Below are some of the most interesting things I came across this week.
LINK
Stan Druckenmiller writes, “Debt management that even appears to follow the political calendar spends the one asset that took two centuries to accumulate: the credibility of the Treasury market. That asset doesn’t regain its value so easily.”
LINK
“All this is a bit like the ‘five stages of grief,’ which start with ‘denial’ and end with ‘acceptance.’ Except that – when it comes to fiscal policy – in most cases ‘denial’ lasts until there’s a crisis,” writes Robin Brooks.
LINK
In response, traders have once again embraced the debasement trade. As Bloomberg reports, the name of this trend, is “a nod to the historical practice of rulers such as King Henry VIII of England and the Roman emperor Nero, who diluted, or debased, gold and silver coins with cheaper metals such as copper.”
LINK
Outside of this trend, as Warren Buffett has noted, investors may have never been in more of a gambling mood than they are today. However, Jason Zweig writes, “Gambling fever can burn longer and hotter than most people think—and then end faster than anyone can imagine.”
LINK
And when today’s gambling fever breaks, it could prove uniquely problematic. “The crash that followed an epic railway bond bust of 1873 was long known as the Great Depression — until that label was usurped in the 1930s. Today, it is commonly called the ‘Long Depression,’ and is a testament to the dangers of even well-founded technology booms that come to rely too much on debt. And railroad tracks last much longer than chips,” writes Robin Wigglesworth.
Comments
Log in or sign up to join the conversation.