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Yves is succeeding in scaring me

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November 02, 2008 – Comments (3)

Yves has a post on government bonds.  As so many have run to the "safety" of government bonds, well, this line got to me...

"Yet others argue that government debt must be seen in the context of, and as part of, the overall debt burden on the economy. With the US private debt to GDP ratio at levels never seen before – close to 300%, according to Steve Keen, the Australian economist – the question is surely whether the whole debt pyramid can avoid crashing down via a violent and uncontrollable chain of defaults, dragging the government bond market down with it. If this seems far-fetched, it helps to remember that the Latin root of the word credit comes from credere – to believe, but also to trust. For large sections of the private sector bond market, it is precisely that trust which has disappeared over the last year and a half. To suggest that such “credit revulsion”, to use an old term, might spread to governments’ debt obligations is surely not beyond the realms of possibility"

 

3 Comments – Post Your Own

#1) On November 02, 2008 at 6:10 PM, dwot (60.20) wrote:


Think about this...

We live in a just-in-time kind of world and trade markets are freezing,...

 I wonder what it means to a big city when trade comes to a halt...  I am not in a big city so I can't notice if things you expect aren't showing up on shelves... Something that is lucky about North America is that it does supply its own food, but I wonder how this affects places highly depended on food imports...

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#2) On November 04, 2008 at 8:01 PM, usmilitiadude (31.87) wrote:

Maybe the patriotism definition should be expanded to include living within ones means and having savings.

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#3) On November 07, 2008 at 3:45 PM, Rep07 (28.53) wrote:

OK I'm scared now too.  Time to buy a cheap foreclosed house out in the desert and dig a nice cozy bunker out back.  Then fill it with canned food, MRE's, bottled water, guns, ammo, and lots of conspiracy-theory books.

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