Sharing Knowledge in Smallcaps

[12yearplan]

“I find it funny that the most vocal critics about the spiraling upward out-of-control government debt are often those investors’ most likely advocating positions in long-dated sovereign bonds as a place to hide. The surprise of this cycle will be that risk-free sovereign bonds provide no safety against the next crisis, but will instead themselves be the source of the instability. Think about hedging against the unthinkable happening.” – Kevin Muir

We concur with Kevin. No one has a crystal ball with the mystical ability to know when the imbalance of debt will overwhelm the nation’s ability to pay for it. We would argue that the United States is well beyond that point of no return and the missing piece of the puzzle is the point at which investors realize that fact. One glance at recent patterns of buyers of UST argues that some of our largest foreign sponsors may be asking these very same questions. That said, all investors should recognize that U.S. Treasury debt does indeed have credit risk and that risk is growing.
http://www.mauldineconomics.com/outsidethebox/archive