Monday, October 3, 2011

Guessing Game

Don’t give up! In our life there are two ways always:  goes up or goes down eventually!  Sometimes it can take years sometimes within second. Try to make this world equalizes that is impossible in nature, The catch of  the yield guessing game ,as from Krugman:

But here’s the thing: the Fed can’t cut rates from here, because they’re already zero. It can, however, raise rates. So the long-term rate has to be above the short-term rate, because under current conditions it’s like an option price: short rates might move up, but they can’t go down.
Indeed, if we look at Japan we find that the yield curve was positively sloped all the way through the lost decade.
It is bottom now so the only way is up soon or late, everything takes time, but how long, that is question!