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So You Want Higher Rates?
Some simple bond math: rising rates means lower prices. Holders of rate products, once they anticipate that future prices will fall, sell today to minimize losses. So the question: when the selling of the world's debt begins (and accelerates), especially with everyone urged by central bankers to shun bonds and go for "undervalued" stocks, who buys? We ask because, as the chart below shows, there is quite a bit to sell...
Source: JPM
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Corporations are still buying their own shares. That's likely going to end soon.
A lot of debt to be "rolled-over" in EuroLand pretty soon.Let's see if the big boys can manage that one first.But,maybe the cards don't play out that way.Don't want everything to hit at once do we?
Maybe that's why they're planning on bringing water cannons to London this summer...
So humans (bankers are included as humans for this discussion) use computers and computers give them the ability to convert things such that 1 dollar = such and such number of any other currency. So bankers are able to use money accross national boundaries as if it were the same value in whatever currency. Therefore the world has one currency despite there being many denominations. And, they get to manipulate prices between currencies as a way to skim off the top any transfers between groups of people. So the only thing a single world currency would do for banks is to put a noose around the central banks fraud. And, Central Banks are one organism; the tentacles of the squid.
I object to being taxed without representation by Japan.
Thats a lot of wealth
No Sir, that chart is the death of wealth.
It is Debt.
And there is not enough assets in the world to buy it back with.
Sorry for showing my ignorance but does does this chart show total debt, including governments, corporate and individual debt? So often charts and their descriptions seem inadequate.
Rates go up, gas prices drop. Which is good since Americans really want to import their oil from OPEC since we LOVE being in the greatest trade and investment DEFICIT with the world, in the history of the world.
So what is OPEC's opinion on China and Japan trying to keep their rates down to "export"? I mean, it's not like China is not trying to use Taiwann or Vietnam's currency to export with? No, they just want these two countries on the fixed asset portion of the Cash Flow statement for no good reason.
SocSec is required to invest 100% in treasuries and since SS has gone cash flow neg (because of ZIRP and unemployed boomers being forced to start SS early) SS is/will be a big forced net seller of treasuries.
Returning SS to cash flow positive would solve a host of problems including turning a net bond seller back into a buyer. 1) raise income limit on SS tax 2) make all SS payments 100% taxable 3) means test SS payments 4) rerun actuarial studies to justify lower future SS payments to reflect longer lifespan (it would be politically impossible to reduce current payments so just freeze COLA until monthly payments come in line with actuarial, nobody really understands the nuts and bolts of SS calculation anyway) 4) audit, freeze and backbill with interest and penalties all bogus SSDI payments, charge and jail some in publicized show trials (like NYPD)
Finally require private pensions that are insured by PBGC to invest xx% in treasuries for additional safety and reduce risk profile of PBGC, this would divert a huge chunk of private pension funds into treasuries, could also impose a catchup provision and periodically increase the required %. (PBGC is periodically refunded by taxpayers and why should taxpayers be saddled with costs of private pensions?)