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Old 03-07-2013, 03:29 PM   #3941
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Judging by present rates, the purchasers of Treasury Bonds.
Can you expound on that?

In my industry, I might consider spreads or yields to indicate questions of creditworthiness. For example, CCC "junk" rated corporate debt, priced at very low spreads, is trading about 9%.

10-year US Treasury bonds are yielding less than 2% (within spitting distance of 50-year lows).

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By finding itself in a position in which it is unable to raise sufficient funds from a combination of revenue activity (tax collection) and debt (the issuing of bonds) to pay for 100% of Federal spending.
The only way the US Treasury cannot raise US dollars is in the event of a currency rejection. Every involuntary case of which in the history of monetary systems like the US has been after a major exogoneous shock which caused a major loss of productive capacity: loss of war on domestic soil, major governmental regime change (not going from a Neo-Con to a Liberal POTUS but from representative democracy to dictatorship), etc.


Currency rejection is possible, but so improbable given current and plausible outlooks, that it's hardly worth spending much time on (even though I have spent plenty of time on it here in the past ).
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Old 03-07-2013, 03:47 PM   #3942
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10-year US Treasury bonds are yielding less than 2% (within spitting distance of 50-year lows).
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Old 03-07-2013, 04:22 PM   #3943
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We were AAA, and now we're AA+. Can't that happen again?
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Old 03-07-2013, 04:23 PM   #3944
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Americans for Tax Reform : Tax Bite Leaves Flacco Second Best Paid in NFL
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Old 03-07-2013, 04:34 PM   #3945
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We were AAA, and now we're AA+. Can't that happen again?
What a rating agency rates treasury bonds for does not really matter. All that matters is how the market reacts to a downgrade. When we were downgraded last time it had basically no effect on the market.
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Old 03-07-2013, 05:07 PM   #3946
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We were AAA, and now we're AA+. Can't that happen again?
One rating agency downgraded the Treasury bonds a notch, based primarily on their perception of US political dysfunction. That can happen again, but see the second question in that post...

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Originally Posted by Scrappy Jack View Post
Who is calling in to question the credit worthiness of the US Treasury? Are they worth paying any attention to?


After all, those ratings agencies were the same one rubber stamping "AAA" on baskets of mortgage securities they either (A) didn't bother to try and understand or (B) understood and thought were high-risk. They have virtually no credibility in my mind.

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What a rating agency rates treasury bonds for does not really matter. All that matters is how the market reacts to a downgrade. When we were downgraded last time it had basically no effect on the market.
That's close enough for government work. (Technically, yields on the US 10-year went down and prices went up after the downgrade, but that was as much to do with Europe as it was to do with S&P).
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Old 03-07-2013, 09:13 PM   #3947
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Huge-*** image that will get mega-reduced:


Sub-titled: Don't worry, markets are efficient.
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Old 03-07-2013, 09:22 PM   #3948
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We used to see Bernie Ebbers around town. Not so much anymore.
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Old 03-08-2013, 10:12 AM   #3949
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This is what Joe wrote:

This is what Scrappy sees:
Speaking of throwing down the gauntlet on the US bankruptcy idea...

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Originally Posted by Warren Mosler
Senate Candidate Bets Congress $100 Million That the U.S. Government Cannot Run out of Money

Warren Mosler Offers $100 Million of His Own Money to Pay Down the Federal Deficit If Any Lawmaker Can Prove Him Wrong
From 2010-10-22. No one has taken him up on the offer.
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Old 03-08-2013, 10:40 AM   #3950
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im going to have mcdonalds for dinner tonight using a 2 for 1 coupon.

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Old 03-08-2013, 01:16 PM   #3951
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Your car is dirty. Vacuum it.
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Old 03-08-2013, 01:17 PM   #3952
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garage is currently below 40F; ill wait.
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Old 03-08-2013, 01:36 PM   #3953
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garage is currently below 40F; ill wait.
Bah. 40F around here is balmy spring weather. I'll be doing an oil/fuel filter change outside this weekend.
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Old 03-08-2013, 02:05 PM   #3954
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its supposed to be in 60s this weekend. ill wash all salt off then and vacuum, just for you.
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Old 03-08-2013, 08:27 PM   #3955
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Ell oh ell at your weird frozen rain.

Braineack, rejoice in the glory:
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Old 03-09-2013, 08:47 AM   #3956
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he needs a permit for that raptor.
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Old 03-09-2013, 11:58 AM   #3957
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its supposed to be in 60s this weekend. ill wash all salt off then and vacuum, just for you.
Got the oil changed, did you vacuum?

It's nearly 50 degrees here, a veritable heatwave. I love global warming.
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Old 03-09-2013, 12:11 PM   #3958
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ive bene lazy this morning. i plan to wash and vacuum both my cars today.
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Old 03-09-2013, 02:37 PM   #3959
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Quote:
Originally Posted by Scrappy Jack View Post
One rating agency downgraded the Treasury bonds a notch, based primarily on their perception of US political dysfunction. That can happen again, but see the second question in that post...



After all, those ratings agencies were the same one rubber stamping "AAA" on baskets of mortgage securities they either (A) didn't bother to try and understand or (B) understood and thought were high-risk. They have virtually no credibility in my mind.

That's close enough for government work. (Technically, yields on the US 10-year went down and prices went up after the downgrade, but that was as much to do with Europe as it was to do with S&P).
Well, I guess we're all in the clear now, because it just doesn't matter, and perceptions are apparently more important than fundamentals.

...sorry, just trying to get used to the upside-down rules in this new world.
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Old 03-09-2013, 02:46 PM   #3960
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Well, I guess we're all in the clear now, because it just doesn't matter, and perceptions are apparently more important than fundamentals.

...sorry, just trying to get used to the upside-down rules in this new world.
Perceptions have always been the only thing that mattered. Under normal circumstances the "fundamentals" guide perception. The difference in this situation is that the "fundamentals" do not apply to the U.S. govt. This is why the market did not react poorly to a downgrade. The U.S. will not run out of money to pay its debts and the country was no where near a complete political meltdown like a coup or something.
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