IceCap Asset Management On The Long Bond Con

Tyler Durden's picture

IceCap Asset Management: GLobal Investment Outlook February 2011

The Long Bond Con (pdf)


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
truont's picture

If you buy a US Bond you WILL be paid back in dollars, guaranteed.

No question.

There is no guarantee, however, on how much the dollars you get back will actually be worth....

This is the con.

SparkyvonBellagio's picture

Agreed on the Con job,,, and to think those folks who bought TIPS thinking they're protected.....

Govt saying inflation is running around 4%   LOLLLLLLLLLLLL




Okay here's your 1.04 per...... LOL




get nothing and like it's picture

But its so easy now with direct deposit of your tax refund into Treasury Bonds -,,id=217791,00.html

e_goldstein's picture

only if there is a "government" and a "dollar" around when you want to sell that bond.


Tapeworm's picture

One of the cons is the funds ramping up the price of silver.

 The silver crazies should do some arithmetic.

 I'll do it for you:

 Gasoline at 3.25/gallon

 A silver dime is 33.70(spot) x .72= 24.26 per silver dollar. Divide by ten for the value of a dime=2.43, so 3.25/gallon/ 2.43= less than 14 cents/gallon in 1964 coin. That is double anything of 1964 prices even in a "gas war".

 How about an airplane fare of 400.00 round trip to wherever? That comes to 400/33.7 /.72=less than $17.00 in 1964 silver coin.

 Do the same with storage food (a year for 62 dollars) or houses (200k for $8250.00) or any real item. Then tell me how you will get rich on buying silver at the prevailing prices other than a full collapse of just about everything. Your price for airfare to wherever will not be a consideration any more.

 Of course this time might be different and I will be proven wrong on my warnings to newbies.

johnQpublic's picture

wtf are you saying?


and we are pretty much facing a complete collapse....and pm's are for wealth protection, not to make scads of cash

Just Observing's picture

That is double anything of 1964 prices even in a "gas war".


Say what ?   I started driving in 1964, and the cheapest I EVER saw gasoline was 19 cents/gal in a gas war.  The average price was 25-30 cents.  We could scrape together a buck between several teens and cruise all evening on 3-4 gallons.

prophet's picture

ot, reuters running a few stories and a pdf file they call their special report on SAC.

surfersd's picture

Well put. I would advise that they add silver to their gold position.  I thought the ICap guys were going to be acquired by the Axis of evil NYSE/Borse/Nikkei. If they are we won't be seeing any of these salient reports any more, take a screen shot now.

silver bitchez

eigenvalue's picture

But where can they get the silver? According to Eric Sprott, there is no silver left. Unless you wanna tell them to add some paper SI or SLV.l

SparkyvonBellagio's picture

Use your Credit Cards to buy Silver/Gold Bullion (my god make sure it's real/legit). 

Don't pay it back.


If it happens to be a Chase Card, even better.

JPM is short more silver than has been ever mined. LOL



johnQpublic's picture

now that is a great plan


screw a credit rating....max that 25k limit chase card

Scottj88's picture

These guys are unbelievable...

We must learn about these bankers...

Oh regional Indian's picture

Excellent Analysis. Two interesting things:

1) A little debt is a good thing? Nope. If it has compound interest attached, even the tiniest bit will explode. A debt-less world is worth looking forward to.

2) We can all be excused for being stunned at such NUMBers? Hardly guys. We are in trillion twilight zone now!

And of course, the good hungarian gold doctors plunging interest rate thesis comes to mind seeing the chart that looks like a long-dive.

This whole game is best left to bots and opportunists.


Bearster's picture

Only a bank lending taxpayer-backed money has an incentive to lend to uncreditworthy borrowers.  Let's not blame this on "greed" when the unintended consequences of central state planning are really to blame.

Stuck on Zero's picture

All confidence schemes play on the following scheme: You give me x dollars now and I will later return to you 10x dollars.  This plays on the greed of the sucker.  Isn't this the same con that politicians have played on their sheeples?  I will tax you x dollars today and return 10x benefits tomorrow!  Watch how fast our brilliant bankers and politicians flee this country when the system crashes. 

By the way, the best movie for cons was the Flim Flam Man!

Xkwisetly Paneful's picture

They are still paying barely above lint and yet there is no shortage of proclamations the game is over.


How long ago was it that they were paying less than transaction costs? Was that the fall of 2009?


This all caused by the elite giving unfettered access to capital at historically low rates to anyone who could make an X?


Xkwisetly Paneful's picture

Same song different year, I tried to pay for gas today with some gold and the guy was about to call the police,

I tried to buy groceries with some silver and the grocer said he can't collect on the float with the silver-


how many decades have the new world standard bearer army been out?


meanwhile how many more times likely is it the dollar still accounts for over half of all global commerce in the year 2100 vs the Euro still being in existence?


maybe the ruble will replace it or the yuan? just like the yen and deutsche mark were going to in the 70's and the 80's.



Irwin Fletcher's picture

OK, IceCap, what do asset managers chuckle about at the end of the week over drinks? Making their clients money by going long commodity ETFs? Maybe  lawyers, doctors, mechanics and teachers genuinely feel that they provide a service to society, such as justice or health, and a good laugh at the end of the week is what keeps them from going Tunisian on people whose only function is making the world's distribution of income more unequal. Maybe you're riding Bennie's inkjet Ponzi just like JPM rode Bernie Madoff's Ponzi. Pot? Kettle?

gwar5's picture

I would never buy any bond instruments of any kind.

It's backed by devaluing dollars and if rates go up you get killed too.

Squid Pro Row's picture

As frustrating as ponzi eCONomics are, the show will continue.  Until a credible and globally accepted alternative currency is devised and deployed, the US dollar will remain king and rates will behave.

From my perspective, I am beginning to wonder if we even need taxes here in the US.  If we can print $0.40 to $0.60 of every dollar spent by our government, then why not push this thing to the limits?

Sadly, I think most worries are overblown.  Dollar diplomacy and US hegemony are basically unchallenged.  (And no, the BRICs are not a working model - they are a credit driven mania and are the echo of our printing bananza)

twotraps's picture

Interesting comment, don't like it but have to agree.   Dollare diplomacy is unchallenged but the distraction is thinking about future consequences of current policy against the backdrop of normally accepted economic and accounting principles.  However, being unchartered territory, a totally new outcome is possible.  I don't know what it is, but its becomming a silly game where the US and Europe have a zillion bazillion shmillion dollars in debt floating around and the sky has yet to fall.  Do we look to Iceland?  Ireland?  Varying situations where they cannot print their own money.  I may show my hand here and display a complete lack of economic concepts.....but do we Really Know where the govt stands with everything?  Do we really know where the banks Actually stand from an accounting perspective?  Do we really, anyone, know where each state stands with its budget issues...........other than the crap they give us to read?  So, we work, we pay bills, save, invest, plan (some of us) etc....we operate with real economic consequences to our actions.  It seems to me the govt runs a massive Pretend Account that has no basis in reality.  They never run out, are never really under any pressure despite an increasing burden every year.  It was mildy disturbing to see Billions and Trillions used with great ease during the seemed to carry some weight.  How will we take when Quadrillion becomes mainstream?

johnQpublic's picture

 Quadrillion will prolly be taken the same way as trillion...with a grain of salt

extremely huge numbers are difficult for the masses to grasp


see political math website for examples galore on topic

sudzee's picture

Looking like we will have to see -20% real interest rates before Bernie pulls the trigger on a 1/4 point rise in official rates. To bring real inflation under control rates will have to rise by 20% and in doing so all rev's of gov't will be needed to pay interest only on debt. This is Japan Syndrome for sure.

johnQpublic's picture

japanese leadership used to commit ritual sepuku when their mission failed...

we could use a revival of this tradition, as in make it manditory for those leaders who 'mission fail'

televise it on pay per view and use the money to pay down the debt

i'd pay 50 bucks to see inkjet benny plunge a sword into his gut and cut a cross before someone lopped off his head

FoieGras's picture

Ah the good old "Yields went down for so long, clearly now they must go up" logic. Good luck to IceCap with that theory. They're lucky they weren't born in Japan.

Johnny Lawrence's picture

Another report bashing can find the same thing at Merrill/BAC, UBS, Morgan Stanley, and every mutual fund company.

orangedrinkandchips's picture

Very very few people outside of this great site EVER discuss two issues that are life and death to the US.

1.) Can Ben ever turn off the debt spigot? No! He cannot.

2.) I am no theory-based, freaky, evil and inept economist taking up space on some overpriced/piece of shit school payroll but cmon on...If I borrow money and the rate is NOT fixed, then IF the rates go up I PAY OUT THE NOSE. Once I stop paying out of it I bleed out of it!

THE US CANNOT AFFORD RATES TO INCH UP 1BP! Every basis point up means more pain. Yes, they pay themselves 1/3 of the interest but the fact is the leverage of the debt they took on.

It is zero-sum....the govt took the stupid debt from these private cocksuckers....It has not gone anywhere! it is still there. It is in someone elses balance sheet!

It is like the law of mass (something close to that)...where you crush an empty can. DOES THIS MEAN YOU HAVE LESS MASS??? NO!!!!!!!!!!!!!!!!!!!!!!!!! it is in a different form but weighs the same!!! It just changes form.


Nobody evey discusses the debt service when rates inch up.