Warning- Bond Dislocation in Progress

Originally posted by tsloan
Hmmm...
Yet here we stand a day after the sky has fell and doom and gloom has ruled a loaf on this thread...
I guess it's not as bad as thought...?
Nothing is going to happen...just like when everyone was screaming that if we don't save the auto industry america will crumble...Well guess what we did save them at the tune of about 38-40 billion dollars and guess what...They are going to file and all our tax money has just been used as the biggest pay off to a private company.
And guess what GM is still going to be GM....Dodge is still going to be Dodge...
Stop all the doom and gloom this is called a market adjustment is happens every 15 years. It's the Green bonds time to make millions before that sector will bubble and another one will rise...

Read this thread again...50 more times, if that's what it takes you to understand what is being posted here....there is a bond dislocation in proress...you can deny it all you want, but I have the facts and numbers, and charts to back up my claims.... I saw nothing in todays bond market that would change my opinion.....you say "no worries"...I say prepare...I wish you the best of luck!!

[edit on 28-5-2009 by RolandBrichter]

Originally posted by SaraThustra
reply to post by lpowell0627

 

You're totally correct. Giving vouchers to people to buy new cars would have been better than a bailout of a car company. For that matter they could sell every car in a month by saying no money down and "If we go out of business in a year, you can keep the car for free."

My big brother's mortgage was sold to Bank of America for 10 cents on the dollar from Beare Sterns. Then BOA turned around and forclosed on him wanting 100% of the value and this was AFTER BOA got the billions in bailout money. Why didn't the government just let my brother pay the 26K so he could keep the house?

The reality is that ALL of the bailout money has ended up in the personal bank accounts of all of the Yale schoolmates of the powers that be - the elite, and until this country is ready to storm the Hamptons and raid the banks we will never ever see a dime of it - but for generations we will pay to keep the wealthy living in the lap of luxury.

I don't understand the logic in this either.

If a couple owns a home that they paid $600,000.00 for and now one is out of work and they default on their loan. The banks foreclose. It takes near on a year to get them completely thrown out of the house in which time the bank received no money. They turn around a year later go through the expense of putting the house on the market and then selling the same house to a new couple for $200,000.00.

It makes no sense. Why not have worked with the original couple; dropped the price by half and everybody is a winner.

I know it is not a perfect solution and there are people like me that have lived within their means. Used debt responsibly and paid our bills on time and we get nothing for it.

Yes it seems like these people are being rewarded for poor judgment but not everybody can be painted with that same brush.

Most people did not expect to lose their jobs. Most people were too busy trying to live the American dream to realize that it was nothing more then a re-run on HBO.

These people will suffer and getting a break on their mortgage so they will not become another group of homeless in the streets is a better deal in the long run for all of us concerned.

There has to be a better way.

reply to post by aravoth


I agree 100%, watch SPY. It is a "TRUE" indicator. Unfortunately you will also see the FED's "unaccounted" 5 trillion in action striking at critical support levels acting as the invisible hand we have all come to know.

With Treasuries interest nothing less then plummeting and the bond market about to implode, the invisible hand we all know so well is running out of options.

Mortgages rates over the past week have skyrocketed due to this. In reality rocketing mortgage rates will hopefully turn away naive new buyers until the market truly corrects.

Unless inflation hits hard (which it will at some point IMO) housing prices should correlate to mid 1990 levels right now. We have deflated so greatly that I may even be overestimating the true median cost.

The old rule of if you can't pay for your potential home in two years pretax (assuming no other expenditures yearly) you can't afford it needs to be drilled home.

This mess has two more years of implosion left before it even thinks about fixing itself.

I however will in the meantime be renting homes I could never think of affording while carrying not a single cent of debt.







[edit on 28-5-2009 by utmostbastard]

i think the bond market will be popped back into place

it seems like many who are critical of the corruption , arrogance, revolving door in washington /wall street have been anxiously awaiting these purpertraitors brought to "justice" in some way.....thus waiting for the day when something rises up to stop them......like a bond market "dislocation"

i think i realized i was letting these emotions get in the way of my thinking to a degree and as i step back i wonder how prevelant this is......i think when this happens ....you start making a bigger deal about things that you wish were going to happen to bring the corrupt finance industrial complex a slap in the face

I think bond rates will rise ....i think bernanke will double down on QE (buying more gov't debt) to keep rates lower.......perhaps they already have.....but the fear is they will be left as the "only one's bidding"....that is pure speculation

The motto in washington is kicking the can down the road longer.. (since fixing the system is poltically unacceptable)....in order to do that we need low intrest rates...(like we still have).......also having a weaker dollar = higher asset prices......(gas prices as well lol).........so i think we will have the fed's do what they can to kick the can down the road.......buy more gov't debt......put a ceiling on yields (more buying)......as well as a weaker dollar......keeping asset's from deflating completely and keeping the investor class's net worth's /ego's a bit higher to........

dollar index is teetering near the important psychological barrier (80)......a dip below that WILL send gold over 1000 soon after..........i give this a 80% chance ..........also watch how fast it sends oil up as DEMAND (investor demand that is) soars when the dollar breaks below 80

there is no hyperinflation of the money supply either.....money is not being printed in 1,000 dollar notes...........imaginary electronic credit is being conjured up to backstop potential debt losses.....or bank runs.....but the banks are not lending much......should the dollar fall....speculators will may reverse there bullish positions on treasury's and look for higher returns in commodity's (for a while)......but this would not be a "money printing" inflation.......more like a dollar devaluation increasing the cost of commoditys quoted around the world in dollars (like oil and food) IMO

and economists will glady speak of money inflation (instead of dollar devaluation) because they want the public to believe a real inflation is here and to borrow and purchase more more more.........otherwise cosumers may have to deal with the horror of decreasing prices LOL



[edit on 28-5-2009 by cpdaman]

The Fed just came up on CNBC tonight via Liesman and said they are NOT defending the 10 year rate, and will not.

Didn't take the WSJ long to pick up and run with that

Fed Holds Steady as Rates Rise in Market

Federal Reserve officials believe the recent sharp rise in yields on U.S. Treasury bonds could reflect a mending economy and a receding risk of financial catastrophe, suggesting the central bank won't rush to react -- even though some investors see danger in the government's rising cost of borrowing.

Talk about drinking the Koolaid... more at link

And using the only thing the average joe understands, mortgages...

Mortgage Rates Surge, Sap Hopes

Not backstopping or trying to keep the rate down is like admitting that everything they have done so far is wrong & not working, IMHO

reply to post by warrenb


I personally think this is how some of the trouble within the US is going to start. The officials are already having problems keeping track of and dismantling the "tent cities" that have popped up over all the country.

Wait until 25M more people become homeless. There is no way the gov't can let tent cities exist and it's my bet that the people living in them - most of which have never been homeless and always had a job - are pretty ticked off. It won't take much for these two sides to start clashing.

Further, it's my opinion that most Americans feel empathy towards these tent cities and will not support the gov't in their efforts to dismantle them. This will of course, cause a further divide.

Lastly, be prepared. We are the ones who are going to have to make up the difference in taxes for these 25M.

Like I said in another thread it's time to hit the RESET button. Erase all debt for everyone(People, Corps, Countries). Only the "Elite" would loose out and most of the World is democratic. If they don't like it they can find another Planet to enslave. Think of what erasing the Debts to zero would do. Talk about stimulated economies! Big tax cuts because we no longer have to service debt. Individuals would have more money. Some would spend, others would save. We need both of those things to keep the economy stable. If everyone lived within their means, had reasonable savings for rainy days we wouldn't have these bubbles in a true market driven economy. The above goes for everyone(People, Corps, Countries).

reply to post by DEEZNUTZ


You forget

You are controlled by your debt

You are owned by the banks

Why in the world would they give that up?

LOL

We own the government and some of these banks if you're a US citizen. We the people own the world these banks are allowed to operate in.

reply to post by DEEZNUTZ


Well, I don't my know friend, this is debatable lol

If we really own this country/world I would like to see someone not in the CFR get elected into office, or perhaps maybe a total grassroots individual, similar to ron paul.. but even more grassroots

You see how the media blatantly obscured the ron paul campaign?

I think that is all the proof right there that you are being controlled (well not just you, but all of us, obviously)

Originally posted by DEEZNUTZ
Like I said in another thread it's time to hit the RESET button. Erase all debt for everyone(People, Corps, Countries). Only the "Elite" would loose out and most of the World is democratic. If they don't like it they can find another Planet to enslave. Think of what erasing the Debts to zero would do. Talk about stimulated economies! Big tax cuts because we no longer have to service debt. Individuals would have more money. Some would spend, others would save. We need both of those things to keep the economy stable. If everyone lived within their means, had reasonable savings for rainy days we wouldn't have these bubbles in a true market driven economy. The above goes for everyone(People, Corps, Countries).

Inflation = effective erasing of debt. If you owe a million dollars, its pretty hard to pay back now. But if we inflate to the point where a loaf of bread costs a million bucks, payback is easy.

So the process of debt destruction is underway.

In a way, I understand that for the safety and integrity of society, debt erasure may be necessary. But personally, part of me resents this. I played by all the rules, saving money and living benieth my means for decades. As a consequence, although I live in what seems like a rather shabby state, I have substantial cash and gold savings. Why should I and people like me suffer to bail out a bunch of nouveau-riche jerks who went into hock for massive houses and cars they had no business buying in the first place? I guess the answer is that there are so few shabby-living savers these days that the great bellowing herd has no problem trampling us into the dust to save themselves. I got snickered at on the way up for not buying into the debt carnival; now it looks like I get trampled on the way down as inflation melts the value of my savings like butter on a hot skillet. No justice in this world. *Sigh.*

reply to post by silent thunder


I totally agree with you. I too have good credit. No debt, I don't own a house yet because I knew deep down that things were going down. I've always been a news junkie even before the Internet. My idea for the RESET button as far fetched as it would be was intented to show that for the Greater Good of society this would be a reasonable choice.

Even for those of us that play by the Rules, have a mortgage that they can afford and even car payments that are within their living wage and still saving will benefit. Your savings and assets would still be worth something(Even at a new currency). If you had a mortgage it would be gone. If you didn't have a mortgage and paid off your House you would pay lower property taxes as municipalities wouldn't have debt to service. You would pay less income tax and gas tax and such.

It's a win win for most.

Originally posted by DEEZNUTZ
We own the government and some of these banks if you're a US citizen. We the people own the world these banks are allowed to operate in.

If that is written on the same paper they using in the mint to print our currency then it probably is just about as legitimate and probably is less valuable.

bond market is throwing up again this afternoon.....

someone on the ticker likens this run-up to a similiar event happening before the 1987 market crash...but who knows they are pretty pessimistic over there....

the "inflate the debt" argument away is a PIPE DREAM.....in this enviornment of unemployment and global wage arbitrage the added costs of goods and services (IF inflation ever soared.........would leave less money left in disposable income after necessity's) to pay down debt.....this IS NOT THE 70's where wage prices rose like the sun at dawn

mortgage debt is a monster and we have seen how stern the lenders have been in ensuring people can not get their principal reduced...just their interest rates............

it is a nice thought however



[edit on 1-6-2009 by cpdaman]

The New US National Anthem.

The vid is a bit Bush-focused, which is unfortunate because the message encompasses the collapse in general (including its political, social, and economic aspects) and the lyrics transcend petty left-versus-right politics.



[edit on 6/1/09 by silent thunder]

Historically, treasury yields have had to rise about 50%, within in a year, from their starting yield before they’ve triggered dramatic market turnarounds. Prior to the 1987 bond market dislocation, 30-year bond yields rose from 7.25% in March to 10.25% in October, before the stock market crashed 30%. This year, on April first, the yields were at 3.5, so a 50% gain would be 5.25. Today we're 4.58. The rise since December 15 is even more dramatic.

Of course, we've seen this 50% increase during times when nothing happens. Here's a good blog entry describing the process: Bond Market Dislocation Warning

Before such a dislocation, what should happen is the following:

1) A flight to safety which will cause bond prices to rise (yields to fall). Currently, there is a bubble in US Treasuries.
2) Once the point of critical mass is reached, bond holders will begin to liquidate their US-bond holdings, driving up yields and pushing down prices.
3) Meanwhile, foreign countries, in an attempt to raise money, will liquidate their own Treasury holdings, putting more upward pressure on Treasury yields as well as foreign debt yields.
4) Since US Treasuries anchor the bond market, this will cause yields on all other bonds (corporate, munis, etc) to rise, causing defaults in the private sector.
5) Since US Treasuries anchor interest rates across the entire lending spectrum, all other rates will rise, making borrowing more expensive.

[edit on 1-6-2009 by theWCH]

WCH you said today were 4.35........we're in the neighborhood of 4.50 tonite

other than that good point

Ah...you're right 4.575. I had the chart set to end about a week ago, and cut off the past 8 or so days. Silly me.

[edit on 1-6-2009 by theWCH]