VERY Important - I never thought I would see this happen so soon

[OptionsTrader]

I've been bearish the stock market for a year now (home lenders going bankrupt, home builders taking enormous losses, investment banks taking huge write downs) and we are about to see a really really bad month in the market folks because this credit cancer is hitting the bond market hard now, and that is not going to have a pretty outcome.

http://www.marketwatch.com/news/sto...6D4-FB70-4304-B6B4-C444A554401C}&siteid=yhoof

Leading bond insurers Ambac Financial (ABK) and MBIA (MBI) look increasingly likely to lose their AAA ratings. While almost unthinkable just six months ago, such concerns are also causing turmoil in the $2.5 trillion municipal-bond market. Bond insurers agree to pay principal and interest when due in a timely manner in the event of a default -- a $2.3 trillion business that offers a credit-rating boost to municipalities and other issuers that don't have AAA ratings. Without those top ratings, their business models may be imperiled.

Folks, this may be the worst possible outcome for our economy and for liberty because this almost certainly means Bush will try to fix this with buying out the bond insurers because if the government does not step in, the whole farce that is the debt backed economy would come to a screeching halt, and they will be tempted to not let that happen.

If MBIA has it's AAA credit rating revoked, good lord it is going to get ugly in the markets.

 

[Malakai0]

Peter Schiff has been saying for months now that the bond market is a time bomb that threatens the rest of the economy, usually met with smiles and giggles I might add.


Right on time eh? With I had a few hundred k to throw into euro pacific hehe

 

[rob-NC]

damn I wish I paid more attention in my economics class.

 

[Kotin]

isnt this good for Dr.Paul?

hes the only one admitting recession.. and hes the only one who has a plan!

 

[therealjjj77]

I heard Ron Paul say that the free market will prove to be more powerful then the government through all this. I hope he is right, and I hope they don't call for actions to take away more of our liberties. I just wish we had an alternate asset-backed currency we could use. Like the Liberty Dollar.

 

[Mike S.]

Ron Paul is being ignored, as usual. Instead, the folks on the evening news discuss how Hillary or Edwards can spend even more money and get us farther in debt as a solution.

isnt this good for Dr.Paul?

hes the only one admitting recession.. and hes the only one who has a plan!

 

[HOLLYWOOD]

The 30 YEARs are already rated at a JUNK BOND level...

worth like 31 cents on the dollar

 

[lbadragan]

No matter what happens in the short term, there are $9,000,000,000,000 that needs to be paid back, along with an exploding entitlement burden. America is dying and nobody cares.

 

[rob-NC]

This is going to be a silly question...so please fill me in etc..etc.....isnt the crash the very sort of event that the Neos want? What better way to null the election and for Bush to declare himself emperor elite during America's crisis?

sorry for an off the wall question.

 

[kaleidoscope eyes]

Well Gawrsh! I thunk McRomniuli sed we're AOK?! Blue skies, puppies, a mule in each garage!

How could they lead me astray?

 

[WilliamC]

The 30 YEARs are already rated at a JUNK BOND level...

worth like 31 cents on the dollar

I thought the Treasury Department stopped issuing 30 year bonds.

Now isn't 10 years the longest term bond currently issued?

And wasn't there a report that Moody's was making noises that the Federal Governments AAA rating could be in jepardy?

 

[TulsaRevolution]

This is going to be a silly question...so please fill me in etc..etc.....isnt the crash the very sort of event that the Neos want? What better way to null the election and for Bush to declare himself emperor elite during America's crisis?

sorry for an off the wall question.

There are many forces from all sides that would love to take advantage of a dire situation like this. Bush of course has the power now, so he is the most dangerous. But get some socialists in power during a depression and it will be a new wave of entitlement. And either way, the globalists are waiting to buy everyone's stuff for pennies on the dollar once it all falls to pieces.

 

[agaiziunas]

No need...

damn I wish I paid more attention in my economics class.

No problem, just buy gold. Lots and lots of gold. Cheers.

 

[rob-NC]

There are many forces from all sides that would love to take advantage of a dire situation like this. Bush of course has the power now, so he is the most dangerous. But get some socialists in power during a depression and it will be a new wave of entitlement. And either way, the globalists are waiting to buy everyone's stuff for pennies on the dollar once it all falls to pieces.

Thanks for the info!

 

[angelatc]

damn I wish I paid more attention in my economics class.

It's not tooooo hard. A bond is basically a loan to somebody else. If the city wants to build a bridge, they can raise money by borrowing it from people. That's a government bond. The people get their money back, with interest. (There are also corporate bonds.)

But let's say that you own a bond, but you need your money now and JP Wentworth won't return your calls. You can sell your bond at the bond market. The value of them depends on several things. How high the interest rate is, how long until the bond is paid off, and how likely the government is to actually pay the money back at all.

Most bonds are given ratings by stuffy old firms that tell potential investors how likely it is that the bond will be good until it matures. (That is, all the money plus interest paid back to the investor.) Based on those ratings, insurance companies get a piece of the pie by guaranteeing that the investor will get paid back even if the issuer collapses.

The real problem is, as always, fiat money. More than likely every dollar in the above transaction chain is borrowed from somebody else. There's no assets tied to any of it. It is a house of cards.

 

[jereome]

No problem, just buy gold. Lots and lots of gold. Cheers.

Actually gold is a myth.

What really matters during an economic meltdown is FOOD, WATER and SHELTER.

You cant eat gold, you cant drink gold, nor does anyone live in a gold house.

Those that stock up on food supplies, water and have their mortgage paid for will weather the storm, while those that stock up on gold will either be starving or trading an ounce of gold for a bag of beans.


Of course though in the end it doesnt matter, because once the economy tanks the entitlement generation will riot.

Once that happens the federal government will have to step in with martial law to stop the rioting and once that happens you can kiss the constitution goodbye.

 

[Dr.3D]

I heard Ron Paul say that the free market will prove to be more powerful then the government through all this. I hope he is right, and I hope they don't call for actions to take away more of our liberties. I just wish we had an alternate asset-backed currency we could use. Like the Liberty Dollar.

If you want to keep some alternate money, just buy silver rounds and put them away for later. You can get them for 39 cents over spot at this web site.

http://www.silverprice.com/

When the excrement impacts the pneumatic impeller, they will be like money.

 

[angelatc]

I thought the Treasury Department stopped issuing 30 year bonds.

Now isn't 10 years the longest term bond currently issued?

And wasn't there a report that Moody's was making noises that the Federal Governments AAA rating could be in jepardy?

They stopped issuing them in 2001, but brought them back a few years later.

 

[rob-NC]

It's not tooooo hard. A bond is basically a loan to somebody else. If the city wants to build a bridge, they can raise money by borrowing it from people. That's a government bond. The people get their money back, with interest. (There are also corporate bonds.)

But let's say that you own a bond, but you need your money now and JP Wentworth won't return your calls. You can sell your bond at the bond market. The value of them depends on several things. How high the interest rate is, how long until the bond is paid off, and how likely the government is to actually pay the money back at all.

Most bonds are given ratings by stuffy old firms that tell potential investors how likely it is that the bond will be good until it matures. (That is, all the money plus interest paid back to the investor.) Based on those ratings, insurance companies get a piece of the pie by guaranteeing that the investor will get paid back even if the issuer collapses.

The real problem is, as always, fiat money. More than likely every dollar in the above transaction chain is borrowed from somebody else. There's no assets tied to any of it. It is a house of cards.

Gotcha! I appreciate the fill in everyone!

 

[Dr.3D]

The big problem with bonds is with the collapsing dollar, what will you have when they mature and the dollar is worth 1/100th of what it was originally?