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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:
nowandfutures.com

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

Economic releases and data (NBER):
nber.org

Treasury rates and Agency spreads:
rbsgc.com

Bloomberg interest rate quotes:
bloomberg.com

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

Treasury Dept Auction Announcements and Results:
treasurydirect.gov

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

Tracking the consumer liquidity trap, Steve Church:
prudentbear.com

Fed OMO:
ny.frb.org

Bank of Japan:
www3.boj.or.jp

Daily Treasury Statements:
fms.treas.gov

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

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

Federal Reserve Economic Data: St. Louis Fed
research.stlouisfed.org

Company conference call transcripts:
seekingalpha.com

Committment of traders (COT) reports:
futuresemail.com

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

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

Excellent commentary and graphics from Contrary Investor:
contraryinvestor.com

Bank Credit Analyst:
bcaresearch.com

Rasmussen Consumer polls:
rasmussenreports.com

Ild's charts and graphs:
idorfman.com

Russ Winter's, Calculated Risk's, Mish's and Bart13 blog sites, good articles, and links to relevant sites:
wallstreetexaminer.com
calculatedrisk.blogspot.com
globaleconomicanalysis.blogspot.com
nowandfutures.com

Ben Jones housing Bubble Blog:
thehousingbubble2.blogspot.com

Mortgage Lender Croak-o-meter :http://br.endernet.org/~akrowne/ml-implode.html


Excellent overview of the endgame of fiat

richtoscano.com
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ReplyMessage PreviewFromRecsPosted
110177Richard Werner: Monetary Policy Revolution - QE, Nominal GDP Targeting and the Ibruiser98-September 17
110176Richard Werner at the Rhodes Forum 2015 Interesting part about money creation bruiser98-September 17
110175Can banking be this absurdly lucrative? You loan me $10k at 10% simple interestbruiser98-September 7
110174You can understand why so many Americans want all Catholics deported. They don&#Elroy Jetson-June 24
110173methinks the Feebs have zero credibility [youtube video]Broken_Clock-June 23
110172So now we are supposed to accept that the perp was not a Muslim terrorist and thFreedomForAll-June 23
110171Orlando gunman Omar Mateen was allegedly captured on surveillance cameras durinElroy Jetson-June 23
110170Big Hedge Fund Bridgewater Approved to Set Up Shanghai Subsidiary Company registJohn P-May 22
110169Some economic lessons here? The slow and deadly dzud in Mongolia bbc.combruiser98-May 14
110168 The Great Ponzi Scheme of the Global Economy Michael Hudson counterpunch.orgbruiser981April 2
110167Cool ggersh-March 23
110166Another statist. Does not appeat to be a relevant response to my post. (Of coursFreedomForAll-March 23
110165[graphic]ggersh1March 22
110164No reason to vote for HRM clown or lying traitor. There is a third choice with iFreedomForAll1March 22
110163Apparently Utahans would rather vote for a mass murdering genocidal bitch than aBroken_Clock1March 22
110162Why Utah Mormons' distaste for Trump could turn a red state reluctantly blueElroy Jetson1March 22
110161Wouldn't vote for either statist candidate. Doubt we will see Trump as candiFreedomForAll1March 21
110160Evasion is evasion Trump is an unknown Killary is a diehard war freakBroken_Clock-March 21
110159What was it Donald Rumsfeld said? "You go to war with the candidates you Elroy Jetson1March 21
110158Do we really need to run this experiment again, expecting different results? TheBroken_Clock-March 21
110157We've already run the experiment where we elected a self-described terrific Elroy Jetson3March 21
110156Of course you are free to vote for Killery. She's never seen a war she didn&Broken_Clock-March 21
110155George W. Bush promoted the "Ownership Society Real Estate Bubble" in Elroy Jetson1March 20
110154Surprised the hell out of my mother also:O)Pogeu Mahone-February 19
110153Ray Kurzweil and other technology types work with computers. I'm surprised Elroy Jetson-February 19
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