China does it, we all know. America even did it for Q1 GDP growth. Recently, a fact disturbed me: all European central banks don’t disclose their bond holdings. Contacting some central banks in Europe was discouraging: they don’t disclose the quantity or type of bonds they hold. What does this mean? Well, back to my inside trader theory, Europeans know their central banks are full of garbage, and they’re dumping them like crazy. Remember how everyone denied having large sub-prime mortgage debts until they desperately needed someone to save them? Well, if European countries have trash bonds, and keep it quiet until they are about to drown, this will bring a very bad chain reaction.
One of Goldman’s models predicted a 33% chance double dip. Buying stocks right now would be the equivalent of playing Russian roulette with a hand gun containing 2 bullets. 2/6 chance. Not bad if you like high risk high return.