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camarodan64 (97.94)

Where In The World Is The Next Bubble, US TREASURY BONDS

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March 27, 2009 – Comments (12) | RELATED TICKERS: SKF

 


   Bubbles, they keep forming everywhere you look, and most are created and busted by the  Federal Reserve.   The latest bubbles to burst included the housing market,  crude oil prices, and commodities except gold.   The Fed has had it's hand in making and breaking all these bubbles.  The USA passes laws to curb demand or increase demand in particular markets.  The next "Great bubble in the making is US Treasury bonds" also propelled by the Fed, in recent news the Fed announced they would be buying a trillion dollars in treasurys over the next 3 months, This will go down as the biggest bubble of all time when its over.    All in all,  who's side do you think the "Fed" is on we will see.

     The housing market was artifically inflated by the Federal Reserve's low interest rate policy in the early years of the new millenium.   During this time China was exhibiting large pent up demand for nickel, copper, and steel  signaling a robust Chinese economy, all the while the Fed left their rates at 1 percent as if China was invisable to them.  Instead of raising rates sooner,  Mr. Sleepy Greenspan decided to leave rates at 1 percent untill he retired  3 years later essentially "asleep at the wheel", even as commodities broke through record prices.   Greenspan did nothing,  driving up home prices further in a time of irrational exhurburance on China's part.  By the time Greenspan left office it was too late for Bernanke to do anything but raise rates to curb global demand by wrecking the US housing market , he knew that this would effectively lower demand for Basemetals, steel, and oil.  So the burst of the housing market was not a mistake , but a well orchrastrated event planed out by the Federal Reserve Commitee  to curb irrantional global demand for products and services by  wiping out trillions in home equity value from its own people.

     The oil market bubble was fueled grossly by the US government's  large  purchases of oil for the stragegic reserve.    One would think the US would release oil from the reserves in times of need, and not be buying it, an example set  by past US President Clinton shows responsible use of reserves as he released oil in the late 90's to harbour US economic growth.   The law that broke the back of the oil market happened last year in June 2008 and passed by US president Bush stating that speculators were the ones responsible for the record high oil prices and the new law stated that "NOW YOU CAN ONLY SELL OIL CONTRACTS, AND ARE NOT ALLOWED TO BUY ANYMORE FOR YOUR ACCOUNTS"   I knew at this point oil was going to fall from $148.75 a barrel to $85 within a month, and within 5 months it was hovering around $40 a barrel. So once again the US goverment cost investors trillions.

     The great Us treasury bond bubble is currently in the making and I believe it is ready to burst within three months.   The Fed's interest rate is at or near 0 percent and bond prices are high to reflect this.   The Federal reserve is slated to buy 1 trillion dollars in bonds over the next three months, this law was passed recently.    The US government see's that bond prices will crash soon, but wants to postpone it a bit by iniatiating these bond purchases,  usally the US government sells bonds, purchasing bonds is not normal.   This extra demand from the Fed purchasing bonds will keep bond prices at their maximun for the next 3 months,  when its over the bubble will burst, sending interest rates skyrocketing, just like in the early 1980's,  Again the US goverment is going to wipe out trillions in investors assets when this is said and done,   ask yourself this "should the US buy bond's at current high prices or buy these bonds at lower prices" it's a no-brainer.


    Is the Fed and the US government on your side, I think not,  look at the track record to see.  the fed has cost its citizens and investors over 20 trillion since 1980.   The housing market bubble was planned out perfectly Boom and bust,  bust the mortage companies, bust the banks, bust the bond insurers and yes they will bust the bonds, it is the last step in their great plan,  but as bonds burst GOLD will make its final run in this classic boom and bust cycle and that is a whole new topic i will discuss in a future article.  This bond bubble is slated to burst soon,  be on the right side of the bond trade, short or put US bonds, you know Uncle Sam will come through on making history and wiping out trillions once again.


     

12 Comments – Post Your Own

#1) On March 27, 2009 at 7:33 PM, vriguy (81.27) wrote:

Thought-provoking. Thank you.

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#2) On March 27, 2009 at 7:36 PM, nuf2bdangrus (< 20) wrote:

TBT   RYJUX

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#3) On March 27, 2009 at 7:46 PM, camarodan64 (97.94) wrote:

yes indeed tbt,  i tried to put
UltraShort 20+ Year Treasury ProShares (TBT) and

iShares Barclays Short Treasury Bond (SHV)

as related tickers but CAPS said the ticker symbols were invalid.

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#4) On March 27, 2009 at 9:37 PM, Option1307 (29.92) wrote:

Good read, thanks for the thoughts and looking forward to your piece on gold...

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#5) On March 28, 2009 at 5:33 AM, kaskoosek (93.45) wrote:

SHV

Is short term. DO NOT PICK ON CAPS.

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#6) On March 29, 2009 at 4:55 PM, nobby73 (< 20) wrote:

Using TBT can be dangerous - it tracks the daily return and therefore you can lose value through volatility. It is designed as an intra-day hedge. Also, if the treasury bubble does blow and bonds drop by 5%, you should expect the dollar to drop even more, so far better to invest in non-dollar assets or base metals...

 

 

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#7) On March 29, 2009 at 6:10 PM, Lance912 (27.77) wrote:

I agree with nobby.I'm very bearish on US Treasuries. However, those ultras screw themselves over with the daily leverage. Look at the SKF. The XLF is down over 60% over the past year. The SKF, it's down 20% too!

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#8) On March 29, 2009 at 6:27 PM, eddietheinvestor (< 20) wrote:

If this is true that bonds are doomed to fail, are there any bonds worth buying, such as high-grade corporate, GNMA, or inflation-linked bonds--or will the entire bond market fail?  I would think that if Camarodn64 is correct about interest rates shooting up as in the late 1970s, inflation-linked bonds would do well.  Does that make sense?

 

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#9) On March 30, 2009 at 8:34 AM, sputnik139 (< 20) wrote:

Can someone list who are the parties who might gain by this actions?

Are US Treasury bonds a giant Ponzi scheme? The new buyer pays off the old ones and the shortfalls is filled by printing more dollars? 

 

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#10) On March 30, 2009 at 3:16 PM, camarodan64 (97.94) wrote:

 In response too:

'If this is true that bonds are doomed to fail, are there any bonds worth buying" 

 

"The Us treasury's are trading at record almost maximum high possible,  as these bond's start selling off,  It will raise the interest rate those bond's pay when held to maturity, however the ones who bought at record high's will see a sharp decrease in value if not held to maturity, and will lose out to the higher rates as well.  The Ones who buy the treasurys at the bottom of the upcoming bond crash will become rich!! so its not which bond is best to buy , its whats the best timing to buy the bond" camarodan64

 

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#11) On April 23, 2011 at 2:30 PM, camarodan64 (97.94) wrote:

Well  you know it now QE1 QE2 and QE3 the day of judgement is near

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#12) On April 27, 2011 at 3:57 AM, camarodan64 (97.94) wrote:

#9) On March 30, 2009 at 8:34 AM, sputnik139 (< 20) wrote:

Can someone list who are the parties who might gain by this actions?

Are US Treasury bonds a giant Ponzi scheme? The new buyer pays off the old ones and the shortfalls is filled by printing more dollars? 

 

ok , there is a debt limit

heres what benifits

bond insurance purchasers

short bond interest

short bond insurers 

the people who buy the bonds near the bottom of the crash

short copper

short nickel

short oil

short dow

put dow

there you go

 

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