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Nassim Taleb forecasts future US treasury bond crisis
Posted on 18 May 2010 with 3 comments from readers
Author of ‘The Black Swan’, New York University professor Nassim Taleb thinks one day a treasury auction will fail and produce a crisis in the US bond market.
Bernanke is the man who crashed the train. New UK Prime Minister David Cameron understands the problem and knows what to do.
Taleb’s advice for what investors should not do: avoid long-term treasury bonds, avoid the dollar and euro; buy metals, agriculture and avoid the stock market.
3 Comments posted by readers:
For some odd reason this month China bought a shi* load of US treasuries. I couldn’t figure out why they bought so much when 3 months ago they were lightening up on buying US treasuries.
@ Andy:
Over the past year, China has shifted its holdings of US Treasuries to the short and intermediate side of the scale.
The China Strategy:
Within the past few months, China sees significant evidence of global deflation. Here’s a few strong indicators:
1) Yields are falling steadily in 10 year and 30 year US Treasuries
2) The USD, which is trash, is rising, in relation to most currencies (except the Yen, which has problems of its own)
3) CDSs are going crazy… look at the CDS rates over the Eur fiasco
4) China is about to crash and burn; look at their stock markets performance over the past 6 months
So… if China is right, then the best strategy for their US Treasury holdings is to be in 10 year Treasuries . . . who knows, they may make up for the huge losses they took in 2008 and 2009 at the expense of Wall St. fraud.
EUR Totally Screwed:
The economies of western countries are screwed… and when the ECB starts to print Euros by the trillions (which will happen soon, since they don’t have the courage to fix their fiscal problems!), we’ll then see a rapid switch to a hyperinflationary depression in Eur.
The BIG QUESTION is whether the EUR mess will spread to the USA . . . logically, it should, since the debt to GDP here in the US is just as bad (if not worse, in some cases!) and the USA is incapable of EVER paying off its debt. But since the USD is the world’s reserve currency, the USA is not being held accountable, and is getting away with murder every day!
We are now in a transition phase of taught from non-heterodox economics (mainstream economics) taught that battered our world economy and looted the wealth of my parents retirements into heterodox economics (austrian economics) which thirsty to a resource-based economy.