Sunday, 14 June 2009 05:00

Just another Reggie Macro Rant...

I noticed that no one commented on the last set of treasury tables in Part 3 of my take on investing for inflation. I expect a potential crash in Treasuries. For one, they have been doing too well for too long in terms of very low yield; number two: there is the risk, although relatively minimal as compared to factors one and three,that demand will drop precipituosly, and number three: supply is about to shoot through the roof, at the same time that absolute credit quality will probably deteriorate significantly, alhtough on a relative basis I believe we will be one of the strongest credit risks around. That is not saying much since much of the world is currently in or will be in the toilet.

Many have commented on the demand from China. I have a healthy skepticism of China's output numbers. For one, they are a net export nation with their trade partners ALL in recession. Duhh...

Without their consumer consumption jumping much higher, I don't see

how thier GDP doesn't crash. In addition, all of the signs seem to point to government stimulus priming the export pump (manufacturing, inventories, lending, etc.) but I see very little evidence of the Chinese consumer making more money or spending signifcantly more without the aid of credit. We all know a GDP ramp up based off of gushing credit is unsustainable, don't we???

Then there is the fact that we are actually putting faith in the numbers put out by a country that banned free speech, killed students en masse that tried to demonstrate for freedom of speech, and outright and openly censors open access to information and facts within the country that refer to that demonstration of free speech (ex. not google, twitter, etc.) without complete government control. What they hell makes anyone think they can believe the numbers coming out of China, when you get locked up for even disagreeing with the Chinese goverment?

I don't believe the numbers coming out of the US, and we are suppose to be the bastion of free speech and democracy.

Last modified on Sunday, 14 June 2009 05:00