Korean Job Discussion Forums

[bacasper]

I said, 'Oops, upside ya head
I said, 'Oops, upside ya head
It's like a jungle sometimes
It makes me wonda how I keep from goin' unda
Don't push me 'cause I'm close to the edge
I'm tryin' not to lose my head
It's like a jungle sometimes
It makes me wonda how I keep from goin' unda
I said, 'Oops, upside ya head
I said, 'Oops, upside ya head

Treasuries to Lose AAA Rating?

The worldwide sovereign debt crisis may be about to take a turn for the worse if recent bond sales are any indication. Some corporate bonds have begun to yield less than U.S. treasuries, in effect suggesting that the corporate bonds are the safer bet. As reported by Bloomberg and NPR, Berkshire Hathaway 2-year notes are yielding 3.5 basis points less than similar maturity treasuries.

[AsiaESLbound]

Asian countries lend money for US to support them by importing their goods. It's international trade agreements the US government sponsors to support our outsourcing employers interests. This system works, because it supports both Asian economies to develop while benefiting America's elite. After all, the US government serves the interests of America's wealthy to get wealthier; not to protect the average American's interests. They don't care if the US government is borrowing on worse terms than companies, because it's not a person nor a company. It also didn't seem to matter that the US government over pays for it's debt, services, and supplies like it would if it were a company or individual. It gets used and abused. Each billion dollars of debt is another nail in the coffin.

[Trevor]

[Jeonmunka]

So, how do corporations borrow? Usually they beat treasury returns so get easy money, what about now?
They got less money to play with = good in a way they won't blow it like in the last decade.

Is there really less risk because the yield is lower?

[blomkvist]

They should have ALREADY lost the AAA rating... their bond rating should be CCC. Yeah, they'll probably pay you back, but with a significantly decreased purchasing powered dollar.

[mises]

The US will not be downgraded for the simple reason that the ratings agencies are a US government created oligopoly. They are a private arm of the government. No matter what the spread between corporate and US bonds are, the US will be AAA.

The US can borrow for extremely cheap now. Investors trust the USD more than virtually all other assets. Precious metals markets are manipulated to create both instability and depressed prices. There is also the threat that gold and silver will be either taxed to all hell or just outright confiscated (again). Precious metals are the natural enemy of the fiat reserve currency and will eventually return to primacy is the global monetary system. The low rates today do not mean the government should borrow, just that it can.

For the USD to be stripped of reserve status there will have to be a period of global macro economic stability. This will happen. That is when the US debt will become more difficult to accumulate and service. For the US, catastrophe will happen when the world is stable.

The other possibility is that a major commodity state (Russia) could demand payment in gold and collapse the greenback in a few hours. This is not as far fetched as it seems. If Russia were to index their currency to a precious metal, huge amounts of capital would move to that currency. Russia would become an economic superpower overnight.

This is all fun to watch. When it unravels, it won't be much fun to experience.