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Strategies & Market Trends : BAK - Investing
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To: Flipper2058 who wrote (2865)6/5/2012 10:42:25 AM
From: DoggyDogWorld1 Recommendation  Read Replies (1) of 3249
 
Re: Treasuries (was Two Buck Chuck...)

Part of the Fed's job is to be counter-cyclical. So if the market is pushing yields down, should the Fed be pushing the other way? I know they won't, but it's interesting to think about.

In Finance 101 they tell you never mis-match your maturities, but no one seems to be listening with finance firms choking for earnings.
Bond bubbles aren't that scary because when they pop you still get your principal back plus interest. You just get less interest than you should have. This causes nowhere near the same kind of damage as Nasdaq crashing 80% or a third our homeowners suddenly being underwater. Unless finance firms borrow short and lend long. Then the damage can be catastrophic, both for the financial sector and the general economy. Bernanke is practically forcing them into it, though. That can make it scary.
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