As I warned, when money rushes back out of the U.S. Dollar (the dollar lost about 3% today), the entities that were stuffing their money into 30 year US Treasuries thinking they were “safe” were going to lose a LOT of money very fast.
Today, the 30 year Treasury lost 24 basis points (a basis point is 1/100th of 1 percent in yield)… So the the price of that bond dropped about 5% today in one day – not even being mentioned by the Fox News people who are having a party over the Dow going up 300 points.
If you’re a non-American investor, the drop in the value of the dollar means you lost about 8% of your money in one day (as seen from the foreign investor persepctive). When that reality hits the people who made this bad decision, the money will flee the US dollar even faster and interest rates to fund US debt will zoom up, probably consuming all of that $3 trillion in “savings” the Congress is fighting about.
I feel helpless, like I’m on that Air France Plane flying over the Atlantic Ocean at night flying into a huge thunderstorm – the plane is in a deep stall and plummeting to the earth at 10,000 feet a minute…. and the people flying the plane are staring at the computer screen – the stall is so bad, the computer stops warning of the stall and unplugs itself. In response, the pilots say “See, we weren’t really in a stall – throttle back the power and pull the nose up some more”
Today’s stock market going up is a sign that the end is very near, not a reason to think things are back to normal.