00:00Two days ago, Ken, we witnessed a disorderly, seemingly uncontrollable sell-off in the Japanese
00:06bond market. And there are many people here who may not be paying close attention to the
00:10Japanese bond market. Pay attention, right? It has been described as eerily similar to the UK's
00:192022 guilt crisis. Is there an implicit warning, Ken, in that sell-off for the US Treasury bond
00:26market? Actually, there's an explicit warning that if your fiscal house is not in order,
00:33the bond vigilantes can come out and extract their price. And what's particularly troubling
00:39is that if you look at what happened in Japan, when bonds and stocks move together in prices,
00:48then bonds are no longer a hedge for your equity portfolio. And they lose a substantial part of
00:55what makes them so special in constructing a portfolio. If US Treasuries are viewed as being
01:02at risk because the United States is not seen as being creditworthy, then bonds and stocks will move
01:09together in price. And that will result in bonds having a much higher demanded yield in the marketplace.
01:16So mortgage interest rates will be higher. The cost for us to finance our deficits will be higher.
01:25I think that what happened in Japan is a very important message to the House and to the Senate.
01:31You need to get our fiscal house in order. Liz Truss was playing with fire. The Japanese just learned
01:40they're playing with fire. Is the United States as President Trump playing with fire? Probably not yet. The U.S.
01:47has so much wealth we can maintain this level of deficit spending for some period of time. But the longer we
01:55wait to change direction, the more draconian the consequences will be of that change.
02:01The United States is a great way to change direction, the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian the more draconian
Comments