In this week's Off the Cuff podcast, Chris and Brian Pretti discuss:
- Bonds Are For Dough
- The size of the risk in the credit market is staggering
- The War On Cash
- Will going cashless help the credit bubble live longer?
- Greece & Derivatives
- How a Grexit could trigger Armageddon
- The End Of Confidence
- When it arrives, the collapse will happen swiftly
Amidst their recent articles on the frighteningly-high risks in the credit markets, Chris and Brian sit down this week to discuss bonds.
The bond markets are so huge that really, all other asset markets pale in comparison. That makes the stability of the bond market paramount: should it stumble, it's going to take the whole world down with it.
Chris and Brian are intently watching the credit markets now because both fear we are at the end of the 35-year cycle, one in which bond yield marched ever downwards (and, therefore, bond prices marched upwards). If we are indeed entering a new era of rising rates, which seems increasingly likely, bond prices are at great risk. And nearly no one in the markets has the historical experience of what it's like to invest in such a secular higher-rate environment.
Combine that with the staggering difference in private and public debt levels vs 35 years ago, and there is real potential for a full-fledged collapse/conflagration of the world's credit markets should things get out of control.
by johnshippen