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Bond markets defy Fed as Treasury yields spike

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posted on May, 29 2009 @ 05:35 AM
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Bond markets defy Fed as Treasury yields spike


[url=http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5402260/Bond-markets-defy-Fed-as-Treasury-yields-spike.html]www.telegraph.co.uk[/ url]

"The Fed is going to have to consider doubling its purchases of Treasuries," said Ashraf Laidi, from CMC Capital Markets. "We could be nearing the end-game for the US dollar but the Fed has little choice at this point. We're in a vicious circle where any policy aimed at supporting the US economy must be at the expense of the dollar."

The US Mortgage Bankers Association yesterday highlighted the fragility of the US housing market, reporting that 12pc of homeowners are either behind on their payments or facing foreclosure, the highest level since records began.
(visit the link for the full news article)



[edit on 29/5/2009 by Iamonlyhuman]




posted on May, 29 2009 @ 05:35 AM
link   
Well, at least someone, albeit outside of the US, is reporting this.


What is clear is that the market choked on $100bn of US Treasury debt issued in three auctions this week, and on the knowledge that Washington must raise a further $900bn by September. Governments around the world must fund $6 trillion of deficits this year, exhausting the capital markets.

The US is at the front of the firing line. Beijing is clearly losing its patience with the Fed's policy of printing paper, seen as a form of stealth default. There is some risk that further moves to step up quantitative easing could cause China to boycott US Treasury auctions. China and Japan together hold 23pc of all US federal debt.



[url=http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5402260/Bond-markets-defy-Fed-as-Treasury-yields-spike.html]www.telegraph.co.uk[/ url]
(visit the link for the full news article)



posted on May, 29 2009 @ 05:38 AM
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Sorry, I don't know what happened to the links and I can't fix them for some reason. It's here: Telegraph



posted on May, 29 2009 @ 06:18 AM
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mmm, lets do some math. If the bond interest rates went up 1.5 percent on 100billion or ruffly 45% of the current interest rate. Would it not be true that for ever 100billion the fed plucks down, the interest rate again goes up 45%?

200billion= 5.45
300billion= 7.89
400billion= 11.44
500billion= 16.58
600billion= 24.04
700billion= 34.86
800billion= 50.54
900billion= 73.28
1trillion = 106.26

mmm, planning on selling 1 trillion by september. If bond rates go the way they are we could see interest rates go through the roof. Obviously this isn't going to happen, so they will print more money to maintain the benefits being recieved. This will decrease the dollar by the precentage of the amount we produce. lets say they print 1 trillion, which is ruffly 10% of current monies in circulation. prices will jump 10% dollar will decrease 10%. Example being the dollar menu at mcdonalds. It will now be the 1.10 menu. Costs will go up by that amount. This is just for this year btw. Next year obama is on target to increase the deficit by another 1.5 trillion.

The simple fact is, a service based economy will not exist. An economy must be based on services as well as manufacturing. Manufacturing must include raw materials and finish product. You need the whole entire chain to exist.

The problem in the U.S. is that we have free trade, when we should have FAIR trade. a trade deficit should not exceed 5% of the total amount of shared products. If we stuck to this philosophy, yes prices would go up, but they would go up, because it costs more to produce items. It costs more, because you have americans producing them, instead of other nations. Yes this would hurt prices in the short term, and the people in the short term, but in the long term, it would have significant effects on the U.S. and our economy.

Other issues that impact the economy is the deficient in general. You can't spend 500 billion on the military, with 20% of it having NO accounting done. How can the u.s. spend 100 billion on black ops operations, and not have it reported to the legislature. The u.s. has for the last 20 years spent more on its military then EVERY nation in the world combined. What has that gotten us? We need to stop empire building and start focusing on our people. We need to close EVERY single base across the world. We need to offer N Korea a PEACE TREATY, instead of being morons. We need to normalize trade with them so that instead of only being able to produce weapons they can build there economy. Shutting down every american base outside the u.s. and shipping all that personel back to the u.s. would have several positve effects. It would cut costs to maintain these bases, the Dollars spent on the soldiers will reintroduced to OUR economy and not the economy of other nations. I recommend spending to go down 50 billion each year, until our level is equivalent to U.K. and france.

Thats just my 2 cents, by no means am I an expert, but thats what I would do if I were dictator of the world.

Cheers,

Camain



posted on May, 29 2009 @ 06:33 AM
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You know this doesn't sound all that bad...
I mean I have $10,000 in cash maybe I can buy the whitehouse at auction and turn it into condos?

Seriously I know they meant well and did what they thought was right but it seems to me it would have been better to let the big banks collapse... kind of like taking off a bandage, either way its going to hurt, better to rip it off quickly rather than prolong the pain



posted on May, 29 2009 @ 06:34 AM
link   

Originally posted by camain
mmm, lets do some math. If the bond interest rates went up 1.5 percent on 100billion or ruffly 45% of the current interest rate. Would it not be true that for ever 100billion the fed plucks down, the interest rate again goes up 45%?

200billion= 5.45
300billion= 7.89
400billion= 11.44
500billion= 16.58
600billion= 24.04
700billion= 34.86
800billion= 50.54
900billion= 73.28
1trillion = 106.26

mmm, planning on selling 1 trillion by september. If bond rates go the way they are we could see interest rates go through the roof. Obviously this isn't going to happen, so they will print more money to maintain the benefits being recieved. This will decrease the dollar by the precentage of the amount we produce. lets say they print 1 trillion, which is ruffly 10% of current monies in circulation. prices will jump 10% dollar will decrease 10%. Example being the dollar menu at mcdonalds. It will now be the 1.10 menu. Costs will go up by that amount. This is just for this year btw. Next year obama is on target to increase the deficit by another 1.5 trillion.

The simple fact is, a service based economy will not exist. An economy must be based on services as well as manufacturing. Manufacturing must include raw materials and finish product. You need the whole entire chain to exist.

The problem in the U.S. is that we have free trade, when we should have FAIR trade. a trade deficit should not exceed 5% of the total amount of shared products. If we stuck to this philosophy, yes prices would go up, but they would go up, because it costs more to produce items. It costs more, because you have americans producing them, instead of other nations. Yes this would hurt prices in the short term, and the people in the short term, but in the long term, it would have significant effects on the U.S. and our economy.

Other issues that impact the economy is the deficient in general. You can't spend 500 billion on the military, with 20% of it having NO accounting done. How can the u.s. spend 100 billion on black ops operations, and not have it reported to the legislature. The u.s. has for the last 20 years spent more on its military then EVERY nation in the world combined. What has that gotten us? We need to stop empire building and start focusing on our people. We need to close EVERY single base across the world. We need to offer N Korea a PEACE TREATY, instead of being morons. We need to normalize trade with them so that instead of only being able to produce weapons they can build there economy. Shutting down every american base outside the u.s. and shipping all that personel back to the u.s. would have several positve effects. It would cut costs to maintain these bases, the Dollars spent on the soldiers will reintroduced to OUR economy and not the economy of other nations. I recommend spending to go down 50 billion each year, until our level is equivalent to U.K. and france.

Thats just my 2 cents, by no means am I an expert, but thats what I would do if I were dictator of the world.

Cheers,

Camain


Well I wouldn't vote for you for dictator of the world.
Only because of your last paragraph .... I WOULD hire you for main economic advisor because of your first 4 paragraphs though. Hahaaa....




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