Listening to a NY Times podcast by Bill Gross, who points out the
unprecedented 30% yields being given today.  What does this mean?  It
could be inflation, as Gross points out, and that's what I believe it
points to.  Gross also fears deflation, but IMO that's a very short
term phenomena.

RL

Blash <bla...@comcast.net> wrote:
raylopez99 wrote on 11/22/08 9:43 AM:

Listening to a NY Times podcast by Bill Gross, who points out the
unprecedented 30% yields being given today.  What does this mean?  It
could be inflation, as Gross points out, and that's what I believe it
points to.  Gross also fears deflation, but IMO that's a very short
term phenomena.

RL

   The high yield on "junk bonds" is probably due to a combination of the
economy(sucks) and their inability to borrow money to fund their daily
operations......IOW, investors are betting that they're going to tank
soon.....

Agreed, what extremely high rates usually means is nothing more than
extremely high risk of default. The big boys wouldn't be pouring into
treasuries at yields of 4.5% or less if they feared rampant inflation.
Seems to me like they definitely fear deflation and economic collapse
which could last years.

Apparently a wave of municipal and state bankruptcies are looming as
well.  Orange County' default doesn't even hold a candle to what looks
to be on the horizon this time.- Hide quoted text -

- Show quoted text -

Listening to a NY Times podcast by Bill Gross, who points out the
unprecedented 30% yields being given today. What does this mean? It
could be inflation, as Gross points out, and that's what I believe it
points to. Gross also fears deflation, but IMO that's a very short
term phenomena.

RL

raylopez99 wrote on 11/22/08 9:43 AM:

Listening to a NY Times podcast by Bill Gross, who points out the
unprecedented 30% yields being given today. What does this mean? It
could be inflation, as Gross points out, and that's what I believe it
points to. Gross also fears deflation, but IMO that's a very short
term phenomena.

RL

The high yield on "junk bonds" is probably due to a combination of the
economy(sucks) and their inability to borrow money to fund their daily
operations......IOW, investors are betting that they're going to tank
soon.....

Listening to a NY Times podcast by Bill Gross, who points out the
unprecedented 30% yields being given today. What does this mean? It
could be inflation, as Gross points out, and that's what I believe it
points to. Gross also fears deflation, but IMO that's a very short
term phenomena.

RL

Michael Milken, would loved that 30% yield on that junk bond in his
heyday.

On Nov 22, 7:11 pm, Olneyb...@webtv.net (Trailer Trash) wrote:

Michael Milken, would loved that 30% yield on that junk bond in his
heyday.

Or rather, his clients would have loved it.  It's a little known
secret that pension funds like Calpers were his biggest clients.  They
fueled the LBO mania. As they did the cheap money privitisation mania
of hedge funds post 2000.  Retirement monies funded speculation,
ironically.

As for 30% yield being an indicator of default, I agree with that, but
also wrapped up in that equation is inflation.

You deflationists ask yourself:  with Keynesian economics being
orthodox, do you think Bernanke will allow deflation?  No. Paul
Krugman (who won the Nobel this year) said a few years ago that for
Japan's malaise they should just print money.  I think the USA will do
exactly that.

As they say:  Got Gold?

RL

raylopez99 wrote:
Listening to a NY Times podcast by Bill Gross, who points out the
unprecedented 30% yields being given today.  What does this mean?  It
could be inflation, as Gross points out, and that's what I believe it
points to.  Gross also fears deflation, but IMO that's a very short
term phenomena.

RL

I heard a stat the other day that if you take the negative CPI number
from last month (-2.8%, IIRC), and if you BACK OUT gasoline, you have a
very manageable deflation rate of .4%.

And, since the big % deflation of oil is over (deflation will likely
continue, but at a smaller rate) we'll likely be back to inflation by
Q109, albeit at rates translating to less than 1% per year.

JG

.Ive seen more than a few guys in their mid 80's doing this.. no way
you can compare them... strong and fit.     fully retired is a much
worse situation regardless the money.

On Nov 22, 6:52 am, John Galt <kady...@gmail.com> wrote:
raylopez99 wrote:
Listening to a NY Times podcast by Bill Gross, who points out the
unprecedented 30% yields being given today. What does this mean? It
could be inflation, as Gross points out, and that's what I believe it
points to. Gross also fears deflation, but IMO that's a very short
term phenomena.
RL
I heard a stat the other day that if you take the negative CPI number
from last month (-2.8%, IIRC), and if you BACK OUT gasoline, you have a
very manageable deflation rate of .4%.

And, since the big % deflation of oil is over (deflation will likely
continue, but at a smaller rate) we'll likely be back to inflation by
Q109, albeit at rates translating to less than 1% per year.

JG

with the national debt at 10trillion now and growing fast, and
derivitive mess at hundreds of trillions in the red, and govt issuing
money... its a hyperinflatonary scenario over the long term... with a
deflationary dip going on now that cant last for those reasons.

Im gonna hold you to that 1% you know

discussion two years ago about the real estate mkt

crashing, and will get worse fast, a lot worse... then stocks...and
then bonds will tank, out the bottom...... the underlying drivers bode
for continuing crash, not recovery..

this is not a statistical or chart issue, its driven by the macro
economics involved, and for the US those are nasty.


Phil scott

phil scott wrote:
On Nov 22, 6:52 am, John Galt <kady...@gmail.com> wrote:
raylopez99 wrote:
Listening to a NY Times podcast by Bill Gross, who points out the
unprecedented 30% yields being given today. What does this mean? It
could be inflation, as Gross points out, and that's what I believe it
points to. Gross also fears deflation, but IMO that's a very short
term phenomena.
RL
I heard a stat the other day that if you take the negative CPI number
from last month (-2.8%, IIRC), and if you BACK OUT gasoline, you have a
very manageable deflation rate of .4%.

And, since the big % deflation of oil is over (deflation will likely
continue, but at a smaller rate) we'll likely be back to inflation by
Q109, albeit at rates translating to less than 1% per year.

JG

with the national debt at 10trillion now and growing fast, and
derivitive mess at hundreds of trillions in the red, and govt issuing
money... its a hyperinflatonary scenario over the long term... with a
deflationary dip going on now that cant last for those reasons.

Yea we can, actually. It may work out as you believe, but if everything in
a tradeable market worked out the way you believe, you wouldn't be posting
on USENET -- you'd own an island in the Caribbean and be there drinking
pina coladas right now.

A note of currency, no longer backed by any sort of metals standard, is
essentially a share of ownership in a nation's economy. It will fluctuate
in value relative to the holders' opinion of the state of that economy,
AND relative to the holders' opinions of the state of OTHER economies.

So -- we dilute by a trillion dollars. Is that a lot? Well, it depends on
the amount of money in circulation, eh? If a nation has 10T in
circulation, yea, that's a 10% dilution, and the dilution will show up in
the buying price of the note. However, if the nation has 1000T in
circulation, that 1/10 of 1%, and not that big of a deal.

We have a LOT of money in circulation, more than the Euro, for example. If
Germany (which they did) tosses in euros equal to 600B $ against that much
smaller base of notes in circulation, they've diluted their currency more
than we have, relatively speaking.

Now, I agree that we have an inflationary scenario over the long term. Is
it "hyper"? Well, depends a lot on what other countries do as they respond
to the current distress, eh? It also depends a lot on how fast these
economies recover, or IF they recover. It's quite possible that in the
gyrations over the next few years, most other nations dilute more than we
have, and their economies get much worse than ours. If THAT scenario plays
out, you may actually have further dollar appreciation --
long term.

Nothing is for certain. Well, death and taxes, of course.

Im gonna hold you to that 1% you know

What does that mean? Are you trying to be a prick?


, remember we had a similar
discussion two years ago about the real estate mkt

Personally, I wasn't using "John Galt" two years ago.

JG


... it ended up
crashing, and will get worse fast, a lot worse... then stocks...and
then bonds will tank, out the bottom...... the underlying drivers bode
for continuing crash, not recovery..



this is not a statistical or chart issue, its driven by the macro
economics involved, and for the US those are nasty.


Phil scott

phil scott wrote:
On Nov 22, 6:52 am, John Galt <kady...@gmail.com> wrote:
raylopez99 wrote:
Listening to a NY Times podcast by Bill Gross, who points out the
unprecedented 30% yields being given today.  What does this mean?  It
could be inflation, as Gross points out, and that's what I believe it
points to.  Gross also fears deflation, but IMO that's a very short
term phenomena.
RL
I heard a stat the other day that if you take the negative CPI number
from last month (-2.8%, IIRC), and if you BACK OUT gasoline, you have a
very manageable deflation rate of .4%.

And, since the big % deflation of oil is over (deflation will likely
continue, but at a smaller rate) we'll likely be back to inflation by
Q109, albeit at rates translating to less than 1% per year.

JG

with the national debt at 10trillion now and growing fast, and
derivitive mess at hundreds of trillions in the red, and govt issuing
money... its a hyperinflatonary scenario over the long term... with a
deflationary dip going on now that cant last for those reasons.

Yea we can, actually. It may work out as you believe, but if everything
in a tradeable market worked out the way you believe, you wouldn't be
posting on USENET -- you'd own an island in the Caribbean and be there
drinking pina coladas right now.

A note of currency, no longer backed by any sort of metals standard,  is
essentially a share of ownership in a nation's economy. It will
fluctuate in value relative to the holders' opinion of the state of that
economy, AND relative to the holders' opinions of the state of OTHER
economies.

So -- we dilute by a trillion dollars. Is that a lot? Well, it depends
on the amount of money in circulation, eh? If a nation has 10T in
circulation, yea, that's a 10% dilution, and the dilution will show up
in the buying price of the note. However, if the nation has 1000T in
circulation, that 1/10 of 1%, and not that big of a deal.

We have a LOT of money in circulation, more than the Euro, for example.
If Germany (which they did) tosses in euros equal to 600B $ against that
much smaller base of notes in circulation, they've diluted their
currency more than we have, relatively speaking.

Now, I agree that we have an inflationary scenario over the long term.
Is it "hyper"? Well, depends a lot on what other countries do as they
respond to the current distress, eh? It also depends a lot on how fast
these economies recover, or IF they recover. It's quite possible that in
the gyrations over the next few years, most other nations dilute more
than we have, and their economies get much worse than ours. If THAT
scenario plays out, you may actually have further dollar appreciation --
long term.

Nothing is for certain. Well, death and taxes, of course.

Im gonna hold you to that 1% you know

What does that mean? Are you trying to be a prick?

,  remember we had a similar

discussion two years ago about the real estate mkt

Personally, I wasn't using "John Galt" two years ago.

JG

... it ended up



crashing, and will  get worse fast, a lot worse... then stocks...and
then bonds will tank, out the bottom...... the underlying drivers bode
for continuing crash, not recovery..

this is not a statistical or chart issue, its driven by the macro
economics involved, and for the US those are nasty.

Phil scott- Hide quoted text -

- Show quoted text -- Hide quoted text -

- Show quoted text -

On Nov 23, 2:38 pm, John Galt <kady...@gmail.com> wrote:
phil scott wrote:
On Nov 22, 6:52 am, John Galt <kady...@gmail.com> wrote:
raylopez99 wrote:
Listening to a NY Times podcast by Bill Gross, who points out the
unprecedented 30% yields being given today. What does this mean? It
could be inflation, as Gross points out, and that's what I believe it
points to. Gross also fears deflation, but IMO that's a very short
term phenomena.
RL
I heard a stat the other day that if you take the negative CPI number
from last month (-2.8%, IIRC), and if you BACK OUT gasoline, you have a
very manageable deflation rate of .4%.
And, since the big % deflation of oil is over (deflation will likely
continue, but at a smaller rate) we'll likely be back to inflation by
Q109, albeit at rates translating to less than 1% per year.
JG
with the national debt at 10trillion now and growing fast, and
derivitive mess at hundreds of trillions in the red, and govt issuing
money... its a hyperinflatonary scenario over the long term... with a
deflationary dip going on now that cant last for those reasons.
Yea we can, actually. It may work out as you believe, but if everything
in a tradeable market worked out the way you believe, you wouldn't be
posting on USENET -- you'd own an island in the Caribbean and be there
drinking pina coladas right now.

thats a facetious argument.. you can do better.

I am pointing out the history of fiat money and the demographic
drivers. a person gets rich on timing... thats a but up in the air
imo... I personally think (gut feel) it will go down fast...but it
could easily be stretched out for 5 years o more...so any bet made
today on my notion that its going to be a fast collapse would indeed
be in error.

same with my ragging on your ass about the real estate bubble last
year...I turned out to be correct...nowever that should not really
prove much, the mess could easily have gone on for another year or
two...so there again selling then or whatever could have been a bad
idea.

I simply post what I see of the macro economics, cite the historical
patterns... after that timing etc...even accuracy is not assured.






A note of currency, no longer backed by any sort of metals standard, is
essentially a share of ownership in a nation's economy. It will
fluctuate in value relative to the holders' opinion of the state of that
economy, AND relative to the holders' opinions of the state of OTHER
economies.

I hear you, and I could argue that range of issues in your favor
also... but I dont think its going to work out that way. reasons the
demographic drivers etc that ive mentioned.

Im not trying to prove anything with my posts or influence anyone...Im
saying what I think and giving the reasons is all... and yes recently
Ive been quite accurate, that is not my historical trend though... I
thought this mess would collapse 8 years ago. it didnt.

the demographic drivers though remain in place. so I post what I do.

I truly and earnestly hope that your view turns out to be the case and
that I am absolutely incorrect... I suppose I have a lot of company in
that wish, including yourself...but I dont think we are staged for
that outcome.




So -- we dilute by a trillion dollars. Is that a lot? Well, it depends
on the amount of money in circulation, eh? If a nation has 10T in
circulation, yea, that's a 10% dilution, and the dilution will show up
in the buying price of the note. However, if the nation has 1000T in
circulation, that 1/10 of 1%, and not that big of a deal.

You have presented one of the most salient arguments for your
position...I really hope it adds that way in the end... yes we are so
deeply in dept, and the derivitives market is so bogus, hundreds of
trillions...that a few trillion in bailouts is a mere drop in the
bucket....and if those work, it will be the bargain of he
century...and Im sure Paulson, Bernake et all are hoping like wise...I
sure as hell am.

I just dont see it happening if history of fiat money and those
national patterns are any indicator... no exceptions so far in world
history. we could be the first, but I dont think the national
demographics supports such a reversal.

your view might be that negative think will exaerbate the probem so
you are trying to talk the mess straight...and indeed those are valid
factors... I just think its too late for that by a wide margin.


We have a LOT of money in circulation, more than the Euro, for example.
If Germany (which they did) tosses in euros equal to 600B $ against that
much smaller base of notes in circulation, they've diluted their
currency more than we have, relatively speaking.

these relativity issues are indeed important, if it were not for china
as a massive exception Id have great hope for your views in this
regard.



Now, I agree that we have an inflationary scenario over the long term.
Is it "hyper"? Well, depends a lot on what other countries do as they
respond to the current distress, eh? It also depends a lot on how fast
these economies recover, or IF they recover. It's quite possible that in
the gyrations over the next few years, most other nations dilute more
than we have, and their economies get much worse than ours. If THAT
scenario plays out, you may actually have further dollar appreciation --
long term.


thats a good argument.... relative to national debt etc. the current
mess is not itself on a hyper inflation track. I sincerely hope as
many do that you are correct.

You know my other argument though. ..I hope it has holes in it.



Nothing is for certain. Well, death and taxes, of course.

actually the bit about taxes is greatly exagerated.





Im gonna hold you to that 1% you know
What does that mean? Are you trying to be a prick?

no... Im just going to hold you to your 1% estimate. I think its off
by a factor of 10x at least...just my view. again I hope your 1%
figure is closer to reality than mine.... it will mean I do well and
will not suffer greatly as I would were my estimation of this mess
accurate.


, remember we had a similar

discussion two years ago about the real estate mkt
Personally, I wasn't using "John Galt" two years ago.


maybe it was a year ago or whatever... many people were pushing real
estate right up until the crash, with some saying its a buying oppty
today... ... I think its going clear to hell in a hand basket as 80
million retire and drop deader than hell over the next decade or so.


Yours in limitless optimism, Phil Scott



JG

... it ended up



crashing, and will get worse fast, a lot worse... then stocks...and
then bonds will tank, out the bottom...... the underlying drivers bode
for continuing crash, not recovery..
this is not a statistical or chart issue, its driven by the macro
economics involved, and for the US those are nasty.
Phil scott- Hide quoted text -
- Show quoted text -- Hide quoted text -

- Show quoted text -

Agreed, what extremely high rates usually means is nothing more than
extremely high risk of default.

d@noospam.com (d.) wrote in news:492838de.248961571@216.168.3.70:



Agreed, what extremely high rates usually means is nothing more than
extremely high risk of default.



Junk bonds were widely owned by hedge funds. As deleveraging and margin
calls proceed, distress selling is widespread. Yields on junk bonds are far
above those required by any realistic rate of defaults.

Dr Tormento <reply@togroup.com> wrote:

d@noospam.com (d.) wrote in news:492838de.248961571@216.168.3.70:



Agreed, what extremely high rates usually means is nothing more than
extremely high risk of default.



Junk bonds were widely owned by hedge funds. As deleveraging and
margin
calls proceed, distress selling is widespread. Yields on junk bonds
are far above those required by any realistic rate of defaults.

It just seems like that, if the default rates are really going to be
that low, folks should be tripping all over each other trying to buy
this paper. Not only can you beat the heck out of average stock
market returns, you can beat most of the best stock market returns
and do it year after year after year as long as there are no defaults.

  There was an article in Barrons about this recently. To justify current
yields the default rate would have to be over 13%. The all time worst
default rate for corporate bonds was 15% in 1933. So they are pricing in a
Great Depression.
  It is not realistic to expect "no defaults". However, they are compelling
buys right now. The credit crunch is preventing buyers from loading up on
them, just as margin buying of stocks is stymied right now.

On Nov 24, 1:17 pm, Dr Tormento <re...@togroup.com> wrote:

  There was an article in Barrons about this recently. To justify current
yields the default rate would have to be over 13%. The all time worst
default rate for corporate bonds was 15% in 1933. So they are pricing in a
Great Depression.
  It is not realistic to expect "no defaults". However, they are compelling
buys right now. The credit crunch is preventing buyers from loading up on
them, just as margin buying of stocks is stymied right now.

Thanks for that insight.  However lending practices pre-WWII and pre-
Keynesian economics were arguably more sound than now.

RL