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Greenspan Sounds Alarm
Rising interest rates have been advertised for so long and in so many places that anyone who hasn't appropriately hedged his position by now obviously is desirous of losing money. - Alan Greenspan, November 20, 2004
TLT is a long-term United States Treasury Bond fund and as such is extremely sensitive to changes in interest rates.
TLT price on November 20, 2004: $88.26
TLT price on September 25, 2009: $97.98
Total gain over the period: $9.72
Total distributions paid over the period: $19.62
Total Money Lost: -$29.34 (Note the negative sign)
Total Return: 33.2% (Not counting reinvestments)
I don't know what it is that I'm doing, but I sure as heck keep doing it! - Gilligan
Source Data:
TLT Price History
TLT Distribution History
ICE: Mortgage Delinquency Rate Increased Year-over-year in October
-
From ICE: ICE First Look at Mortgage Performance: Serious delinquencies hit
17-month high while foreclosure activity remains historically muted
• At 3.45% ...
2 hours ago
10 comments:
Greedspan has no clue whatsoever. He never did. The man is a total sham. I get angry whenever I hear him speak. The increasing rate of decreasing risk premia will CONtinue to foster a further....blah, blah, blah..... all crap.
And Bernanke shares some of the same misguided beliefs as Greenscam too. Namely, that we always need more debt. And remember, Bernanke has already done a 180 on his "hands off" regulatory approach. How much pain will we have to suffer before he realizes that more debt IS the problem? Just ask Japan, Iceland, Latvia, Estonia, Ireland or Spain about ever increasing debt levels.
This article about sPAIN is particularly telling as our debt levels are even higher than theirs.
http://www.telegraph.co.uk/finance/economics/6228390/Spain-tips-into-depression.html
This may sound harsh, but I truly believe that both Greensham and Bernanke have been criminally negligent. They absolutely failed to regulate banks, mortgage debt, consumer debt, private (in)equity debt, off balance sheet bank entities, credit card and overdraft fees, system leverage, financial products, etc. Far, far too many mistakes for me to accept the "nobody saw this comming" nonsense.
Regardless what the eCONomists call it, this period will be a depression for far too many.
Oh yeah, now I'm getting worked up. How about Obama's "we need to look forward, not backward" bs. That CONcept bugs me to no end. Seriously. Why can't we look both forward AND backward?
GRRRRR!
Stag,
I just watched the Gilligan's Island video in your post.
At 16 seconds into video, the Skipper is standing next to an add for his charter services.
Get this. The add says "free lunces". No joke! I never noticed that before.
Mark and Mab,
I think economists are the over hyped, over rated prfessionals of all time. Money should be managed by real scientists that use real, well, science and not crappy models and ideas that have their roots in political ideaology, not fact. In fridays post I noted a quote from a TOP SHELF economist who said:
"In effect, the Fed looks to be putting much weight on the cyclical story playing out, while ignoring the structural story of the necessity of asset bubbles to fuel growth."
I mean, we have gone fully over to the bubble blowing as our core engine of growth.
mab,
Spain was a favorite heckling point of mine in the past, simply because their leaders had such a sense of arrogance about them. Heckling now is like shooting fish in a barrel though.
http://illusionofprosperity.blogspot.com/2007/09/david-taguas-vs-vizzini.html
"This may sound harsh, but I truly believe that both Greensham and Bernanke have been criminally negligent."
First degree landslaughter. I intended my pun to be land slaughter but it might actually be lands laughter.
Here's the definition.
"It is committed recklessly under circumstances manifesting extreme indifference to the value of land."
Okay, that's land slaughter. There's very little laughing.
"Why can't we look both forward AND backward?"
Eyes Evolved For 'X-Ray Vision': Forward-facing Eyes Allow Animals To 'See Through' Clutter In The World
http://www.sciencedaily.com/releases/2008/08/080828120312.htm
"While animals with forward facing eyes lose the ability to see what's behind them, they gain X-ray vision, which makes it possible for them to see through the clutter in the world."
This goes somewhat counter to the idea that nobody could have seen the dotcom or housing bubbles coming though. Perhaps the hundreds of trillions of dollars in derivatives made the clutter too intense? Or alternatively, maybe our X-ray vision is TOO good. Maybe investors saw what dotcom stocks and housing prices would be in 100 years?
mab,
It does say Free Lunches! That is TOO funny! I'm feeling really good about the appropriateness of the musical tribute now, lol.
GYSC,
"I mean, we have gone fully over to the bubble blowing as our core engine of growth."
It strikes me as a delaying tactic. Something tells me that they all knew what they were doing. Serious economic problems that lie dormant would suddenly appear if bubbles could not be inflated.
Greenspan had most of his money in Treasury Bills heading into the dotcom bubble.
http://www.nytimes.com/2001/08/08/business/greenspan-holdings-are-said-to-increase.html
Bernanke actually invested in Canadian Treasury Bonds. I never understood why it didn't seem to bother many other than myself. That's a HUGE conflict of interest.
http://www.independent.co.uk/news/business/news/us-fed-chief-bernanke-puts-his-trust-in-canadian-bonds-874937.html
Bush? Treasuries.
Cheney? Heavy in Treasuries and TIPS.
http://www.kiplinger.com/columns/value/archive/2007/va0605.htm
"Why the aversion to risk?
Still, it's puzzling why they aren't more interested in making their money grow. Since 1926, stocks have returned twice as much as bonds -- an annualized 11.5% for stocks to 5.5% for bonds."
For what it is worth, it certainly wasn't puzzling to me!
Mark,
If you are frugal and have upward mobility salary wise, a 5% return on savings is all you will ever need. This is what I strive for.
OMG, my verification word is "ashlo" which is very close to, well, you know!
Stag,
It does say Free Lunches!
I've seen Gilligan's Island more times than care to admit. And I never noticed the "free lunch" advertisement before.
It makes me wonder about all the other "sign posts" I've missed. It's a bit like suddenly realizing your in the Twilight Zone.
I have a hunch Bernanke's going to get a dose of the Zone soon. I think he has far less CONtrol than he thinks. Money out of helicopters. As if.
GYSC,
"...a 5% return on savings is all you will ever need..."
Be honest. Did you just win a trip for two to Fantasy Island? Take ME with you!
I can't seem to find an after tax inflation adjusted return much higher than 0% these days. ;)
mab,
"I have a hunch Bernanke's going to get a dose of the Zone soon."
Bernanke is in the Twilight Zone right now! I'm a believer!
"There is a fifth dimension, beyond that which is known to man. It is a dimension as vast as space and as timeless as infinity. It is the middle ground between light and shadow, between science and superstition, and it lies between the pit of man's fears and the summit of his knowledge. This is the dimension of imagination. It is an area which we call economics."
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