The point where everything goes to hell in a hand basket looks like it will be when we have a bond market dislocation. Hopefully this can still be prevented, but it looks less likely with each passing month. I know predicting exactly when this could occur is next to impossible, but what are everyone’s instincts telling them? Will (can) we still stop this? If not, how long do you think we hold out?

Edit: It should say July-December, and the last option should read 2010. Sorry, don't know how I messed it up that badly.

Missing an option...

[ ] Day after my TLT puts expire

Post in Gen's latest ticker thread says it's already happening in Australia... (dunno enuf about it to offer an opinion)

Before end of 2008 is my 1st choice and 2nd choice is Jan - Feb.

i am just guessing, i am thinking it is gonna happen by the end of 2009, mainly because of the supposed coming flood in T bill supply to fund the deficits.
if i had to guess even more specifically, i'd just take the middle of 2009, so june or so.
what will be interesting to see is if federal revenues start falling off and the debt ramping up.
that would be freaking ugly.

everything is happening so much faster than i would have dreamed a year ago...

With China and Japan's exports down so much they won't be able to buy enough T-bills to fund our deficits. So we will print money OR confiscate 401ks. That might postpone the dislocation until the end of 09 or beginning of 10. But things are happening so fast that it is also possible that it could happen this week.

Since the price of Treasuries is completely fictional due to the Federal Reserve's backstop, I'd suggest looking at private issue bonds to determine the answer to this question.

Im calling it right now.....the Bond market dislocates, day after tomorrow

It aint going to dislocate, not until there is someplace ELSE for that capital to safely go.....and there isnt, at least right now

As soon as Pimco stops backstopping China's retreat. OR, as soon as I can prove it:)

Ok, showing my ignorance, but what is a bond market dislocation? What will actually happen?

As I understand it, one day the bond market will decide they're not going to continue to loan us money at such a low interest rate. They'll demand more yield to compensate for the higher risk. This will cause the price of existing bonds to fall. People will "rush for the exits", dumping their bonds as the price falls. It's being referred to as a dislocation because it'll happen suddenly, not over weeks or months.

this is a small one;

http://www.tickerforum.org/cgi-ticker/ak....

presumably the federal budget now is in a more precarious situation than in 1931. . .