Tuesday, May 27, 2008

One notices...

...the men in Newport Beach proclaiming the end of the world. Or at least the end of America. I, for one, am not going to convert to the prophet of doom's religion as this kind of talk is as old as snake oil.

For their sake, I hope it does not end soon...who will they sell their short-duration securities to and actually book that nice profit they have been recording?

So let's discuss "creating demand by fear".

A comically simple rule: One needs a supply of buyers who want what you have. What if you are a very, very, very large bond manager? Would you too exclaim "Ragnarok is upon us...Sleipnir! to me! the end of time draws nigh!!! (Very well...no-one would say such a thing at the end of the world. I was merely trying to think of something that befits the absurdity of the scenario), magnanimously warn the general populace of this "fact" and advise same to purchase BONDS because BONDS performed well during past invasions from the 7th plane of hell.

And, as fate would have it, the very, very, very large bond manager just happens to have some of those bonds to sell you. Ah, the quintessence of serendipity! Manna from heaven indeed.

Of course, this same wonderful bond house has never done anything like this in the past...nor have they been spectacularly wrong in their views of the world...


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