Treasury Bonds

[dayman]

http://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/textview.aspx?data=realyield

 

I know I know...don't spend money...but are people paying us money for the privelege of holding their money right now b/c the rest of the world is so !@#$ed? Will we ever be able to invest in ourselves the way we can right now? I'm not finance or economy guy, so I'm not trying to make a point here. I'm just asking is this normal? All those negative signs...seem...good to me...am I an idiot?

Edited July 27, 2012 by TheNewBills

[dayman]

And just to go ahead and reveal where I'm tempted to go with this....I know this is a democractic talking point but we do have infrastructure and things we can do even if we don't have to do it now we will need to do it in the next 20ish years and probably can never do it as cheaply (at a profit?) as we can now. Plus it puts people to work and would help spur the economy.

 

So my basic question is spending money you don't have is bad I get that. But ... would any business man not look at this and see gold?

 

Do the facts support this "Obama spending like a maniac" pitch as a bad thing? Should we not be borrowig by issuing treasury bonds like drunken sailors right now to spur us in the short term and build for the long term at rates that look amazing?

 

As a "business guy" would Mitt Romney not get this? Rape Europe while they are down b/c they may pick themselves up soon or later? Strike while the iron is hot?

Edited July 27, 2012 by TheNewBills

[TakeYouToTasker]

"And, like, whoa, Barbie, I mean, like, how could you afford NOT going deeper into debt, like, right?"

[dayman]

"And, like, whoa, Barbie, I mean, like, how could you afford NOT going deeper into debt, like, right?"

 

 

But seriously in a non-combative way I'm just asking (since this seems to be an issue for you) it's a simple question and I may well be wrong on it. But the basic equation is that we have things we need to do within the next 20ish years anyway everybody agrees on this, and we can do it cheaper than ever if we do it now, and it requires us to pay people to do it now when unemployment is an issue conservatives and liberals alike agree on...so why is this a political or ideological debate? What is the deal? How can a rational decision maker not come to this conclusion is what I'm asking? Raging about the debt is popular...but is it rational?

Edited July 27, 2012 by TheNewBills

[/dev/null]

It's kind of like saying, yeah I know she has the clap, Herpes, and AIDS

But you know, she's hot and I'm wearing a condom. So it's safe

[WorldTraveller]

This discussiin is an extension of the "deficit spending" thread.

 

Krugman dangerously makes this argument, he points at the interest rates as proof positive of the security of the bond markets. It's such an utterly absurd argument to make, I don't even know where to begin. Let's begin with a recent historical reference, all one has to do is look and see where Greek and Spanish bonds were trading at three to four years ago. They were near record low rates with no signs of stress. Once growth slowed, the bond investors began to take a closer look and concluded that based on their debt and ability to repay it, they slowly began to sell, and once that occurred rates went higher and as rates got higher, more bond investors doubted their ability to repay that debt because of the higher borrowing costs, which caused even more selling and it's now a virtuous never ending circle, sort of like a negative feedback loop. By krugmans standards, we would of never have seen this this coming.

 

There is a great research paper written by Carmen Reinhardt and ken rogoff about sovereign debt. I highly recommend you read it, it's an excellent piece and you can finish reading it in 20 minutes.

 

also there is a saying, in regards to the bond markets " everything is fine till its not"

Edited July 27, 2012 by WorldTraveller