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
110048Cimate change might help. -vbg- huffingtonpost.comggersh-last Thursday
110047Yes and keeping the status quo in check is paramount in this Gilded Age of exceJohn Vosilla-last Thursday
110046Payoffs and bribes work.ggersh-last Monday
110045Only a handful outraged in Congress tells the story..John Vosilla-last Monday
110044Corporate bonds better than Muni's...-ng- Message 29708294ggersh-September 11
110043no kidding!Broken_Clock-September 10
110042 Interest Rates Held Far Lower Than Necessary Cause Speculative Bubbles Posted John Vosilla-September 10
110041It shows me the whole economy is a sham. Fed 's ballooning balance sheet isEntitlement-April 1
110040Ben Bernanke On Money and the Sophistry of Modern Monetary Theory From Jesse. bruiser98-January 13
1100391/02/2014 @ 2:01PM <b>Oregon Study Exposes Another ObamaCare Falsehood: Pogeu Mahone1January 6
110038Velocity of money is GDP divided by the money component. When you look at all thbruiser98112/9/2013
110037No, instead the White House is saying that it will use "enforcement discrethe navigator311/18/2013
110036Does "keep their health care plans" include the choice of not buying iFreedomForAll311/14/2013
110035it really wasn't a lie... that's your ODS talkingObama said you could keBroken_Clock-11/14/2013
110034R U back hiding on the PBO thread? Dale's "no free speech" thread?Broken_Clock-11/14/2013
110033I guess you were wrong. +++ On Wednesday, the Obama administration finally rBroken_Clock-11/13/2013
110032Message 29225750 nuff said when Republican wall st. cheerleaders can't contBroken_Clock-11/12/2013
110031My take based on other things that I have read is below. If I am wrong on some oFreedomForAll-11/12/2013
110030Is FDL a right wing site? No. it's a rabid Dem site….but they woke up to reaBroken_Clock-11/12/2013
110029Scully has been trying to assuage these worries, but the nervous questions keep Broken_Clock-11/12/2013
110028real analysis, not made up political spin from Obamaland +++ TUESDAY, NOVEMBER Broken_Clock-11/12/2013
110027Looks like Diane agrees with me. lol!Broken_Clock-11/12/2013
110026even a broken clock is right once a day but you are totally clueless and a wastAlex MG-11/12/2013
110025apparently the "facts" aren't so clear to the Dem leadership. ++Broken_Clock-11/12/2013
110024apparently the "facts" aren't so clear to the Dem leadership. ++Broken_Clock-11/12/2013
110023So why do you HATE Obamacare so much when the facts show it is actually helping Broken_Clock-11/12/2013
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