3 replies to this topic

[paulstan]

His weekly commentaries are excellent. His latest provides excellent commentary on the current fad of labeling the flight toward debt and risky investments as "liquidity." "Foreigners hold a staggering quantity of the Treasury securities. Our own financial system holds direct and indirect claims on a lot of the toxic stuff like mortgage debt. Wall Street talks about all of this using the upbeat term “liquidity.” But what it really represents is a crushing pile of claims on our future production, as well as high risk junk, some of which (like sub-prime mortgage debt) is already starting to go belly-up." see the larger commentary at www.hussman.net

[PorkLoin]

what it really represents is a crushing pile of claims on our future production, as well as high risk junk, some of which (like sub-prime mortgage debt) is already starting to go belly-up."

I agree with that, but also think that as long of the total amount of debt is increasing, then the "liquidity" wagon will keep on rolling. And where Hussman says, "This will end badly" -- agreed there too.


Doug

[da_cheif]

from day one....."this will end badly"....

[Cirrus]

Debt is not a problem as long as there is inflation. If debt begins to become a problem the answer is even more inflation. I actually think real interest rates are a lot lower than most think they are as I think inflation is higher. Real rates accross the curve, including long rates were actually negative for a time in 2005. I really don't worry about debt as long as central banks continue to answer with inflation.