Comments on: Issuing Debt for as Long as Our Republic Will Last

By: Aiden

Aiden — Thu, 27 Nov 2008 03:59:48 +0000

The treasury should be throwing out as much paper as the fixed income investors will bear. At these record low yields, the US Treasury needs to throw some paper on this fire. I really like the idea because the credit of the US government will probably deteriorate over time and rates will probably rise, so the 4% coupon that the feds will offer on a 100 year bond will turn into a 15% YTM in 50 years. This is exactly what happened to the long running Tribune Co. & Ford Motor bonds, their credit deteriorated big time and the great safe coupon that the investors thought was there just got a lot less enticing. Sounds like a great plan to me. I just wish Hank & Co were better traders.

By: cgaros

cgaros — Thu, 27 Nov 2008 00:26:49 +0000

Relating your last two posts: banks are about to issue foreign-currency denominated bonds backed by the full faith and credit of the USA under the FDIC’s TLGP program. Maybe some day the FDIC can acquire these bonds and trade them to Treasury for some dollar Treasuries. Then we won’t have to show any weakness to the international community.

Thank god nobody else in the world has a credible reserve currency paying positive real interest rates! We should all be thanking our underappreciated i-bankers for selling the world so much toxic debt that their governments and corporations are just as unhealthy as ours!

By: Sivaram Velauthapillai

Sivaram Velauthapillai — Wed, 26 Nov 2008 18:02:12 +0000

sysin3: “Nobody ever got rich betting against Jimmy Rogers.”

Are you sure about that? He was bullish on China back in the mid-90′s! Yet someone long the US markets, but avoiding obvious bubbles like tech, would likely beat China so far.

Jim Rogers is good but it’s not as if he is always right. I mean, we have Warren Buffett betting directly against him. Rogers has implied all investment banks are going bankrupt but Buffett is long Goldman Sachs.

By: MurratR

MurratR — Wed, 26 Nov 2008 14:21:39 +0000

There are two reasons stimulus packages are popular economic issues:

* Politicians like excuses to spend more of our money.
* And the public is made to think that they are bound to work, because politicians and the media promote it as a one-sided thing. So, it seems obvious that if government spends more money – or cuts taxes – the economy is bound to improve.

By: Russ Wood

Russ Wood — Wed, 26 Nov 2008 13:56:33 +0000

David,

“It is not in the DNA of the Fed to inflate, ever since the era of the ’70s.”

Are you referring only to a deliberate inflation as a policy response to a crisis, or to a general debasement of the currency? I might agree with the former, but I think the latter can be easily disputed with a look at gold.

Thanks

By: hmf

hmf — Wed, 26 Nov 2008 08:21:18 +0000

David – if possible, whenever you have a chance, could you please explain why there is any spread whatsoever between govt-guaranteed bank-issued debt (e.g., the GS TLGP bonds) and comparable treasuries. It would seem they’re one and the same – thus no default risk. Thank you very much!

By: sysin3

sysin3 — Tue, 25 Nov 2008 23:37:27 +0000

Nobody ever got rich betting against Jimmy Rogers.

(he does have a long-term view though, and readily admits to being a lousy short-term trader)