No Institutional Memory Whatsoever is Better

We are conditioned to be fearful of a 10-year bond yield this low. We are way beyond thinking, “This could be good for our country,” or “This could spur more housing,” or “This could allow more refinancing where it is possible.”

At least today we recognized the value of the bond-equivalent stocks, which usually happens in one of these interest-rate plummets.

And, oh lord, wouldn’t it be fabulous if the federal government woke up and sold $500 billion in bonds at these prices to alleviate the shortage and make it so the deficit would be less onerous. But that would be too clever to expect from anyone in government. It seems as if they all have some sort of aversion to ever being clever or frugal when it comes to debt, hence all of the short-term issuance, which is so stupid as to be breathtaking.

What we think about now is that something must be dreadfully wrong, and that there is going to be the Lehman moment I mentioned earlier. We never think about how only a brain-dead rich person or institution would invest in any large country’s 10-year over in Europe. You know they do have money there. And they have money in the Middle East. Some even have to sell when a country is downgraded, as the U.K. was.

Nope, like with oil, when rates go down and oil goes down, it’s considered bad; and when oil goes up and rates go up, it is considered good. In this environment it’s better to have no institutional memory whatsoever lest you lose a huge amount of money remembering what used to be good and is now bad.

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