Buffett says U.S. Treasury bubble one for the ages

[harkm]

"When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s," he went on. "But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary."


Its only a matter of time.





http://uk.reuters.com/article/businessNews/idUKTRE51R1Q720090228

 

[new$]

He's got his own problems:

http://www.guardian.co.uk/business/2009/mar/01/warren-buffett-credit-crunch

 

[harkm]

Quote from new$:

He's got his own problems:

http://www.guardian.co.uk/business/2009/mar/01/warren-buffett-credit-crunch

Yeah, having tens of billions of dollars and 78 years old. What a horrible place to be. I really don't like his value approach but I will have to agree with his treasury bond stance.

 

[scriabinop23]

If 3.7% for US denominated 30 yr debt is a bubble, I wonder what 1.96% for JPY denominated govt debt is...

Did Buffett ever take economics? As money supply increases, all other factors held constant, interest rates fall.


I'd hardly call 30 yr debt 15% higher in price at peak a 'bubble'...

 

[number22]

Quote from scriabinop23:

If 3.7% for US denominated 30 yr debt is a bubble, I wonder what 1.96% for JPY denominated govt debt is...

Did Buffett ever take economics? As money supply increases, all other factors held constant, interest rates fall.


I'd hardly call 30 yr debt 15% higher in price at peak a 'bubble'...

Price bubble, not yield.

 

[harkm]

Quote from scriabinop23:

If 3.7% for US denominated 30 yr debt is a bubble, I wonder what 1.96% for JPY denominated govt debt is...

Did Buffett ever take economics? As money supply increases, all other factors held constant, interest rates fall.


I'd hardly call 30 yr debt 15% higher in price at peak a 'bubble'...

I will have to disagree. A bubble is something where the price and conditions are completely out of balance. Bond prices and conditions were out of balance before the big rise in November. Bond prices are now controlled by foreign purchasers. Eventually, the government will have to print the difference when those purchasers can't fund our spending needs. Interest rates incorporate inflation and in his opinion(and mine) inflation is coming. I am sure Buffet took economics

 

[LincolnArmy]

Granted Buffett has made a shitload of money and was one of the legends of the bull market. There is no knocking his record, until the stock market turned.

And here we are. How bad has he been over the last 18 months? How wrong has he got it? About as wrong as Jim Cramer? As wrong as stocktrad3r? Has anyone lost any more money than Buffett? Well I'm sure there are a few contenders but the fact is that he has been spectacularly bad. Phenomenally bad.
Wasn't he calling a bottom 3000 points ago?


Do you trade treasuries harkm? After the price action at the end of last year I called it a bubble, but right now it sure doesn't feel like one.
Time will tell, but if you are so confident that Warren Buffoon has finally got it right, then put your money where your mouth is.
No, please don't -I suspect you'll get ripped a new arsehole.

 

[scriabinop23]

Quote from harkm:

I will have to disagree. A bubble is something where the price and conditions are completely out of balance. Bond prices and conditions were out of balance before the big rise in November. Bond prices are now controlled by foreign purchasers. Eventually, the government will have to print the difference when those purchasers can't fund our spending needs. Interest rates incorporate inflation and in his opinion(and mine) inflation is coming. I am sure Buffet took economics

I've the counterpoints here:

http://acrossthecurve.com/?p=3451#comments

and..

http://scriabinop23.blogspot.com/2009/01/buy-treasuries.html

The 'foreigners control US treasuries notion is overused' and I believe their impact on prices is perhaps overestimated, versus the alternate of who would likely be buying treasuries if we weren't a net importer from China and Japan. If we weren't buying foreign goods, those dollars would be staying inside the country, savings would be higher, economic activity lower, and thus we'd be able to buy more treasuries internally. These scenarios don't operate in a vacuum... There are counteracting forces to every single trade balance (or imbalance).

Also -- trade deficits with China where China buys treasuries represents deferred buying of US goods. Eventually they will use that money (versus sticking it in treasuries) to purchase goods in the future. Otherwise, besides political leverage, their reserves in US dollars are worth very little.

 

[daddyeaux]

interesting that t-bill rates are .2% and the DOW is breaking to cycle lows

imagine if rates were at 7% which is where they need to be.

 

[scriabinop23]

http://blogs.cfr.org/setser/2009/02...who-will-be-the-big-buyers-in-2009/#more-4785

Thats one more with plenty of detail.