreck:
Message 21107936

Economic releases and data (NBER):

Treasury rates and Agency spreads:

Bloomberg interest rate quotes:

Libor and Constant Maturity Treasury yields, used to price "house as ATM card" reset costs on Adjustable Rate Mortgages:

Treasury Dept Auction Announcements and Results:

Paul Kasreil's (Northern Trust) presentation "Inevitable Rebalancing of the US Economy". A must read.

Tracking the consumer liquidity trap, Steve Church:

Fed OMO:

Bank of Japan:

Daily Treasury Statements:

Assets (loan data) and Liabilities of US commercial banks, released Fridays:

Fed govt securities bought outright (monetized) and FCB activity:

Federal Reserve Economic Data: St. Louis Fed

Company conference call transcripts:

Committment of traders (COT) reports:

Prudent Bear commentaries; key on Doug Noland's Credit Bubble Bulletin (updated weekends), Marshall Auerback, and Richard Duncan:

Financial Sense Online (Jim Puplava), some very good weekend interviews and links to other sites:

Excellent commentary and graphics from Contrary Investor:

Bank Credit Analyst:

Rasmussen Consumer polls:

Ild's charts and graphs:

Russ Winter's, Calculated Risk's, Mish's and Bart13 blog sites, good articles, and links to relevant sites:

Ben Jones housing Bubble Blog:

Mortgage Lender Croak-o-meter :

Excellent overview of the endgame of fiat
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ReplyMessage PreviewFromRecsPosted
110067Demystifying QE economonitor.combruiser98-January 24
110066What's wrong with the money multiplier? - Banking 101 (Part 2 of 6) youtube.bruiser98-12/25/2014
110065The money multiplier explanation of money creation is bogus. [youtube video] bruiser98-12/25/2014
110064It's the year 2014, not the 60's, UFB Wisconsin's Voter ID Law Blocggersh-10/10/2014
110063Yeah taking money out of politics a big start. I have little respect for anyoneJohn Vosilla-10/9/2014
110062Some blowback...will it work? politico.comggersh-10/6/2014
110061We are screwed. Divide and conquer. Plutocrats continue to 'win'.. WhJohn Vosilla-10/6/2014
110060"Time has come to withdraw consent and load our weapons." Jeffersoniaggersh-10/5/2014
110059If Jefferson, Franklin, Paine, and Adams had said that, we would still be subjecFreedomForAll-10/4/2014
110058Do you know any politician that doesn't lie, I for one don't but the LOTggersh-10/3/2014
110057How about politicians that work for the people instead of chasing wealth and powFreedomForAll110/3/2014
110056 Sen. Warren: We Need Regulators Who 'Work For The American People&#ggersh-10/3/2014
110055Too Big to Jail When fraudulent banking nearly sank the global economy in 2008,John Vosilla210/2/2014
110054Imagine breaking the law, getting fined, and use the fines as a tax writeoff....ggersh-9/30/2014
110053The Best Way to Rob a Bank is to Own One: How Corporate Executives and PoliticiaJohn Vosilla-9/30/2014
110052Same bed, they cherish that huffingtonpost.comggersh-9/24/2014
110051Do we need a few Amazon or Google type innovative new age no bricks and mortar John Vosilla-9/23/2014
110050WS and the plutos' consume it all unfortunately, as I thought the same &quggersh-9/23/2014
110049'Wall Street is, in a very real sense, the epicenter of our environmental crJohn Vosilla-9/23/2014
110048Cimate change might help. -vbg- huffingtonpost.comggersh-9/18/2014
110047Yes and keeping the status quo in check is paramount in this Gilded Age of exceJohn Vosilla-9/18/2014
110046Payoffs and bribes work.ggersh-9/15/2014
110045Only a handful outraged in Congress tells the story..John Vosilla-9/15/2014
110044Corporate bonds better than Muni's...-ng- Message 29708294ggersh-9/11/2014
110043no kidding!Broken_Clock-9/10/2014
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