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Bond market bondage

                Thanks to how incestuous our economy has become, it is all bound together as one too big to fail system.  Reserve currencies are no longer based on merit but based on if we don’t the system will break.  Companies can no longer fund their own futures expansion or their employees’ retirement.  States and Cities budgets are leveraged to the hilt and some have even declared BK protection or paid with IOUs.  Many countries are experiencing a reduction in tax revenue while at the same time increasing their bail out expenditures.  Somehow, the global economy keeps heading higher thanks to the devaluation of the dollar (reducing the debt burden/hidden purchasing power tax).

                Here comes the next set of economic beasts that our government, Goldman Sachs, Fed and Treasury will need to work together to battle.  First, you have the REIT market that might not make it if housing doesn’t recover soon.  Second, you have the bond market that will get marked down as interest rates rise.  Unfortunately, for a housing recovery, you need an economic recovery, which will lead to increasing rates, which will end in a bond market mass stampede to the door.

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