The Naked Emperor 12/5/02

[DrStool]

The Naked Emperor (12/05/02)

In the Turdsday monetary review Doc shows why Al doesn't matter any more. It's true!

[Goldmember]

I caught Bill Gross on Crapvision today and oh there will certainly be trouble in bond land. He'd rather buy Mexico yeilding 8%. Can you blame him considering the Fed threats about artificially keeping bond yeilds low for as long as it takes to work off "over-capacity". Excellent Anals lately Doc, some good explanations of late for newbies and myself to easier understand, and make some sense of this POS market. I'm damn well liking it! :grin:

[Guest yobob1]

With the financial "pecking order" being (from low to high) stocks, bonds, forex perhaps this (below) is a very important concept to fully grasp.

 

He is clearly focused on the bond market, and wants to manipulate it to keep the 10 year as close to 4% as possible. Otherwise, game over.

 

All three markets are of course inter-twined, but might the focus on bonds and ultimately through association Uncle Buck far outweigh the concerns for futher equity losses? I think so. In fact it may be necessary for AG to consider sacrificing equities somewhat in order to prop up the buying of bonds (via safety flight) and help maintain the buck. I really think that a lot of the foreign holders are very unlikely to sell even in the face of a melt-down in bonds or the dollar. However it doesn't take all of them selling to set the price, just a few. Could the fed target the redemption of foreign holders in such a way that prevents the perception of a "run" on the bonds?

 

Personally I think the fed is attempting a bluff when it comes to their extreme statements regarding deflation. I'm sure they know that what they have proposed would be tantamount to announcing a 50% off sale on the dollar and the consequneces of those actions which would certainly not be good in the long run and probably deadly in the short term.