Treasuries cracking now: "financial Krakatoa"

[BadJuju]

Re: Treasuries cracking now: "financial Krakatoa"

I would be happy to post photos if there's interest -- although definitely in a new thread (or maybe the NZ-specific posts in this one can be split off?)

I would love that. And thanks again!

Gah, I want to go there NOW! Must wait until September. :mad:

[Sharky]

Re: Treasuries cracking now: "financial Krakatoa"

OK, I've created a new thread:

http://www.itulip.com/forums/showthread.php?p=101365

Let's move the NZ conversation over there (should have done this earlier, sorry!)

[Guest]

Re: Treasuries cracking now: "financial Krakatoa"

Can we all be your in-laws Sharky? That would speed the process up no-end on all of our NZ naturalization and residency applications.

[Chris]

Re: Treasuries cracking now: "financial Krakatoa"

Long bond falling off a cliff - Still not short!

[jpatter666]

Re: Treasuries cracking now: "financial Krakatoa"

Long bond falling off a cliff - Still not short!

Sigh....I'm nearly convinced now the Friday pushdown was sheer manipulation.

[nero3]

Re: Treasuries cracking now: "financial Krakatoa"

I see two outcomes...

WW2 way. MOnitize, keep rates low, high inflation, (this can happen at the same time consumers lower their debt levels) then you come to somewhere around 1949 look alike, they tighten, you get the "long boom".

Otherwise, they just pump enough, like they have done, maybe some more, to keep rates low a while, just to get the economy pumping, then later, when long yields climb, they allow the yields to go up in a trend, maybe to 6-7, maybe even 15 % like in 81, while they push with negative real interest rates similar to in the seventies, until some time when you get into a new bond bull, however that might take a while. In this scenario of stagflation, consumer debt just trend even higher to GDP.

[nero3]

Re: Treasuries cracking now: "financial Krakatoa"

Maybe a joint venture with Japan, South Korea, China and the US in North Korea, so they could set the people free from the "evil rulers", could kind of top off and give an extra needed boost to the economic recovery and "green shoots" A new wave of cheap goods, with the help of Vietnam, North Korea and even Cuba. I would not rule it out.

[ASH]

Re: Treasuries cracking now: "financial Krakatoa"

Maybe a joint venture with Japan, South Korea, China and the US in North Korea, so they could set the people free from the "evil rulers", could kind of top off and give an extra needed boost to the economic recovery and "green shoots" A new wave of cheap goods, with the help of Vietnam, North Korea and even Cuba. I would not rule it out.

Seoul is too close to the border (within range of heavy artillery) for the South -- or the United States -- to consider direct military action against North Korea as anything other than an end-of-the-world last resort. Basically, for the South Koreans, it would have to be a "Seoul-razed-if-you-do/Seoul-razed-if-you-don't" scenario. And to the extent that the United States likes to trade security for economic consideration and other influence, the US can't afford to be seen as triggering a war that obviously and directly leads to the destruction of a major client's national capital. There's also the whole "overextended" thing.

Their constitution notwithstanding, I imagine Japan would love to see something done about North Korea -- they have little to lose (not as close as Seoul, and it won't be their troops doing the fighting) and quite a bit to gain. However, Japan won't be in the policy drivers' seat.

I very much doubt that China will have any enthusiasm for either (a) American troops pushing up against their border (which is how my father lost his legs), or (b) a wave of North Korean refugees doing the same. For that matter, China wants to source the cheap goods -- not create additional price competition for its exports.

[jpatter666]

Re: Treasuries cracking now: "financial Krakatoa"

Hi Ash,
I agree with everything you say. But China has been pushed into a corner as well. Basically I see the following options.

1 ) Do nothing. This has been the default choice. Problem is, North Korea is getting more and more erratic. And China easily has the most influence on North Korea -- would they not be blamed if North Korea were to step (overtly) over the line? North Korea can be thought of as China's Israel. No one really believes anything they do wasn't "sanctioned" from on high -- whether that is the reality or not.
2 ) Tacit approval of US/South Korea levered unification. No way. I can't see any positive way China would view this.
3 ) Military coup. I'm starting to wonder about this one. Turn North Korea into Myanmar and an implicit China proxy state. I think China could definitely pull it off, but just how loyal to Kim is the military? You can never tell on that sort of stuff -- many "indoctrinated" troops fight to the end. Loyalty is a weird thing sometimes.

[ASH]

Re: Treasuries cracking now: "financial Krakatoa"

Hi Ash,
I agree with everything you say. But China has been pushed into a corner as well. Basically I see the following options.

1 ) Do nothing. This has been the default choice. Problem is, North Korea is getting more and more erratic. And China easily has the most influence on North Korea -- would they not be blamed if North Korea were to step (overtly) over the line? North Korea can be thought of as China's Israel. No one really believes anything they do wasn't "sanctioned" from on high -- whether that is the reality or not.
2 ) Tacit approval of US/South Korea levered unification. No way. I can't see any positive way China would view this.
3 ) Military coup. I'm starting to wonder about this one. Turn North Korea into Myanmar and an implicit China proxy state. I think China could definitely pull it off, but just how loyal to Kim is the military? You can never tell on that sort of stuff -- many "indoctrinated" troops fight to the end. Loyalty is a weird thing sometimes.

If I were China, I'd be thinking very hard about how to turn North Korea into a better controlled client state, when Kim dies. They may not even need a coup. Possibly, they will wait a bit longer to see how the successor behaves, and what influence they can hold over him. On the other hand, I assume they have pretty good intelligence about who is likely to replace Kim, and how controllable he will be, so maybe there won't be a grace period.

[WDCRob]

Re: Treasuries cracking now: "financial Krakatoa"

Or China could assassinate Kim and install a loyalist. The ROW might even look the other way given recent developments.

[jiimbergin]

Re: Treasuries cracking now: "financial Krakatoa"

anyone else buy TBT (look it up at finance.yahoo.com) to profit on this? I, by trade am a (poor?) financial advisor but, this has been one of my client's best investments. yes, i AM new, but no, this is NOT spam btw... TBT double shorts the price of treasuries. there are a few other similar ETFs that do the same.

TBT has been discussed many times on itulip. I have bought and sold it a number of times. I and up this time, but have quite a bit of losses to make up

[nero3]

Re: Treasuries cracking now: "financial Krakatoa"

I am deeply fascinated with North Korea. It's like the only old fashion socialist state of the more old school model left. I want to travel there, and see it, before it's gone.

[c1ue]

Re: Treasuries cracking now: "financial Krakatoa"

The problem with all these theories of taking out Kim and putting in a puppet or merging with South Korea (difference is what?) is nuclear weapons.

Between loading on a mini sub, putting on an AN-2, or any number of other ways - Beijing, Seoul, and Tokyo are all easy targets.

That's why any right thinking dictator needs nukes.

[nero3]

Re: Treasuries cracking now: "financial Krakatoa"

I think it was the bull-market in treasuries back from the 1980-s that really killed communism. Now it's only North Korea left. It just looks like a failed sim city computer game. However, they had their glory days, things were not bad when they had the soviet union to trade with. After all the trade blockade on North Korea is not nice. It could be that the bear market in treasuries will do countries such as North Korea and Cuba extremely well, and might be the savior for the dictators.