And when this bubble blows, it's gonna blow SPECTACULARLY.
The bursting of the US bond bubble will forever change the world.
That said, don't forget that bubbles can go on longer, much longer, than you think they will... And the longer they go on, the bigger the burst. But eventually, you know how this one will end.
Get popcorn.
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19 comments:
but wait, if the treasuries bubble pops then bond prices plunge, so how can speculators make a profit? is he saying that when prices go down the Fed will buy treasuries at an inflated price?
can anyone explain?
Peter Schiff is only partially correct.
It is true that by the fed adding inventory of dollars it reduces its value.
But were I disagree with Mr. Schiff is the underlying reason for valuing a countries currency.
The value of a currency is not ‘only’ based on physical items such as Gold etc.
It also reflects the over all value and potential of the country it represents.
For example; Saudi Arabia can tack its fiat currency to Oil (liquid gold) and it would never be a reliable currency, because in the end it is issued by a people who are never going to be financially successful. (Unless of course they change which isn’t likely?)
The US on the other hand, not only has an abundance of natural resources but it has the most innovative population on the planet.
Currency issued by China Japan or Israel would also be a currency you can rely on, for the same reason = innovative spirit.
EU, Russia, and South America will also likely never be real successful due to their egotistical culture which has priority over their economy; therefore their currency can only remain stable for short periods at a time.
To sum all this up = I still bet on the greenback even with Peter Schiff being right.
anon @6:34,
In a speculative bubble the speculators are all just planning not to be the last one out and sell to a greater fool.
Those that do make a profit, those that end up being the greater fools get wiped out.
There is NO safe haven.
And to think, if we had just required people to put 20% down and borrow no more than 3 x income, none of this would have happened.
Idiots.
Anon.. He's just saying that US treasuries are in a bubble and most holders are looking to sell to a greater fool before it bursts.
Dollar crazy,
Funny you mentioned Saudi Arabia
I was just thinking about this Saudi prince who diversified some of his oil money in to AOL and CitiGroup, now both losing institutions.
Oh no! How’s prince
Al-binsolbinalsolomi-binalsolalboobi-binsalalbobin-poopy
going to pay for the martyr’s family new vest?
Shoot, there goes the plan for 10 more wahabi schools in London and Paris.
This will all end very ugly for the majority of US citizens.
Those who stole the most will not
be punished as they should be,
while those who worked the hardest,
and "played by the rules", will suffer greater and greater losses - until they have nothing left to give.
Taxation is all the city, state and federal governments have left in the feable attempts to resolve the problem, but all they're doing is making the problem far worse, angering the average citizen, and pushing the entire nation over the cliff.
2009 will make 2008 look like a walk on the beach, more and more retail stores will be put out of business and more banking institutions will be forced to close as well.
got skills?
learn to field dress a deer!
http://pubs.cas.psu.edu/freepubs/pdfs/uk100.pdf
don't forget to tie off the anus BEFORE you pull it into the body cavity! duhhhhh
Bubbles only last as long as the fools' ignorance of them, and that turnover rate is going down due to more publicity for people like Schiff (and the former blog) after they were proven correct on the housing market! Hope this one pops sooner than later.
This bond bubble has lasted so long. Remember the last little mini-recession (2001 to 2002)? Interest rates plunged and bonds went up in value. Now, we are still in that bubble territory. The only reason why our government can come up with a "stimulus plan" after a "stimulus plan" after a bailout is because stupid foreigners continue to lend us money. God, when the U.S. Treasury Bond Bubble bursts, then watch out below. Then all of a sudden the government will have no means to finance any more stimulus plans or bailouts for anyone. Then things will get ugly. Also, that is when our government and "economic experts" will proclaim; "oh dear God what is happening? No one saw this one coming either".
RE: "Taxation is all the city, state and federal governments have left in the feable attempts to resolve the problem"
I wouldn't say that's the case. Stock market profits went up exponentially but salaries didn't for the average person. So unless the stock market recovers, it's really impossible for any sort of taxation scheme to meet the expectations which the stock market (and interest only debt) caused people to have.
do any of you know how to short treasuries?
I think the market may be right that we are heading into a depression and the winners are those who loose the least. Schiff is sweating bullets that the market is wrong because gold is a good move for inflation not deflation. Naturally he is talking up gold since he probably has his clients invested in the stuff. Somebody will be right somebody will be sorry. The risks are huge right now and the rewards may be huge for those who get it right. So far he is only one third correct. He was right about the housing collapse (not just him) but he was way wrong on foriegn equities and so far on gold. If he had put his clients into treasuries they would be way up right now but I dont recall him making that prediction. I think these investment gurus better shut up a realize that they have no better crystal ball than the rest of the informed publc.
What happens when it pops?
Currency issued by China Japan or Israel would also be a currency you can rely on, for the same reason = innovative spirit.
Israel innovative? Ha! Only in stealing and bombing kids and women. Oh, I forgot, Israel is also good in ecstasy trafficking, manipulating the US stock market through Mossad's schemes of deception, etc.
Schiff is wrong on this one - Bernanke already said that he will purchase Treasuries to keep rates low. In other words, he will print more money.
They may already be doing the above.
Treasuries rates will be low for a very, very long time.
But inflation will eventually rage.
Gold, oil, agriculture. But they still have a ways to fall.
Short Treasuries : TBT
Good luck
"The US on the other hand, not only has an abundance of natural resources but it has the most innovative population on the planet"
Innovative like CDOs, ABS, CDS, subprime, Ninja-loans, housing never goes down etc...?
Oh right, you actually meant stupid.
I agree
Happy European
@casey
TBT is the 20-year treasury short. You can also short the 7 year with PST. Both are ETFs.
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