Listen up! The bond markets are talking

There is no way interest rates are going up. All the pressure on interest rates is DOWNWARD. With the economy/housing/stock mkt all sagging, there is no way the Fed will raise rates. Rates could head upward IF the international community stops buying our bonds, but that has yet to happen, and is not likely to happen. Neither the credit crunch nor inflation is our biggest economic problem. That would be the deficit and projected liabilities from Social Security and Medicare/Medicaid.

LOL, When will people realize the US is totally bankrupt? That is what is causing the credit crunch. The Chinese are selling their US Treasuary Bills as fast as they can, the arabs have been buying only european instruments for five years now, the Russians are back to being an enemy and even though they are the richest nation in the world right now they are not holding or buying US Treasuary Bills.

Our own S.S. system has broken down and is now just barely taking in enough money to run it’s programs. Gone are the 1960’s where S.S. over payments were used to fund the Vietnam War and the Space Race. Add in the already 1 Trillion dollars of the Iraq War and the soon to be 5 trillion dollar bail out of Fannie Mae and Freddie Mac and you have a total meltdown of the US economy.

We are now so broke nobody wants to lend us money. And they are asking for the money they loaned us back.

LOL Looks like we are going to have to start all over at a level lower than Mexico.

This is from your article:
Treasurys may benefit from the proverbial “flight to quality” – the notion that U.S. government debt, despite the nation’s economic woes, are one of the least risky bets an investor can make in turbulent times.

I would not touch US treasuries as I expect interest rates to rise as the economy slows. I know that is counter intuitive. But consider massive Federal budget deficits of $1Trillion annually caused by a slowing economy which implies greater expenses (such as major government bailout packages, new federal spending for social programs, infrastructure rebuilding, and war expenditures) and lower tax receipts. The resulting supply of bonds will be met with reduced demand from foreign buyers who already hold more of our debt than they would like. Interest rates will rise just to compensate for the risk and to make the bonds saleable. US treasuries may well be considered junk if the rating agencies follow through on the possibility of downgrading government debt.

Both the credit crunch and inflation can be laid to blame on the Fed. The entire banking system is a house of cards with the Federal Reserve at the head. Fiat monetary policy enables us to live quite beyond our means, causes malinvestment and initiates these boom/bust cycles. What is more important is completely irrelevant. The root cause is a Central Bank beholden to a State that has an insatiable appetite for power.