Government Bond Bubble

| 22 December 2008 10:14

I have been arguing for some time that the credit bubble has been replaced by a government bond bubble because much of the liquidity pumped out by the world’s central banks is not going to increased lending.  As this money must be invested somewhere, it has gone to the most favoured asset class: government bonds.

See video below for a CNBC video in which Marc Ostwald of Monument Securities suggests much the same. Ostwald also goes on to give a fairly bearish view of corporate bonds because of rollover risk:


avatar About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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