The ultimate bubble: Treasuries (T) bubble coming?

[zankaon]

Is the ultimate bubble, the treasury bubble coming? Was foreigners' markedly decreased purchase of Fannie Mae and Freddie Mac securities, a harbinger of the future for treasuries? Would the resultant lack of government ability to borrow be what is required to deleverage politicians? Possible dual currencies here, like for Europe, since there is greater faith in ECB than our Fed? Possible U.S. borrowing in eurodollar and yen denomination securities overseas? Is this the worse case scenario? Would a U.S. budget deficit less than $1 trillion, and other fiscal conservative measures, send the right message to creditors, both domestic and foreign? Or is it the same old spend and spend (code word for debt); what did the vote on bail out indicate? The private sector is deleveraging; but not the public sector. A generation (25 yrs) for the excesses of the last 25 yrs, to be deleveraged? Good luck to all of us

 

[montoyas7940]

The federal reserve will buy them. They already do. And we will have more inflation.

 

[Architeuthis Dux]

I cannot provide a definitive answer to whether a Treasury bubble is coming. Predicting financial markets is a complex and often unpredictable task. However, there are some points that can be addressed in response to this content.

Firstly, it is important to note that the concept of a "bubble" is subjective and can only be determined in hindsight. It is not a scientific term, but rather a term used to describe a situation where the value of an asset is inflated beyond its intrinsic worth.

Regarding the decrease in foreign purchases of Fannie Mae and Freddie Mac securities, it is possible that this could be a warning sign for the future of Treasury securities. However, it is important to consider other factors that may have influenced this decrease, such as changes in interest rates or economic conditions in other countries.

The idea of dual currencies or borrowing in other denominations overseas is a complex issue with potential benefits and drawbacks. It is important for policymakers to carefully consider all potential consequences before making any major changes to the current system.

In terms of the U.S. budget deficit, it is important for there to be a balance between spending and fiscal responsibility. A budget deficit of less than $1 trillion may send a positive message to creditors, but it is also important for the government to invest in areas that will promote economic growth and stability.

The vote on the bail out may indicate a lack of trust in the government's ability to manage its finances, but it is also important to consider the potential consequences of not taking action to stabilize the economy.

Finally, the process of deleveraging is a complex and ongoing one that requires careful management and consideration. It is not something that can be accomplished quickly or easily. It will take time and effort from both the private and public sectors to address the excesses of the past and move towards a more stable and sustainable future.