Sell-off in US Treasuries raises sovereign debt fears

Telegraph.co.uk ^ | 3-28-10 | Ambrose Evans-Pritchard

[CutePuppy]

The problem for the democrats is that they cannot spin this to investors. The media may buy it, the public may buy it to an extent, but investors know it is crap and no amount of spin is going to bring investors to the table.

Yep. Bill Clinton has "learned" to love bonds; of course, 1994 mid-term Congressional elections were the main "teacher".

From a year ago: Bond Vigilantes Push U.S. Treasuries Into Bear Market - BL, 2009 February 10, by Dakin Campbell and Daniel Kruger

The bond vigilantes may be making a comeback.

A decade after forcing Bill Clinton to abandon his spending plans in favor of a balanced budget, investors in Treasuries are bedeviling President Barack Obama as he embarks on the most costly spending plan in U.S. history, driving up borrowing costs for the government and consumers.

Treasuries have lost 3.6 percent this year, their worst annual start since 1980, according to Merrill Lynch & Co.’s Treasury Master Index data. Yields climbed on longer-maturity debt in five of the past six weeks as bond prices fell amid concern that the Federal Reserve may not buy U.S. debt to keep yields low while the government increases its borrowing. .....

[cranked]

The biggest ramifications would be drastic cuts—if not an end—to all federal government social programs and that no one would want to ever lend money to the US again.

Look at it like filing bankruptcy.

[An Old Man]

"What are the ramifications of defaulting? Who’s hurt, who gains?"

Those who squandered their wealth will be in a world of hurt.

Those who have saved for a rainy day will make it through all this.

[GonzoGOP]

Those who squandered their wealth will be in a world of hurt. Those who have saved for a rainy day will make it through all this

You have that completely backwards. Since the dollar goes to 0 value or nearly zero value all dollar denominated savings become worthless. On the other hand if your debt is valued in dollars you can pay off your entire house with one hours pay. For example a low level government functionary in Zimbabwe they make about $100,000,000,000,000.00 an hour. That's about $6.00 US if your interested. But if his mortgage was valued in Zim dollars before the crahs he can pay it off with his days check.

So who benefits, people who have big debts. Who is destroyed, people who live on their savings or on fixed incomes. Who benefits the most, Obama and the Democrats, all government debt wiped out. After all the debt is enumerated in pre-inflation dollars. So if our inflation goes to Zimbabwe levels Obama can pay off china by selling the office supplies in his desk drawer for a few trillion worthless Obama Dollars. The entitlements like Social Security, can be paid off in worthless Obama Dollars. Everyone is reduced to being a beggar and if you don't worship at the feet of The One you don't eat.

[Positive]

"The sooner the US goes default, despite arguments to the contrary, the better off we will be."

But the US will never default...our debt is denominated in US Dollars and the US is the only entity that can print them.

Therefore we will never run short of them...what they will buy is another thing.

[An Old Man]

"Everyone is reduced to being a beggar and if you don't worship at the feet of The One you don't eat. "

Would you say that those who:

1. Own Land (Free and Clear)
2. Own Animals and Machinery (Free and clear)
3. Have a plentiful supply of food (paid for of course)
4. Have a supply of precious metals in quantities sufficient to sustain themselves and their neighbors
5. Possess the means to defend all of the above

Are going to be beggers!

It's difficult for me to understand how some folks are able to equate paper money with wealth.

I believe in being prepared for every eventuality. I trust you do also.

[GonzoGOP]

Well you have to have Obama dollars to pay the taxes on your land, animals and machinery. And if you raise your prices to match the inflation you will be accused of hording or profiteering. Watch what is happening in Venezuela and Zimbabwe. Nothing will wipe out a nation faster than hyper inflation. That is exactly why Obama is going to cause it.

[An Old Man]

I believe you have bought into "The System'. Good Luck!

[SaraJohnson]

Obama gets it. He does not care. He hates America. He hates our freedom, wealth, self-respect and well being. He calls it “white” and he’s a flaming racist.

[GonzoGOP]

I believe you have bought into "The System'. Good Luck!

No I'm saying that once the hyper inflation kicks in it is too late. It has to be fought now. No matter how many canned goods you have in your pantry you cannot outlast a decade long hyperinflation spiral. Eventually you will need to buy gas, clothing, food and as soon as you do your screwed. So if you think you can ride it out, I have to wish you "Good Luck".

[Freedom_Is_Not_Free]

We’ll see where this goes...

[An Old Man]

"No matter how many canned goods you have in your pantry you cannot outlast a decade long hyperinflation spiral."

Sure you can, My Grand Parents did, and so will we.

[GOPJ]

Thanks for the ping.

[GregoryFul]

So how do you pay your $100,000,000,000 property tax bill?

[spetznaz]

The biggest ramifications would be drastic cuts—if not an end—to all federal government social programs and that no one would want to ever lend money to the US again. Look at it like filing bankruptcy.

My fear is that it would not be that simple, and way far from sanitized. It would definitely throw an adamantium wrench into the machinations of the Left, but there would be no way of stopping the damage at that. It would change the US economically going forward, and (if Obama is the anti-American many believe he is) it would actually play into his hands. You're obviously more optimistic than I am regarding this, but in my opinion (which may be wrong, but based on my experience as a fund manager in frontier and emerging markets, some having banana economies ...and I don't mean the plant) I am afraid that if the US defaulted the ramifications would not only be quite large, but the ability to control them (having 'good' results and mitigating against truly 'adverse' results) would be significantly limited. It would be a veritable fission reaction, with no control rods to regulate the speed and extent of the fission.

In essence, an atomic bomb.

If the financial minds (as corrupt as they may be) could not control the fiscal, monetary, regulatory and financial intricacies that got us into this mess to begin with, I am highly doubtful they would be able to structure and manage any form of 'controlled productive-destruction' that those calling for the US to default are advocating.

It may very well be like that YouTube video of some guys trying to smoke out a rat in their home, and ending up setting the entire house ablaze!

As I said, I may very well be wrong. However what is at stake is quite big. Already the US has taken a run down a path that has a chasm at its end. That is true, and Obama and the Left seem to believe they have a bag of pixie dust that can make everything all better. However I am not sure if the solution is 'default and reboot,' because once it starts the level of control goes to naught.

Anyways, I hope you are right, but if you are wrong then even guns and ammo will not be sufficient ...unless you live in a community away from the cities, and in your community all of you have come together as one to protect each other. The saddest thing is some person who lives in the city, and it is only him and his family, and maybe one or two like-minded neighbors, and he believes that when the SHTF then his well-stocked armory ...since he has been diligent to have a number of guns and enough ammo ..., as well as his gold coins, will be sufficient to ensure his survival. In a collapse cities would be an experiment in collapse! First the just-in-time flows of food and other necessities would stop, looking at what happened during the blizzards in a day or two supplies would be finished (in some cases far faster once panic buying starts). Then looting and some riots would commence. Then after that people - in many cases neighbors - would be inquiring politely from you for assistance (e.g. food, medicine, etc). After some days those inquiries would turn into urgent pleas (e.g. my child is hungry, my spouse is unwell, etc). Then they would be storming your house in a rabid swarm straight out of a Romero movie (particularly if your urban home still has electricity ...since you have a generator). Without support, no number of guns in the gunsafe will stop them ....unless you have computer-slaved gattling guns with electrically fired Claymores.

Now, in a rural community where people can grow their own food, have a network of likeminded folk who are armed and will stick together, etc etc etc ....then those can easily survive a SHTF scenario. But cities ....it will be heaven to hell in a week max.

Anyways, sorry for my long post Cranked, but I sure as heck hope you are correct.

[spetznaz]

See my post 35 (the part I touch on cities vs rural areas). If you live in the cities and the suburbs and stay there when the SHTF, your @$$ is grass. The zombie hordes that will stream to you, first to ask for aid, later on to take by force, will be too many. However, in a rural community with like-minded people, your arms and ammo, your food and gas, your generators, your seeds and medicine ....those will be perfect. A community of 30 who are organized can keep a lot of riff-raff out for an almost indefinite period.

However, in the cities! Your last name could be Benneli and your breath in cold air could spell out Kalashnikov, but you would never make it if you stayed.

[An Old Man]

I don’t

[An Old Man]

" (the part I touch on cities vs rural areas). "

For their own sake, I hope those zombie hordes don't venture close to our place. They would be much better off munching on old rubber tires.

[spetznaz]

For their own sake, I hope those zombie hordes don't venture close to our place. They would be much better off munching on old rubber tires.

If you're SHTF retreat is a rural ccommunity, you are well armed and stocked, and you and your neighbors all know each other and work together as one - then yes, you could hold off indefinitely.

However, if you live in the cities or a suburb, then no amount of firearms will help you if things really went south. Rambo does not exist, and your enemies would not only be relentless desperate people but also other threats like fire and disease. On the zombie hordes - a typical nuclear family living in suburbia or the cities, with each member having 4 guns and 3,000 rounds per weapon, still wouldn't survive - unless it is a Rambo situation where you always hit and they always miss. After all, the 'zombie hordes' will be armed, and they will be many, and the plaintful cries of a hungry baby can make people ignore the fear of whizzing hot metal flying through the air. However, a rural community setup could easily fend off 'visitors' and their ilk.