Spock

While I thank the many responders to my post regarding possibly piling into Uncle Thug's 10-Note today (and helping me come to my senses and NOT buy into today's auction), I am once again up on the financial ledge, forty stories up, and ready to dive headfirst onto the concrete called a 30-Year Treasury bond at tomorrow's auction.

Seeing visions of sugarplums in my delusional little Spockputin mind, I am reaching for that juicy yield of nearly 3.3%.

However, I fear that once again I am not being rational, as Treasury rates could sky any minute now, right?

I mean, this thirty-one year Uncle Thug IOU bond market mania simply can't go on any longer, can it?

Surely our debt enablers--and even the Federal Reserve itself--won't continue to snap up Uncle's debt at these ultra-low interest rates for much longer, right?

Right?

Please, somebody--anybody--help a brother Spockputin out and talk me out of taking the leap. I just have to make it through tomorrow without punching that F12 "Buy Now!" key on the ol' Treasury Direct account, then I'll be safe for another month.

So, whadd'ya say?

Should I jump, and perhaps land safely on the soft pillow of deflation below?

Or crawl back inside the building, and live to invest another day, but possibly miss an opportunity to both front-run the Fed and clip some decent interest coupons for possibly the rest of my life?

Any advice would again be appreciated.

Well, according to this link:

http://finance.yahoo...om/q?s=bac&ql=1

...Bank of America is solidly back in the six-dollar range, and headed lower.

Poor "Uncle Warrant" must be kicking himself for piling into this pig.

Anyway, are we coming closer to the day that Uncle Thug finally pulls the plug on BAC and nationalizes it outright, adding the newly-created "Bonnie Mae" to the list of walking-zombie GSEs?

Or, will Uncle force yet another shotgun marriage with this disease-ridden bride on JPM?

Heh, it's only Monday. Anything could happen this week.

Okay gang, Ol' Spockputin is once again seriously considering buying a 10-year Uncle Thug Note at this Tuesday's auction.

If current yields continue for the next forty-eight hours, I'll be agreeing to a sub-two-percent yield for the next decade.

Of course, if the ChocoZone implodes--which seems likely--then two-percent APR per year might seem like manna from heaven itself.

Then again, if Uncle Thug's debt enablers ever wake up (and the Fed is finally reined in), the value of the 10-year Note might be destroyed in very short order--for a very long time to come--as interest rates rise.

So, a confused Spockputin solicits the advise of this esteemed board:

Should he sign off on a 10-year commitment to fund Uncle's profligacy?

Or continue to hold out, waiting for interest rates on U.S. Treasuries to FINALLY break their thirty-year, relentless, march to zero.

(Side note: I had a similar notion to buy a 10-year Note in late July, but backed off. At that time Uncle Thug was paying a whopping--in retrospect--THREE-PERCENT interest. Not to mention that in the subsequent six or so weeks, the value of the bond has INCREASED.)

Any input would be appreciated.

Mike Shedlock, in a massive missive, found here:

http://globaleconomi...o-midst-of.html

...presents a pretty compelling case for why deflation continues to scroom us all--notwithstanding the shrieking by hysterical "Hyper Super Duper Inflationists" that, any minute now, they swear, we are going to suffer a "Wiemar Meets Zimbabwe" fate.

Furthermore, Mish quotes extensively from the latest "Contrary Investor" monthly, found here:

http://www.contraryinvestor.com/mo.htm

...whereby the low-key "Contrary Investor" dudes show some pretty frightening graphs that depict the continuing fall--none dare call it a "collapse"--in overall credit, a particularly scary graph from the article being the one below, showing the fall in overal credit-to-GDP.

(Spock Conclusion): Mish's missive makes a pretty compelling case for why it is deflation--not inflation--that is what is consuming us all. For my part, all I know is that McMansion and McStock prices are lower than they were three years ago (to the day), when the "Fannie/Freddie Big Bang", as part of the larger "Great Disintegration" took place, and that the banks are sitting on a bunch of reserves that they aren't lending out to the proles.

Wow, looking at the chart of new McDebt for McShantys below, one has to ponder how much more horrid it would look, had not Uncle Thug and the Fed poured TRILLIONS of dollars into the GSEs, the banks, and into McHousing programs.

Notwithstanding, it looks plenty bad even WITH all the desperate measures taken by the Thugs and Pigmen in charge.

And let us not forget that the McReal Estate sector was (emphasis on "was") one of the leading "growth drivers" of our consumer economy, as the ever-rising price of McHomes led the deadbeat, dirtball McDebtors to continue to bury themselves in debt to buy more gimcracks, more McAutos and take more vacations.

So, from where is the next "growth driver" gonna come?