Evaluating Managed Funds

[Evan]

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The bond market is pretty efficient. The bond traders really do analyze a company and sell the bonds that have a high probability of defaulting. GM bonds are rated at BB or somewhere around there, and are not investment grade anymore... GM has some probability of defaulting on some of their bonds. But US treasury bonds still trade at AAA. If there was a 90% chance of default, they would probably be rated in the C's.

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I'm not making this stuff up. I gave you sources and pretty specific reasons. A chronic imbalance of trade cannot exist forever on the scale that it does today between nations. If you want to argue that then I'd suggest getting a job at the IMF.

The US runs about a 90% chance of having a technical default (that is not being able to make interest payments) and a 75% chance of actually going insovlent. These are all figures published by Robert Rubin, Kent Smetters and other far more notable economists than myself.

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Do you know there is a huge trade deficit between New Jersey and Texas? (I actually forget which way though! Doesn't really matter.) The consumers in New Jersey are importing an enormous amount of goods from Texas. It really can't continue!

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I hope this statement was a joke. If it wasn't that's too bad, if it was you shouldn't patronize people that are right.

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If the goods are cheaper to make and import from China, that's best for the world economy. It's best for us because we get lower prices. Capitalism works.

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You're right and oh so incomplete. It's almost as if you didn't read my post at all. THE CURENCIES NEED TO REVALUE. If the Yuan were permitted to float against the dollar it (the USD) would depreciate roughly 40%. That is unheard of. If this sort of thing happened in the financial markets instead of the currency markets, instead of being talked down it would probably be considered economic armageddon.

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The US economy is really, really strong and resilient. It is possible it won't be the strongest economy in the world in 50 years, but bankruptcy is not probable.

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Who are you and why should I believe this? Seriously, this is just an ignorant statement. The US saves at the lowest rate of any industrialized nation and currently at the lowest rate in history (~1%); meanwhile we are spending at increasing rates. This means we are spending out of our assets, and even worse, out of debt. Combine this with the fact that those joining the work force today will pay roughly twice the tax rate their parents did and it becomes a very ugly picture.


I don't have time to get into this further, but I'll end with a quote from Dr. Nile Ferguson (formerly a professor at Stern and now at Harvard) regarding the numbers I've talked about, "There is, however, one serious problem with these figures; not with the calculations that underly them, but with their acceptance [His italics]. To put it bluntly, the news is so bad scarcely anyone believes it." You're reaction is not uncommon, but that makes it no less wrong.


Edit to add one more quote from Paul Volcker, the man who was replaced by Alan Greenspan, "There is a 75% chance of a dollar crisis some time in the next five years." Again, Mr. Volcker should be at least somewhat more of a distinguished economist than me. That quote was not taken out of context at all. This problem is very real, even if the White House and the WSJ refuse to talk about it. Pick up a Financial Times or Economist and you will see for yourself.