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Thread: US Treasury Bonds

  1. #21
    [QUOTE=bitonti;3983287]

    like i said before if we want to say the trends are troubling ok but we aren't even close to broke. It's a shame that the right wing wants to pretend we are broke for political reasons but it's not the reality on the street.[/QUOTE]

    Here's the difference -- when some people see they don't have enough money to pay monthly bills, they say they're "broke" and adjust their budget accordingly. Others say "I'll just borrow off my credit cards" and continue living same as before. It's obvious which type of person you are.

    [QUOTE=bitonti;3983339]the US Spends 3.7T it takes in 2.2T, these are the grim numbers

    they might be able to get it down to 3.3T and that would be a tremendous achievement.

    they aren't getting 3.7T down to 2.2T. Never ever neever nurver. It won't happen.

    taxes will rise. I hate to let the secret out but they have to rise. It's not even up for debate. It will happen.

    and after they do we won't be "broke" anymore.[/QUOTE]

    Do you honestly think the gov't would raise taxes JUST to pay expenses? That if they see more money coming in, they won't find more "causes" to put the money towards? If so, please explain where my SS and penion $$ is, cause I'm pretty sure it's not sitting somewhere waiting for me when I need it . . .

  2. #22
    [QUOTE=bitonti;3983213]I'd like to address the idea that we are spending our way to the poor house... "We are Broke" as boehner says.

    Right now the US debt is trading at record low interest rates. That means the market believes it is a safe bet (Higher interest rates = higher risk of default). the USA also has a AAA bond rating and it's not even close to being changed. The bond market is always lively there is alot of demand for these things, especially as the stock and commodities market get volatile (which they have been almost non-stop for about 2 years).

    there are two facts that deficit-hawks tend to skirt right by 1) under Reagan the deficit more than doubled 2) investors know that tax burden on citizens are at a 60 year low.

    So the money is there. And Deficits do not equal death.

    Taxes just have to be raised... and that will happen, regardless if there's a GOP president or a LIbertarian or anyone else. Taxes will be raised after 2012, they have to be.[/QUOTE]

    You have an assumption that the US government is going to do something to reign in its deficit - neither party has shown any indication that it is realistic in tackling deficits for 30 years at least. Why are they going to start now?

    In actuality instead of reigning in spending, both sides of politics have worked overtime to increase it.

    I suspect what will happen is what is happening at the moment and has happened for the last 30 years - the US Fed will print more money and asset bubbles will ensue. At some stage the bubble will pop and then the whole process will repeat itself. Printing money/causing inflation is the easy way and the best way to stay in power - because the alternative would be electoral suicide (drastically cutting government spending/forced cutting of spending by the private sector - ie raising of interest rates - both these would probably lead to a deflationary scenario where no one is happy - the name Jimmy Carter might ring a bell). Printing money also has the effect of reducing the deficit in relative terms because of the ensuing devaluation of the US $.

    Of course, at some stage the US $ gets to a tipping point in terms of its value where either the debt will have to be paid back, or it will continue its slide towards the Zimbabwe peso or whatever its called. Obviously, this is some way down the track - but maybe not as far as some of you think .

    The US government is currently hamstrung in terms of what it can do in terms of economic policy - interest rates are near zero and we're about to come through the massive liquidity injection the Obama/Bush governments agreed on - an injection that added hugely to public debt levels. What happens when this prop to the US economy is removed?

    In other words, there is only so much money you can give away - you can't do it forever, and you can't put interest rates below zero. At some stage you have to either pay the piper or get him to keep on playing the tune - if the same tune continues, ie a policy of forced inflation, debt levels will continue to climb, and bubbles will continue to form. When the bubbles burst the effect on the economy will be worse for each succeeding one - namely the recessions will be deeper and longer - because of this it will take stronger inflationary measures (ie more and more money will have to be given away, and more money borrowed to do so) in order to kickstart the economy out of the recession. Thus, the next bubble will be bigger and the recession after that even worse than the one before.

    The Global Financial Crisis was the worst such phenomenon since the Great Depression. I have no crystal ball but suspect a future crisis will dwarf these by some margin - and it won't be too many years away.

    TBH, I'm not complaining that much - I've been a financial beneficiary of US policy. The massive resource bubble underway has benefited the Australian Stock Exchange more than any other in the world. We were the only economy in the world to survive the GFC because of it. The bubble in the finance sector wasn't bad either, but the bubble in resources out here has to be seen to be believed. There are resource stocks out here that have risen 1,000-5,000 X in price since 2003 - even since last year I've seen several stocks rise 10 X in the small cap sector with more rises to come. BHP Billiton, the world's largest miner was largely static in price for 20 years has now risen ~ 5 X in price since 2003 - with dividends added in the effective price rise is much higher. Of course, when the crunch comes and the dance finishes, it will be us who suffer the most, as our country is relying more and more on the resources boom.

    You can't contain these sorts of asset rises just to resources. Inflation doesn't work like that. You will see inflation in your local convenience store on a massive scale. That is just the result of printing more and more money. It may not come next year, but mark my words it is coming.
    Last edited by Soberphobia; 03-19-2011 at 10:47 AM.

  3. #23
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    [QUOTE=Black Death;3983669]You have an assumption that the US government is going to do something to reign in its deficit - neither party of either side has shown any indication that it is realistic in tackling deficits for 30 years at least. Why are they going to start now?

    In actuality instead of reigning in spending, both sides of government have worked overtime to increase it.

    I suspect what will happen is what is happening at the moment and has happened for the last 30 years - the US Fed will print more money and asset bubbles will ensue. At some stage the bubble will pop and then the whole process will repeat itself. Printing money/causing inflation is the easy way and the best way to stay in power - because the alternative would be electoral suicide (drastically cutting government spending/forced cutting of spending by the private sector - ie raising of interest rates - both these would probably lead to a deflationary scenario where no one is happy - the name Jimmy Carter might ring a bell). Printing money also has the effect of reducing the deficit in relative terms because of the ensuing devaluation of the US $.

    Of course, at some stage the US $ gets to a tipping point in terms of its value where either the debt will have to be paid back, or it will continue its slide towards the Zimbabwe peso or whatever its called. Obviously, this is some way down the track - but maybe not as far as some of you think .

    The US government is currently hamstrung in terms of what it can do in terms of economic policy - interest rates are near zero and we're about to come through the massive liquidity injection the Obama/Bush governments agreed on - an injection that added hugely to public debt levels. What happens when this prop to the US economy is removed?

    In other words, there is only so much money you can give away - you can't do it forever, and you can't put interest rates below zero. At some stage you have to either pay the piper or get him to keep on playing the tune - if the same tune continues, ie a policy of forced inflation, debt levels will continue to climb, and bubbles will continue to form. When the bubbles burst the effect on the economy will be worse for each succeeding one - namely the recessions will be deeper and longer - because of this it will take stronger inflationary measures (ie more and more money will have to be given away, and more money borrowed to do so) in order to kickstart the economy out of the recession. Thus, the next bubble will be bigger and the recession after that even worse than the one before.

    The Global Financial Crisis was the worst such phenomenon since the Great Depression. I have no crystal ball but suspect a future crisis will dwarf these by some margin - and it won't be too many years away.

    TBH, I'm not complaining that much - I've been a financial beneficiary of US policy. The massive resource bubble underway has benefited the Australian Stock Exchange more than any other in the world. We were the only economy in the world to survive the GFC because of it. The bubble in the finance sector wasn't bad either, but the bubble in resources out here has to be seen to be believed. There are resource stocks out here that have risen 1,000-5,000 X in price since 2003 - even since last year I've seen several stocks rise 10 X in the small cap sector with more rises to come. BHP Billiton, the world's largest miner was largely static in price for 20 years has now risen ~ 5 X in price since 2003 - with dividends added in the effective price rise is much higher. Of course, when the crunch comes and the dance finishes, it will be us who suffer the most, as our country is relying more and more on the resources boom.

    You can't contain these sorts of asset rises just to resources. Inflation doesn't work like that. You will see inflation in your local convenience store on a massive scale. That is just the result of printing more and more money. It may not come next year, but mark my words it is coming.[/QUOTE]

    BD....That is much too complex and rational a response for liberals on a football message board. They rarely look at facts, just emotion. They want what they want, they want someone else to pay for it and when we have inflation, they'll blame it on BUSH or whomever else is around. GOSH..it can't be OBAMA and Bernanke.

  4. #24
    [QUOTE=southparkcpa;3983684]BD....That is much too complex and rational a response for liberals on a football message board. They rarely look at facts, just emotion. They want what they want, they want someone else to pay for it and when we have inflation, they'll blame it on BUSH or whomever else is around. GOSH..it can't be OBAMA and Bernanke.[/QUOTE]

    Cheers, man - Obama's economic credentials are basically at zero for me. For a start he's surrounded himself with the same people that gave the Republicans the dud advice that led to the GFC - he's seen them get led up the garden path but has still chosen to lie in bed with these people when he knows the next crunch, when it comes, will be even worse than the one he saw at the start of his Presidency. It's almost criminal. Obama came in with this claim he was going to CHANGE everything and that there was HOPE but nothing's changed and there will be a dwindling amount of hope once the government liquidity empties out of the US economy.

    I'm lucky enough to be living in a place untouched by the GFC - but that doesn't mean we won't be greatly affected when the next bubble bursts.
    Last edited by Soberphobia; 03-19-2011 at 09:03 AM.

  5. #25
    [QUOTE=Black Death;3983669]
    TBH, I'm not complaining that much - I've been a financial beneficiary of US policy. The massive resource bubble underway has benefited the Australian Stock Exchange more than any other in the world. We were the only economy in the world to survive the GFC because of it. The bubble in the finance sector wasn't bad either, but the bubble in resources out here has to be seen to be believed. There are resource stocks out here that have risen 1,000-5,000 X in price since 2003 - even since last year I've seen several stocks rise 10 X in the small cap sector with more rises to come. BHP Billiton, the world's largest miner was largely static in price for 20 years has now risen ~ 5 X in price since 2003 - with dividends added in the effective price rise is much higher. Of course, when the crunch comes and the dance finishes, it will be us who suffer the most, as our country is relying more and more on the resources boom. [/QUOTE]

    That may also have to do with global macro strategy funds tapping into previously unrealized fundamental beta exposure within the undervalued small caps out there. If that's the case, you're going to see that market saturated and dried up relatively quickly...

    [QUOTE]You can't contain these sorts of asset rises just to resources. Inflation doesn't work like that. You will see inflation in your local convenience store on a massive scale. That is just the result of printing more and more money. It may not come next year, but mark my words it is coming.[/QUOTE]

    Dude, it's already here...we've seen inflation in the supermarkets for a couple years...but because we don't see it in the market and because the govt keeps feeding us undervalued CPI figures, ppl dont realize it here....it's going to take legitimate stagflation for people to realize the QE is not nor never was the cure...a short period of deflation is what this country needs...

  6. #26
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    [QUOTE=greenwichjetfan;3983745]That may also have to do with[B] global macro strategy funds tapping into previously unrealized fundamental beta exposure within the undervalued small caps out there.[/B] If that's the case, you're going to see that market saturated and dried up relatively quickly...



    Dude, it's already here...we've seen inflation in the supermarkets for a couple years...but because we don't see it in the market and because the govt keeps feeding us undervalued CPI figures, ppl dont realize it here....it's going to take legitimate stagflation for people to realize the QE is not nor never was the cure...a short period of deflation is what this country needs...[/QUOTE]

    LMFAO! [B]Beta exposure[/B]...talk about going over a simpleton liberals head!

    Probably respond by saying they use VHS!

    Good post BTW...on those type funds, I use 2 relatively new funds that do exactly that. One is a PIMCO fund and the other an Eaton Vance. Both will be unnamed but I have been using them with clients portfolios the last 2 years or so as a portion of the portfolio.

  7. #27
    [QUOTE=greenwichjetfan;3983745]That may also have to do with global macro strategy funds tapping into previously unrealized fundamental beta exposure within the undervalued small caps out there. If that's the case, you're going to see that market saturated and dried up relatively quickly...
    [/QUOTE]

    That's pretty much bang on the money - Paladin Resources for example rose from under 1 cent to over $10 in recent years but then started to fall away after the funds had got their fill. Been range bound in recent months though recently hit by the fallout (ahem) from the Japanese situation and last traded at $3.60.

    Lynas Corp, to give you one example from a few recently, is one that is currently following the same broad pattern; it has a large rare-earth deposit and they are a big deal now because China (the main producer) has cut its rare-earth exports. Rare-earths are needed at almost every level of the production of electronics. The funds are getting involved and big volumes of shares in the stock are swapping hands almost daily.

    Edit: doesn't change the central premise of my argument however, that resources are in a bubble right now.
    Last edited by Soberphobia; 03-19-2011 at 11:56 AM.

  8. #28
    [QUOTE=Black Death;3983766]Edit: doesn't change the central premise of my argument however, that resources are in a bubble right now.[/QUOTE]

    I never said it wasn't...I recently graduated from undergrad with a degree in international economics, so I'm going mostly off theories and principles of history (rather than experience), but I've come to believe that everything in finance and the greater economy operates in cycles...it's not merely economic fluctuations; it's a full on cycle. Right now it's the resource bubble, which once popped, will incur inflation and unemployment, which will eventually correct itself through the endogenous cycle (with the help of policy makers), only to create new bubbles...and it goes on and on.

    Gone are the times of making a small business out of a hardware store from your own scratch, operating it to profit, and selling it once you're old and retired and have money saved under your mattress...now everything is investable, the dollar has no meaning and is therefore played around with by policymakers, and everything has become conglomerate...all of this leads to cycles, or bubbles if you will...and it's all operated through factor and regression models which we are not pricey to because the HFs need to make their profits too...

    Btw, out of curiosity, what's your line of work? You can PM me if you don't wanna put it out here in the thread...

  9. #29
    if they raise taxes they will just spend more money.

  10. #30
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    yup- and there's no upside in gold either...lol

    [QUOTE][B]U.S. credit rating outlook lowered by S&P [/B]

    NEW YORK (CNNMoney) -- Standard & Poor's lowered its outlook for the nation's long-term debt Monday, even as it reaffirmed the agency's top-tier rating for the U.S. economy.

    S&P maintained its 'AAA/A-1+' credit rating on U.S. sovereign debt, saying the nation's "highly diversified" economy and "effective monetary policies" have helped support growth.

    But the ratings agency lowered its outlook for America's long-term credit rating to "negative" from "stable," based on the uncertain political debate around the nation's fiscal problems.

    The outlook means that there is a one-in-three likelihood that it could lower the long-term rating on the United States within two years, S&P said.

    "The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term fiscal challenges will persist until at least after national elections in 2012," said S&P credit analyst Nikola Swann.
    Deficit hawks: Not too bad, Mr. President

    The move puts additional pressure on Congress to come up with a plan to bring down long-term deficits, which lawmakers from both political parities say are unsustainable.

    President Obama unveiled a proposal last week to cut $4 trillion from the deficits over 12 years by enacting a mix of spending cuts and tax increases.

    Republicans have proposed a competing plan to lower the long-term debt by $4.4 trillion over ten years, in part by shrinking Medicaid and Medicare.

    "More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," said Swann.

    In a statement, a Treasury official stressed that S&P reaffirmed the nation's pristine rating, adding that the agency assumes lawmakers will begin implementing a long-term debt plan by 2013.
    Meanest budget cuts

    "We believe S&P's negative outlook underestimates the ability of America's leaders to come together to address the difficult fiscal challenges facing the nation," said Mary Miller, the Treasury's assistant secretary for financial markets.

    Miller argued that dealing with the current fiscal challenges is "well within our capacity as a country." She noted that Obama has called on Congress to begin developing a deficit plan next month, with the aim of reaching a legislative framework by June.

    "The U.S. economy is strengthening as it emerges from the recent recession," said Miller. "Both political parties now agree that it is time to begin bringing down deficits as a share of GDP."

    In its report, S&P said its outlook change was based on the growth of the United States' deficits over the last several years as a percentage of gross domestic product, the broadest measure of economic activity.

    From 2003 to 2008, the nation's general government debt varied between 2% and 5% of GDP, which is "noticeably larger" than other countries with "AAA" ratings, according to S&P.

    In 2009, as the government increased spending to stimulate the economy, S&P said the U.S. debt load "ballooned" to more than 11% and has yet to come down.

    On Wall Street, investors reacted to the news by pushing share prices down sharply. The Dow Jones industrial average sank more than 200 points in the first half-hour of trading.

    Standard & Poor's is one of three major agencies that evaluate public and private debt issues. Their ratings are key to measuring an investor's risk in buying the debt, an important factor in determining interest rates.

    Moody's, one of the other big ratings agencies, described the two deficit reduction plans currently on the table as "a significant shift in the U.S. fiscal debate."

    "This potential change in the direction of fiscal policy is credit positive for the U.S. federal government," according to Moody's Weekly Credit Outlook report. "Although it remains uncertain what sort of budget will actually be adopted." To top of page[/QUOTE]

    [url]http://money.cnn.com/2011/04/18/news/economy/us_credit_rating_outlook_lowered/index.htm[/url]

  11. #31
    Well we have Obama *****ing and moaning that Moody isn't looking at the big picture. Well Mr. President you have never seen the big picture. You cannot spend like there is no tomorrow. Gas is going up because of that people will have less money to spend!

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