Wednesday, February 02, 2011

WHAT YOU SEE IS NOT WHAT IT MAY BE

I will not take higher long term yields as a sign of improving economy, what a joke....all the action is taking place ABOVE the 200 day moving average, bullish for higher yields IMHO...debt levels are astronomical, higher rates HERE are not a good sign....BUT if stock market weakens, won't they be safe haven again?
A rise in TLT would show fear may be coming back as was the case from April-Aug 2010 where the SPX lost 16%....until magic Ben shucked out QE2......trend since 2009 has been for rising rates....but the rally persisted.....but I will monitor this situation for more clues.
Todays FLAT looking performance was masking a very weak day with only 34% UP volume of total NYSE up/down volume.


Do we really look that much better when troubles pop up elsewhere like in Greece, Egypt...Ireland, Euroland...?
Here's a good argument....the DEBT ceiling is around $14 Trillion, and we are VERY close to maxing out, so wont Congress mandate that it be raised again? AS soon as March, as late as May this will happen.....some are suggesting the gov't make interest payments on Treasuries the #1 priority, they get pushed up to top of pile.....we don't want to SPOOK our foreign owners, I mean creditors.
SO it would be best to RAISE the debt ceiling....which means we would issue MORE BONDS to pay interest on the OLD BONDS....how reassuring...that is the essence of a PONZI SCHEME!!!!
Duratek




3 comments:

Anonymous said...

Well I hope you realise what you are saying. In our current monetary system the treasury cannot print or create money. The unconstitutional Federal reserve creates money. Treasury issues bonds The Fed churns out the money. Nevermind that the constitution alows the treasury to "coin money".

So yes it is a ponzi scheme. But to cut spending the congress will have to change the monetary system first. Think hard about it. Money is created as debt. "We The People" are cutting back on debt and not taking more loans and mortgages. The federal govt is the only game left in town taking on more debt. If the federal govt did not take on more debt what would happen to our money supply? Money supply would collapse. We ARE in a depression now that is being masked by the federal govt binging on its credit cards.

This also leads to the inevitable conclusion that the financial crash is actually ahead when the credit card payments come due. Sure it will take a few years before the bond market will have to intervene but at some point it will. Use this time wisely. Use periods of US dollar strength to buy other currencies/hard assets. Use periods of weakness like now to just accumulate cash.

Anonymous said...

In other words save and convert, save and convert. Everbank.com offers commodity based curencies CDs that are FDIC insured(whatever that is worth. Right now is a bad time to convert but the dollar wont be weak forever. It will have ups and downs.

Marc R said...

Well said. Yes I know what I aid, and I rushed the explanation in how money is created. Actually I think if credit shows a miracle expansion it is probably not accurate....we have had a major contraction, so yes Gov't maybe had to step in....but I think that ONLY delayed the day of reckoning......$ could surprise but is on the door stop of calamity support.
By creating more govt federal debt that is covering up the prior owed debt and hece it must continue Ponzi style or blow up