[mrsmith]

Even CNN had to let up on the doomsday hysteria!

[kjo]

Don’t believe anything that comes out of CNN; their “news” comes from their fax machine’s talking points issued by the DNC.

[coloradan]

If the bonds go into default, that would even more sharply limit their supply, making them go up even more. Only when they all went to zero, would they finally go to infinity.

[tennmountainman]

Oh my?

[KarlInOhio]

The flip side is that many bond funds, insurance companies and retirement plans have requirements that they only invest in AAA rated bonds. If treasury bonds are downgraded, then these will all be dumped on the market immediately... or more likely the boards of directors of those funds will quietly amend their operating rules from "AAA" to "AAA or U.S. government bonds".

But if they do have to dump them, then bonds will be in oversupply and rates will go up.

[PGR88]

Duh! Exactly!

Want to see the stock market shoot up and the dollar rise? Show the world that the USA is going to cut its massive deficit!

He would never realize it, but enforcing the debt ceiling would actually be the best economic “stimulus” Obama could enact - and with 16 more months to the election, might actually HELP his re-election campaign.

[mrsmith]

“We can look at the prices of put options on government bond ETFs to see whether the put options are expensive, which would suggest that the options market is suggesting a substantial risk of a sell-off in government bonds and rising yields... the options prices do not suggest that the demand for ‘insurance’ against a big sell-off in government bonds is high at all. “
http://www.businessinsider.com/government-default-the-market-vs-the-media-2011-7

[Iron Munro]

Interest rates are already too low.

If cheap money was the solution to recovery we would have a red hot economy right now.

Manipulating interest rates by pumping fiat currency into the economy to keep rates artificially low is one of the major factors leading to the crash of the economy.

And it is one of the factors slowing down a real correction and subsequent recovery.

All we are getting out of the cheap money strategy is inflation.

[mrsmith]

“What does a downgrade really mean? Treasury debt will still be the highest-quality, most liquid market in the world debt,” said Robert Williams, director of research at Sage Advisory Services in Austin, Texas. “We don’t think it has a major impact on rates, even if there is a downgrade.”
http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/2707-treasury-etfs-fly-despite-likely-us-debt-downgrade?src=HPLNews