US Government Bonds Downgraded from AAA to AA by German Rating Agency

Jun 15, 2011 | Bonds, Europe, Market Commentary

One of the big drags on the economy in the coming years will be our fiscal deficits and budget problems.

I’ll be writing this summer about the US ability (and struggles) to sell bonds and finance the debt, particularly as QE2 ends and the Chinese bubble bursts (at some point in the future).

This article talks in depth about an issue we may see more of in the future–US debt being downgraded. This is from a German, not US, rating agency, but it could be just the beginning.

 

LINK TO FULL ARTICLE

Who Will Buy the Bonds?

Mar 9, 2011 | Bonds, Market Commentary, Monetary Theory

Yo u’ll see me in the coming months talk about the bond markets, particularly as the Quantitative Easing (QE2) comes to a close this summer.

We have a huge federal deficit. We need people to buy Federal bonds to lend money to the government.

With the huge influx of money from the Fed in the past few months, foreign investors were squeezed out. Will they come back? The answer is not as simple as you’d think.

I’ll be writing more and more about this as the year goes by, particularly it’s impact on you.

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S&P Downgrades Japan from AA to AA-

Feb 9, 2011 | Asia, Bonds, Market Commentary

J apan has been in a continued recession for the past 20 years.

The deficit levels of the Japan government are among the highest of the developed countries, and expected to increase in the coming years.

This is not good news for Japan. As the rating decreases, the extra premium paid to borrow money goes up. So, a 3% cost of borrow might increase to 4%.

Anyway, this is something to watch as the United States deficit to GDP is increasing rapidly.

CLICK FOR FULL ARTICLE – S&P DOWNGRADES JAPAN FROM AA TO AA-

Just When You Thought the Euro Was Out

Feb 9, 2011 | Bonds, Europe, Market Commentary

Yo u’ve been reading my newsletters and saying “boy, that Mike Brady knows everything”. That may be true, but it’s good to remember the markets have a mind of their own.

The Euro has rallied against other currencies recently.

Do I think this is a short term rally? Yes. Do I think the Euro and Europe in general still have long term problems? Yes.

CLICK FOR FULL ARTICLE – JUST WHEN YOU THOUGHT THE EURO WAS OUT

Lessons from The Big Short

Jan 19, 2011 | Behavioral Finance, Reading Recommendation, Real Estate, Videos

Every wondered what the 2008 Financial Crisis was all about? The Big Short by Michael Lewis is a good, gripping book that explains much of it. I highly recommend it.

But what are some of the lessons we can take from this crisis as outlined in the book?

That’s what this week’s video is about.

Take 4 minutes to watch/listen to it.