Saturday, September 06, 2008

The Last Bastion of Government

During the past two decades, foreigners have accumulated gigantic USTBond holdings. Now finally, too many foreign enemies hold huge amounts of USTBonds, a risk my work has mentioned steadily. The US no longer controls its destiny. The risk to sovereignty has built to a point of recognition as capital sale replenishment deals abound, a frequent occurrence for big banks. The US Dollar is rallying when its financial condition is imploding. The driving force for the deteriorating crippled US condition is the housing decline. Just today, more dreadful home foreclosure and delinquency data was released. The story of US relative strength is absurd on its face, and yet another important chapter in the US Economic Mythology treatise. Such a contradiction invites a reaction.

The sovereign risk to the United States is now overshadowed by a risk of pre-emptive financial attack from foreign locations.
...enter the Sovereign Wealth Fund.
The point here is that a mountain of new US Treasury supply is guaranteed to come soon. The new supply flies in the face of rising price. The timing for a bond attack is soon possibly perfect. For years, nobody has questioned the USTBond as the only viable parking lot for surplus capital, the largest and most liquid market in the world. Times will change. Third World bonds do not flourish!
What will happen when the last bastion of "secure"
paper/credit turns to crap?

Markets and fiat now moving at Warp 8. It will
be very difficult to keep up...for anyone.

Full essay.