Tuesday, December 15, 2009
Bond prices crash -> yields rise -> interest rates up across the board -> house price crash!
Bond price crash is the surest bet in town
Explosive growth in government debt around the advanced world is leading investors to fear for the safety of their capital. Never mind sovereign risk, many government bond prices give virtually no protection against a pick-up in price inflation either, the risks of which would seem to be quite a bit higher than at any stage in the past 10 years. For many governments, the temptation to inflate away burgeoning fiscal deficits will be hard to resist. At present, government debt markets are being artificially supported by exceptionally loose monetary conditions. Furthermore new regulations are forcing banks to stash money in safer assets such as government bonds. As if all this wasn't bearish enough for government bond markets, there are also the unfunded liabilities of ageing populations...
Posted by drewster @ 12:30 AM (1935 views)
11 thoughts on “Bond prices crash -> yields rise -> interest rates up across the board -> house price crash!”
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crunchy says:
If one factors in the taxation hoax falling through at Copenhagen, that huge cash cow will not get milked. Oh dear, what shall we think up
next. Rotters!
techieman says:
hi crunch i still didnt get your remark re dollar collapse and waiting in the wings yesterday …. wanna help me out?
p. doff says:
‘fraid you’ll need an Enigma machine to decipher ‘Crunchy speak’.
I don’t know why he just doesn’t say what he means instead of wasting our time.
matt_the_hat says:
This article raises a good question – why do people buy long term sovereign debt at 4% when inflation is going to be higher?
My other question – over the last 50 years has the monetary base increased a) through printing or, b) through fractional reserve banking, i.e. limit is 5% but banks have only just reached that now.
What has previously cause the increase in the monetary base and if it is a) then where were all the previous announcements on QE.
fallingbuzzard says:
Many reasons. You don’t get capital loss on the right sovereign debt. Legal obligation to buy it. Easily tradeable and convertible back to cash. Can be used as collateral. Also, why not buy 4% debt when the BOE buys your 3.5% debt at the same time. Or you just don’t think that inflation will be high.
Broadly speaking, b
techieman says:
pdoff – you assume he knows what he means! A fatal flaw in your argument pdoff :-).
nickb says:
Crunchie,
Interesting that you seem to think anthropogenic climate change is a hoax, contrary to all the people actually working professionally on this. On which reasoning do you base this please? Please cite studies and sources which show the accepted science to be wrong. I look forward to hearing about your detailed knowledge of this topic.
crunchy says:
7. nickb… One word sucker, (ENRON.) Work it out yourself. I have said enough.
techieman says:
“i have said enough” – thats the most accurat thing you have ever said – and was applicable about eight months ago!
Sorry Le Crunch just found that irresitible (or http://www.youtube.com/watch?v=M3geoXOdnJQ – as you would put it)
Now where is that collapsing dollar again?
nickb says:
Crunchy
ENRON – what does that have to do with Copenhagen? Sorry, I’m indeed a bit thick, you will have to spell it out for me.
Nick
james stephenson says:
nickb.
Apart from the Climatic Research Unit and another unit in New Zealand massaging their data to hide the fact that the planet has not warmed in 15 years and has actually cooled the last seven – there is the fact that peer review has mostly been conducted by like minded scientists who have smothered dissent.
There is also the fake hockey stick graph. See here:
http://www.americanthinker.com/2009/12/understanding_climategates_hid.html
There is no anthropogenic global warming – it is now a politically convenient truth and the science has been politicized. We will be taxed through the nose because of it and Copenhagen is likely to divert money from needed third world development to bogus eco projects.
Brown has, after all, just given a billion and a half of our already depleted money to ‘affected’ countries.