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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110140Almond orchards actually consume 10% of the water used in California, and thesElroy Jetson1January 29
110139The crazy sequence of events that’s making almonds cheap again washingtonpost.bruiser98-January 29
110138EJ's answer's that....remember when Dubya went for the Medicare fix yet ggersh-January 22
110137LOL I got 19 rentals free and clear. How many folks in CA can say that? Yes isJohn Vosilla-January 22
110136My premium went up almost 100% from two years ago. EJ seems to be retired gettiJohn Vosilla-January 22
110135I gladly paid $5,400 cash for a meniscus repair which was only available at CedaElroy Jetson-January 22
110134You and I both know the facts are the facts. Just because the only improvement Elroy Jetson2January 22
110133I gladly flew from Hawaii to Stanford for my surgery.Broken_Clock-January 22
110132Tell that to the Obummer cult. It will get you banned off every "left"Broken_Clock-January 22
110131Blue Shield reached an agreement with UCLA, which had previously been out of netElroy Jetson-January 22
110130I get to explore all of the ins and outs of Medicare supplement plans in anotherElroy Jetson-January 22
110129That's the joke. Universal Medicare had no chance of passage, so they adopteElroy Jetson1January 22
110128My HMSA is allied with BC/BS and Stanford had no problem accepting my Medicare wBroken_Clock-January 22
110127Blue Shield of California doesn't sell policies in Monterrey Country. Not foElroy Jetson-January 22
110126I think a flat fee medicare for all would be far better than the ACA. No chance Broken_Clock-January 22
110125Ask folks in rural areas how happy they are. Driving 3-4 hours to a "proviBroken_Clock-January 22
110124I think the primary advantage of switching the United States to universal MedicaElroy Jetson1January 22
110123Residents of Hawaii will enroll in the federal Obamacare marketplace after HawaiElroy Jetson-January 21
110122for $350/month it darn well better. I've paid full boat most of my life for Broken_Clock-January 21
110121I was under the impression that tax credits were available, maybe your wife makeggersh-January 21
110120on medicare? no. and neither does she. small business owners get squatBroken_Clock-January 21
110119Don't you receive a tax credit or a subsidy?ggersh-January 21
110118insurancenewsnet.comBroken_Clock-January 21
110117I haven't found out if that money was ever spent. I'll keep looking.GPS Info-January 21
110116yup $205,000,000 down the tubes in a gov't scamBroken_Clock-January 21
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