The Market Ticker
Commentary on The Capital Markets- Category [Bonds]

Amusing.....

There is now a very nice lady on CNBS saying that you should "look carefully" at what's in your bond funds, in reference to Puerto Rico and their debt troubles.

Ok, so how about the people who are allegedly professionals and decided what to buy?  Why is it that those people who hold themselves out as professionals and get paid a fee for their services are not held to a higher standard than someone in the general public?  After all, that's what the fee is for, right?

Anyone who bothered to simply sit down with a copy of Excel and graphed out the debt and GDP situations for any of these locations (e.g. Detroit, Puerto Rico, Greece, The United States Treasury) would have discerned many years ago that the path these entities were on was utterly impossible to sustain.  And oh by the way, of those that haven't defaulted yet they are still on said unsustainable path.

That is, it was extremely likely that purchasing these "bonds" were in fact doing nothing more than handing someone cash to burn up as they wish as on their current fiscal path there was utterly no way that the principal and interest could be paid in full.

So as a consequence of this convenient blindness those bonds were issued and bought without the demand for any sort of covenant restraining behavior on the part of these government entities -- like, for instance, a cessation of further deficit spending!

These fund managers thus handed over investor money to these entities without extracting in exchange legally enforceable promises to alter behavior so that the bonds would actually be payable.

In other words they didn't do their job.

A job that they hold themselves out as experts in.

But the fault is yours, as a non-expert, you see, and so should the loss be, instead of falling back on the people who held themselves out as experts and were actually paid by you to analyze and discern such things.

Uh huh....

View this entry with comments (registration required to post)
 

Main Navigation
MUST-READ Selection:
If You're Older Than 40 And Reading This...

Full-Text Search & Archives
Archive Access
Legal Disclaimer

The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.

NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.

The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.

Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.

The Market Ticker content may be reproduced or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media or for commercial use.

Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.