THE LEVERAGING OF JUNK BONDS! YEAH!
We have been telling you for a while now that the big bubble is in the bond market…specifically junk bonds. In fact, we are finding bonds that would have yielded 10% just a few short years ago…now yielding 5 %. We just found a bond that we bought yielding 5% a few short years ago, now yielding just over 1% on an equivalent basis. Now we get the leverage back into the system by people using other people’s money. Does anyone remember the leverage in the CDOs, CMOs, M-O-U-S-E? So we repeat…when things come undone, and they will because that is what the Fed is experts at…booms and busts, look to the junk bond market first. Read on!