DRIx

Why the Market Is Going Up: A Ludicrous Theory

ever heard of occam's razor?

Municipal Bonds: Safe Haven No More

You show little to no understanding of state and local government credits. Deficits alone are extremely misleading. Credits which have the ability and the clear legal obligation to unilaterally raise revenue to pay debt service, particularly credits where debt service is 10% or less of total outlays are as creditworthy as US Treasuries as a practical matter. Your conclusions are not well founded.

Hydro Power: The Underloved Energy Source

Most of the conventional wisdom regarding hydropower and its prospects is completely wrong, which is why it is likely the best investment opportunity in renewable energy.

Bond Expert: Wednesday Wrap

Calif has issued scrip before (relatively recently, I think), so muni traders are less phased by this.

Richelson: 100% Bond Allocation Is Appropriate

Inflation?

Why Investors Should Avoid TIP

Another major disadvantage of TIPS that seems to be largely ignored is that an individual taxpayer has to pay income taxes on the accretion caused by inflation. The greater inflation, the greater the tax liability on phantom income. TIPS are a disaster for individuals unless they are in a Roth IRA.

Review of "100 Years of Corporate Bond Returns Revisited"

Perhaps the most important asset class missing here is municipal bonds in the US. Yields currently comparable to corporates (even though the coupon is tax exempt). Default probabilities and expected losses only slightly higher than US Treasuries. Possibly the most undervalued asset in the current environment.

Excessive Systemic Debt: The Primary Cause of Our Current Crisis

This graph has gotten a lot of play lately, but I have never been able to determine if the numbers adequately account for the effect of debt backed by other debt instruments. For example, If you look at Fed Reserve stats on this they include the GSE's debt and GSE pools AND home mortgages, so it looks like we have a huge increase in debt, but at least some of that is more securitization of debt that was previously held in institutional portfolios. It is certainly the case that the financial sector (eg, the GSEs) became highly leveraged with inadequate equity cushions, but once that equity is wiped out and liquidations occur, it is not obvious that the underlying assets are as seriously overleveraged as this graph implies. Look at the amount of home mortgage debt relative to the underlying real estate value. It is up but not to levels all the hysteria would have you believe. Once the securitizations collapse, the underlying assets still only have the loans underlying the securitizations encumbering them. May be time to take a deep breath.