NP: No gov't; best gov't..from John Lanchester LRoB

[David Morris]

And you are simply a bore.

On Fri, Sep 2, 2011 at 6:34 PM, alice wellintown
<alicewellintown at gmail.com> wrote:
> David, you are simply wrong. If S&P or Moodys or Duff & Phelps or
> Fitch or any other reputable rating agency had reason to suspect that
> the USA would default on its securities it could not and would not
> give the USA a AA+ rating. How could it?
>
> Paul is missing something here too. That is, the UST yield curve had
> become steeper after the QE by the Fed. This steepening is owed to the
> major market players in the UST  moving the long end up vs the short
> term securities, so the bell weather 10 year and the old bell weather
> or benchmark 30 year had declined in price and the yield increased as
> the curve is a leading indicator, and the players were betting that
> the economy would recover in a traditional steep pattern.  This is
> normal. After a deep recession we usually get a steep recovery.
>
> Of course, this did not happen. The double dip in the housing market,
> now a double dip in the US banks and agencies, now heading to the
> courts, along with other factors, including the Obama vs Rep Tea Party
> factor and the S&P downgrade, Greece....Japan, natural
> disasters...protracted wars...so on, has put an end to the whimpering
> recovery. So, the UST yield curve, while a flight to quality play even
> after a downgrade, as Paul noted, is normal as it is actually a
> fundamental trade because the traders believe the USA is heading into
> a recession and the tools it has to get out of it are all locked up
> the woodshed Ben took the congress to the other day or broken or
> useless. The fundamentals are weak and getting weaker, so the US long
> term securities, never a default risk, are a good play right now. Buy
> them! Also, because the US market is soooo big, it has liquidity. You
> can sell a billion of these securities in one second and you will have
> ten firms bidding aggressively to buy them from you. Try that with any
> other bond.
>
>
>
> As Paul notes, the US is not any old nation state but the locomotive
> of the world economy; right now, it is, as Bob Dylan sez, a broke down
> engine. How is the issue. How will we get out of it? How long will it
> take?
>
>
>
> On Fri, Sep 2, 2011 at 4:35 PM, David Morris <fqmorris at gmail.com> wrote:
>> Right.  This fact really did make S&P's move look silly.  But they've
>> been courting the silly for a while now...
>