Jas Jain Still Long US Treasuries - Expecting "Deflationary Depression"

US Federal tax rates for 2011

-------- Original Message --------

Subject:	Re: "Cut, Cap, and Balance" -- The Welfare State's Day Of Reckoning Is Here
Date:	Sun, 4 Dec 2011 14:13:53 -0800
From:	Jas Jain

Date: Sun, 4 Dec 2011 19:53:12 +0000
Subject: Re: "Cut, Cap, and Balance" -- The Welfare State's Day Of Reckoning Is Here
To: jas_jain

"Jas, Are you still long treasuries?   (US Treasury Rate Quotes)

Yes.

"Politically, how do you expect this disagreement to resolve, how will it work out for treasuries?"

Some form of mechanical forced reduction in deficit would be implemented once the downgrades take place before the end of 2013. This would lead to deflationary depression and option for any further stimulus would not be available. US Treasuries would win and neo-Keynesians would lose!

"Italian and Greek bonds are not doing too well as far as I know."

There you have a real risk of default. The real risk of default by the US would lead to instantaneous meltdown of the global trade and the global economy.

Jas

------------------------
--- On Sun, 4/12/11, Jas Jain <jas_jain> wrote:

 

Forget about balancing the budget; all paths to reduce the annual federal deficits below $1Tr. would have to go thru recession followed by depression. The only thing that is keeping the US economy growing at the anemic rate of 2% is deficit sending of 9-10% of the GDP, or $1.35-1.50Tr., annually. The situation for the US is lot worse than Italy. By 2013 all three credit rating agencies would downgrade the US sovereign debt because there would be no agreement to reduce the deficit below $1Tr. annual rate and all the promises of reducing deficits in the future would be proven to have been lies.

The partisan blame game is utterly dishonest. The fact is that the democratic politics breeds dishonesty.

Jas

at a glance:

• Major World Market Graphs
• US Treasury Rates at a Glance