“Government bonds are now an extremely poor investment.”

-       Société Générale Global Strategy Outlook, 1 December 2009.

As Detective ‘Dirty’ Harry Callahan once said, a good man always knows his limitations. The employees of investment banks are not always the first to concede to any kind of limits with regard to human intelligence, insight or fortune-telling. Bloomberg reported on Friday the opinion of [name withheld to avoid embarrassment], an interest rate strategist at [name of bank withheld to avoid embarrassment]. [Name withheld to avoid embarrassment] has just joined [name of bank withheld to avoid embarrassment] having previously worked at another bankrupt investment bank, namely [name of Wall Street bank withheld to avoid embarrassment]. His opinion is that US Treasury bonds are outrageously cheap and that next year will be the year of the bond. He may be right.

On the other hand, he may be catastrophically wrong. His employer, for example, which is effectively in government ownership having wrecked its own balance sheet and impoverished most of its shareholders, is also the UK bank with the single biggest exposure to the troubled holding company Dubai World. (As Shakespeare once said, when sorrows come, they come not single spies, but in battalions.) Never mind. His previous employer, a US investment bank that wrecked its own balance sheet and impoverished most of its shareholders, is now a unit of a commercial bank that itself required emergency government support. Never mind. You can’t necessarily be right all of the time. Or indeed any of the time.

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