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But what's nasty here is that right now we're seeing a flight INTO longer-term bonds (the 10 in particular), which means the market is anticipating another stock panic, and with good reason.
1. If they issue all in the short end of the curve (as they're doing now) they flatten the banks, as the entire point of a bank is to borrow in the short-term market and lend in the long term. When you compress the yield curve you destroy their capacity to make money off their ordinary business model.
2. If they issue in the long end of the curve (e.g. 10s and 30s) then the long end will skyrocket in yield. Anyone remember 18% mortgages? They could reappear. This, of course, will destroy what's left of the housing and consumer credit markets.
Originally posted by mrsdudara
I have a question for all you financial gurus here. I asked this on another thread too, but unfortunatly did not get an answer. I was looking into some information on the stock market yesterday, and noticed that they stopped trading what looks to be about 15 min before the market closed Friday. The 10 yr bond looks like it stopped 30 min prior. I checked to make sure it wasnt just a yahoo thing, and they all do show the same.
[edit on 27-10-2008 by mrsdudara]
Originally posted by Tweakie
reply to post by mrsdudara
The main problem, that I see, is that I am powerless to do anything or change anything that will influence the markets so why bother to worry about it. What will be will be.