Soonerxii's Comments Stream Stats
- 18 Comments, 1
, 0 
- Total Comment Stream rating - = 1
- Free E-Newsletters
- About Seeking Alpha
- About Us
- Contact Us
- What's New
- Readers Feedback
- Advertise With Us
- Contributors
- Contribute an Article
- Feature Your Book
- Our Contributors
- Anonymous Contributions
- Dispute an Article?
- Legal
- Terms of Use
- Privacy
- Copyright
3 Reasons This Rally Has No Legs
Shorting U.S. Government Risk
Greenspan's Bubbles is a great book for understanding how we got to where we are today.
On Nov 26 10:16 AM random2348 wrote:
> apppro,
>
> If confidence returns to the stock market and the credit markets,
> then Treasuries are likely to sell off. To some degree, shorting
> Treasuries is a bet that financial markets will normalize and risk
> aversion will decline. But it is also bet that stands to gain if
> the U.S. government issues such a massive amount of debt in order
> to finance the bailouts that the new supply of Treasuries overwhelms
> the flight-to-safety demand.
Is It Time to Short Bonds?
Commodities Still Have Downside - Barron's
I'll take the rich guy.
The Case for Shorting Long Dated U.S. Treasuries
The Case for Shorting Long Dated U.S. Treasuries
The Case for Shorting Long Dated U.S. Treasuries
This is an email he answered on his site about a week ago. He is ramping up his shorts on long term treasuries I believe, but his trades can come and go fast....I'm not trying to pimp Fleck here, but I am posting something from a paid site, so I need to reflect that, (but also, I will pimp Fleck, because has been fricking invaluable this past year).
"Bill,
It's probably a good thing in the very short term that the "flight to safety" has permitted the Treasury (and ultimately the Fed) to fund the bailing out of the world, because the rate of interest on those short-term Treasuries being bought is REALLY low (as low as one tenth of one percent yield). That reduces the interest-rate burden created by the selling of so much government debt into the markets.
However, this surge of bailout debt is another "weapon of mass destruction" that is going to fall on us somewhere down the road. There is absolutely no way that the bailout debt (like all other U.S. debt since WWII) will be payed down. To quote Dick Cheney, describing the political stupidity of the American electorate, "Reagan proved deficits don't matter."
Now, all this short-term bailout debt has to be rolled over each time it falls due. Once the credit panic is over and the "flight to safety" ebbs, the interest rate on Treasuries will snap upward as the debt is rolled over with fewer buyers bidding on it. As a result, the 10 year yield will rise at least to it's fifty-year average of 7% (not even counting possible conventional bombs going off like inflation from so much liquidity injection or the major devaluing of the dollar).
In other words, the panic has created a "bubble" specific to Treasuries as an asset, and when the bubble pops, the cost of the interest payments on the trillions of dollars in new debt will become a fiscal disaster. With some real bad luck, this can be unfolding just about the time the Boomers are depleting the Social Security trust fund reserves and all that off-the-books Social Security liability will start seriously devastating our already-deeply-underwa... annual fiscal budgets.
How high can interest rates go? Can you say 1979?
• Thanks for that-- I agree-- foks who don't understand how rates can rise given the economy should read this twice. "
The Case for Shorting Long Dated U.S. Treasuries
Retail Sector Doomed: Weak Holiday Sales Will Destroy Under Armour
Hedge Funds Finding New Ways to Short
Are Short Sellers to Blame for the Financial Crisis?
and 2. for blaming all of this on short selling. Even naked shorting. The uptick rule has nothing to do with any of this either. Paulson and Cox are sooooo bad for our country. "The only difference between us an the Soviets, is that they don't pretend to be capitalists".
SEC Bans Shorting Financials
Massive Opportunity to Short the Dollar
Brunswick Corporation: Is the Bad News Over?
Capital One: A Different Short Case
Also, people would be better served to quit using the term sub-prime, as if that is the only category of loans that are going bad or are going to go bad. Alt-A is Waaaaaaaaaaay bigger than subprime, and it is headed for disaster as well.
COF and RIMM are the shorts of the century. And AMZN. Any week now it's going to pop, imo.