An Echo of Germany 1923
January 15, 2010 • 11:05AM

by Lyndon H. LaRouche, Jr.

December 31, 2009

"Junk Bonds Defy Krugman's Bubble Warning as Loomis Sees Gains

"By Pierre Paulden and Caroline Salas

"Jan. 14 (Bloomberg) — The world's biggest bond investors are brushing off concern that the high-yield market is a bubble poised to burst after the Federal Reserve's zero interest-rate policy spurred returns of 57.5 percent last year.

"While Nobel Prize-winning economist Paul Krugman and Morgan Stanley's Stephen Roach see as much as a 40 percent chance for another recession, Loomis Sayles &Co. says debt of the neediest corporate borrowers may be the best bonds to own for 2010."

The relevant question is, whether Loomis Sayles &Co. are wittingly luring the suckers who believe that report to their doom, presumably to the firms' intention to profit from their clients' wishful credulities, or if Loomis itself is the sort of "true believer" who was found standing on the top of a rain-soaked hill, on the night when the predicted resurrection did not come.

Apparently, one must conclude that Krugman and Roach are less dumb than the credulous clients of Loomis & Sayles, but appear, nonetheless, to be already "as dumb as rocks" on their own account.

My recommendation to witting and wise is, why do we not simply push through an early and often enforcement of a Glass-Steagall reform, send Wall Street to the burying ground, and launch a global fixed-exchange-rate credit system, starting with the U.S.A., Russia, China, and India, as leading sponsors of such a global reform.