The assault on income by the WSJ, and it's shills has reached the
outer-limit.
THE NOTION THAT A DEBT RIDDEN ECONOMY LIKE THE US CAN, SOME HOW,
SURVIVE A BOND CRASH IS TOTALLY ABSURD.
THE TWIN DEFICITS SIMPLY MUST BE FINANCED;
AND CITIES AND STATES ARE NEAR BANKRUPT AND NEED TO "FLOAT LOANS" AS
CHEAPLY AS POSSIBLE! Just ask Gov. Arnie!
AND. YOU CAN'T DO ANY OF THAT WITH A BOND CRASH!
NO MATTER HOW MUCH YOU SPIN THE DOLLAR STORY!
Indeed, yesterday many income investments bounced back.
REITS were up big. And, gold and metals were rebounding.
Today's WSJ had an article that was apparently intended to cause a
panic in closed-end funds.
The Journal notes that many of these funds use "leverage."
This is true, but at 1% why not use leverage?
Additionally, many closed-end income funds are now in ECONOMICALLY
SENSITIVE AREAS; like Real Estate, Preferreds, Corporates, Junk,
International, etc.
NOT ALL ARE IN US BONDS, OR MUNIS--AS IN THE PAST.
Finally, the notion of closed-ends becoming a "ghost town" is just
dishonest;
Because closed-end funds trade as stocks, unlike open-end mutuals
which have to disgorge assets to pay their redemptions.
THERE ARE NO REDEMPTIONS POSSIBLE IN THE CLOSED-END FUNDS!
SO, IT'S IMPOSSIBLE FOR THEM TO GO TO ZERO;
UNLESS ALL OF THEIR ASSETS ARE LOST IN THE MARKET.
To wit: Every bond, every muni, and every parcel of real estate
would have to become totally worthless! Not likely, under a Fed Hell
bent on HYPER-LIQUIDITY!
AND, ESPECIALLY NOT LIKELY CONSIDERING THAT GREENSPAN CONTINUES TO
PRINT MONEY LIKE THERE IS NO TOMORROW.
THE WORST CASE SCENARIO FOR CLOSED ENDS IS THAT THEY BECOME SO
DISCOUNTED TO THEIR NAV, THAT BUYING IT'S STOCK IS LIKE BUYING A HARD
ASSET FOR 50 CENTS ON THE DOLLAR!
OR, FROM THE POINT OF VIEW OF THE INCOME INVESTOR;
IT'S LIKE INVESTING $10,000, AND GETTING THE "INTEREST," OR THE
RETURN;
"AS IF" THE INVESTMENT WERE, SAY, $15,000!
A rebound in the closed-end funds is near inevitable.
