Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Foreign Investors Growing Weary of US Junk Paper

Interest-Rates / Credit Crisis 2008 Aug 11, 2008 - 12:17 PM GMT

By: Captain_Hook

Interest-Rates You Can Stiff Some Of The People Some Of The Time - But, you can't stiff all the people all of the time. To what do we refer? Answer: The likelihood that once the Beijing Olympics are over, because increasing defaults of US corporate paper / agency debt leave a worsening bad taste on foreigner's palates, demand for domestic sovereign debt is expected to wane at an accelerating rate, which would send bond yields (market rates) higher – possibly much higher.


Up until this point, Wall Street bankers think they can flog trillions of worthless CDO's and other toxic junk around the world with no ramifications. They think the world will just adsorb trillions in losses on fraudulent junk paper and keep coming back for more. But I can assure you this is not the case. The seeds of destruction of the Western banking model (globalization) have now been planted, and it's just a matter of time before this next card falls in the destruction of our fraudulent and corrupt monetary system.

The following is an excerpt from commentary that originally appeared at Treasure Chests for the benefit of subscribers on Tuesday, July 22 nd , 2008.

Naturally then, this would mean that US borrowers (along with everybody else) are likely to face steadily increasing costs with an accelerating reduction of flows into domestic debt securities, especially with skyrocketing defaults reducing foreigner's appetites for all forms of American debt securities. The most recent TIC data shows no problem today the US 's large trading partners, with steadily increasing flows into Treasuries – Japan being the exception. But again, once the need to ‘save face' for the Chinese is passed with the Olympics this summer, one does need wonder if they will join Japan and cut back on Treasury purchases, especially if the economy continues to weaken, meaning they simply have fewer dollars to buy anything. In this regard you should know the economy is expected to continue weakening, with slower trade being the result.

So as the title above suggests, whether it be due a natural slowing of the economy, or in retaliation for a bunch of paper gone bad, expect foreign support for US Treasuries to increasingly wane in coming months, especially if the inflation monster is well fed by monetary authorities in an attempt to fight this condition. Here, one should realize any talk of addressing the inflation problem in the States is just that – talk – a smokescreen to plicate increasingly jumpy bond market participants while they monetize every problem that crops up. That's what it's all about you know, keeping the bond market happy so that credit keeps flowing. Credit is the milk blood of the global fiat currency economy. So when it stops – everything stops – and hyperinflation will be the result – which is why authorities are working so hard to keep people believing the credit cycle is alive and well.

Of course it could be argued we will make the turn into hyperinflation with the bailout of Fannie Mae and Freddie Mac (GSE's), estimated to potentially double public debt with one stroke of a pen. Up until this point the populace has remained quite complacent about the goings on in the credit markets and so on because it has not affected them in meaningful fashion yet, along with the belief that authorities will fix the problem(s). The only problem is this time the paper-over job might be too big to handle , with enough people finally realizing they are on the hook for all these bailouts. The bailout for Fannie and Freddie will be somewhere between $3 and $5 trillion, qualifying it as the single largest monetization in history. If this doesn't cause gold and silver to go up substantially, then perhaps it will take more bailouts , with a worsening economy guaranteeing this trend.

That's the thing you must realize – unlike your bank account and the economy – gold's future as the alternative of choice is guaranteed. It's just a waiting game now – waiting and watching for events to unfold in process. Of course the suppression of gold continues, well evidenced this week with a big jump in paper gold open interest matched by negligible price gains due to cartel related short selling. And as discussed a few weeks back , suppression efforts don't stop there (i.e. extend to the currency / debt / stock / commodity markets), and are being intensified as well. Of note this past week, technical indications suggest a short to intermediate-term bottom has been put in the stock market centered around the GSE's bailout and a turn higher in financials as a group. Who needs gold when you can buy safe bank stocks – right? And if bank stocks are rising, this must mean credit is expanding again – right? (See Figure 1)

Figure 1

Sure enough, just when it appeared poised to take off to the upside, the Yen reversed lower to help paint this picture – one that credit growth is alive and well as evidenced in a buoyant Yen Carry Trade. You see the current batch of price managers assume the public is stupid, and will believe everything they are told. Like gold and silver however, I don't know how successful this ploy will be, with surprise reversals higher possible at anytime. It's the growing uncertainty you see. People are getting increasingly jumpy about future prospects in the economy, markets, etc. So all the price fixing / manipulations in the world will not work at some point, and that point should be relatively soon considering how fast things are coming unhinged these days. (See Figure 2)

Figure 2

Unfortunately we cannot carry on past this point, as the remainder of this analysis is reserved for our subscribers. Of course if the above is the kind of analysis you are looking for this is easily remedied by visiting our continually improved web site to discover more about how our service can help you in not only this regard, but also in achieving your financial goals. For your information, our newly reconstructed site includes such improvements as automated subscriptions, improvements to trend identifying / professionally annotated charts ,   to the more detailed quote pages exclusively designed for independent investors who like to stay on top of things. Here, in addition to improving our advisory service, our aim is to also provide a resource center, one where you have access to well presented ‘key' information concerning the markets we cover.

On top of this, and in relation to identifying value based opportunities in the energy, base metals, and precious metals sectors, all of which should benefit handsomely as increasing numbers of investors recognize their present investments are not keeping pace with actual inflation, we are currently covering 70 stocks (and growing) within our portfolios . This is yet another good reason to drop by and check us out.

As a side-note, some of you might be interested to know you can now subscribe to our service directly through Visa and Mastercard by clicking here .

And if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these matters.

Good investing all.

By Captain Hook

http://www.treasurechestsinfo.com/

Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

Copyright © 2008 treasurechests.info Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

Captain Hook Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in