bond bear

Discussion in 'Economy' started by william the wie, Nov 17, 2010.

  1. william the wie
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    william the wie Gold Member

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    30 year treasuries reached a peak in August at about 3.5% and have since dropped far enough in price to yield more than 4%.

    The PIIGS are getting in deeper trouble each quarter.

    QE II may not be large enough to handle liabilities uncovered by foreclosuregate.

    Among those liabilities are putbacks (the bonds funding mortgages seem to have had covenant violations so the bonds may be refunded at par), attractive nuisance lawsuits and eyesore lawsuits involving the foreclosed properties.

    Declining state and local revenues leading to bankruptcies for municipalities and possible defaults for up to 10 states. IL, CA, NY and just about any other state without a balanced budget constitution are at risk of going under.

    This could drive interest rates up higher than in the early 80s.

    So how soon and how bad does it look to the rest of you?
     
  2. loosecannon
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    loosecannon Senior Member

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    "So how soon and how bad does it look to the rest of you?"

    which "it" are you referring to? If Interest rates could be driven up to 15% that would be outstanding, but I don't see it soon. I do see the CDS on state bonds going vertical soon. And that market will surely hit the fan in a year or two.
     

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