The Sarcasm Report v.114

July 17, 2011
What happens to markets if the US defaults?

Wall Street isn't panicking yet. But if the unthinkable happens, a default could strike financial markets like an earthquake.

Has the mainstream media ever been able to predict the exact date and time of an economic crisis in advance? August 2nd is now circled on my calendar though. I've used a big red crayon. Maybe it is different this time.

That said, I do expect US debt downgrades in the coming months/years. I do not believe that the US Treasuries that I own should be AAA rated. I'd be surprised if anyone honestly does.

January 27, 2011
Japan’s Credit Rating Cut to AA- by S&P on Debt Load

Japan’s borrowing costs are among the lowest in the industrialized world, helping it fund its debt load. The yield on the benchmark 10-year bond slipped 1 basis point to 1.23 percent as of 10:47 p.m. in Tokyo. It touched 1.26 percent in Jan. 19, the highest since Dec. 16.

Just look at those soaring interest rates. 1.23%! Oh the humanity! And look what they've done since Japan's credit rating was cut.

Japanese Government Bonds

10-year: 1.09%

That's right. Rates fell. It's almost like the entire world is getting caught in a Keynesian stagnation trap. Yeah, it's almost exactly like that.

It's getting harder and harder to make money off of money. That's been a central theme of my blog from the start.

October 21, 2007
The Death of Real Yields

If the economy is so strong and healthy then why haven't higher real yields returned?

Using hindsight, apparently the economy was not so strong and healthy. Further, hindsight shows that the real yields of 2007 were actually pretty high, at least in comparison to what they are now. Go figure.