More Reasons

Another reason I think the unwind has a way to go is from a comment made by Lee Adler on Radio Free Wall Street. He said something that I think is very important, prescient, and correct. He said that all the Fed's recent actions, especially the CPFF and the Paulson plan are aimed, not at shoring up assets, but the securitizations of those assets. In other words, they are trying to stop the current deleveraging process.

Now, given this new way of looking at things, I have to sell my Teasury bonds. Although they are holding their own, we now have Russia, Korea, Brazil, Mexico, and more selling Treasury bonds to shore up their currencies.

For the past 10 years, emerging markets have printed worthless paper and used it to buy paper from the US. Now they are all trying to sell Treasuries and buy real dollars at the same time. They will then use those real dollars to buy back what they printed over the past few years.