segalm

Honestly, im not sure thats why im asking. I still feel like the US will be viewed a "safe", and panic in the markets would to that. Like we said above, maybe int bonds, but Euro situation isnt good as well.

I know the theory etc but im curiious to see what would actually happen.

segalm

egal
your forecast is hilarious. I think you have a plot for a kick ass sci fi novel.


here is the thing: U.S. Treas are planet Earth's definition of a "risk free asset"

s&p, moody's can assign labels, but they can't tell the market anything the market doesn't already know.
the EMH, remember?

Mind you, none of the above are normative judgements, I'm not saying its good or bad, just that it IS a fact in the universe.

U.S. Treas yields reflect not the s&p or moody's labels, but are more a reflection of the cost/benefit equation that's available in the market place. You want the safest possible investment, taking into account market expectations of inflation? That's your U.S Treasury. Full stop.
If the U.S. actually defaults, nothing whatsoever is "safe".

The bigger worry is the long-term U.S. gov balance sheet.



Edited 1 time(s). Last edit at Tuesday, July 26, 2011 at 08:43PM by zoya.