The UST missing an interest payment seems to be a ultra unlikely event. As I said in the past people seem to be unaware that the Fed would step in to prevent such outcome, invoking section 13(3). They would not even need collateral for the loan since it would essentially a purchase of a UST. This could be complicated by some law that prevents the Fed from directly lending to the UST(But I'm not confident of that) but they can bypass this issue by lending to an LLC(Maiden Laine No n) which in turn lends to the UST
Even if the UST misses an interest payment, and sovereign CDSs tick up, its not the end of the world. I'm more concerned about the interest payment/GDP ratio. What's the current figure, 10% of GDP? If that ratio gets unsustainable, the world will realize that 1 missed payment is not a 1 off issue, and then shit will hit the fan. Again, not the end of the global financial system, but beginning of the end for the US.
Its not quite clear to me why M2 is soaring lately. Bank credit declined in may and june, MZM is also soaring. Overall I'd say it makes QE3 less likely
M2 mystery explained Http://www.teletrader.com/_news/newsdetail.asp?id=13109629 It appears that those were money market funds flows into banks but as I said, MZM is soaring and thats supposed to include MMFs
U.S. equities are higher since he spoke. I think he made himself quite clear. There will be no QE3 until there is QE3. The Bernanke put is firmly in place. Let's hope it works better than the Greenspan put, which consigned a generation to crap returns from stocks.
With stocks, one thing I found helpful was to look back over the last 20, 30, even 50 years and see which were the best performing equities in any given year or decade, then try to work out what characteristics they shared. Generally I find that huge winners are either deep value situations bought dirt-cheap in times of crisis, companies which have some kind of innovative product or service plus dynamic management/CEO and which revolutionise their industry sector for years on end (e.g. MSFT & DELL in the 90s, AAPL in the 2000s), or the 'best of breed' companies in some kind of secular sector boom (e.g. commodities in the last 10 years, or tech in 1990s). Another approach I found useful was to study the big winners of renowned investors like Buffett and so on, and try to work out how they spotted them and held on - and also what mistakes they made, if any (e.g. Buffett holding Coke and Gilette in 1998 at 40-50 times earnings - terrible blunder). In any case, doing this kind of analysis teaches a lot about how stocks perform, how businesses operate, and so on.
The problem with it is that if the EU goes into recession due to a debt crisis contagion, Norway will get hammered. If you want a soundly financed economy & currency, with rates outlook in favour, then I'd go for the Singapore dollar instead.