Zeev wrote: >>When was the last time that treasury did not compete with other investments for investible dollars? Right now, not only the treasuries are not competing, but on an annual basis, the treasury is going to inject $350 billions into the markets ($300 Billions roughly in interest payments and $50 Billion in budget surplus, thus less need to roll over debt). We thought that $20 to $25 billions injection of new funds into the market was "awesome", I say we have not seen anything yet. Our budget surplus plus a very minute leak of Japanese savings to world markets are going to be explosive.<<
Zeev,
I didn't really forget to mention this aspect. You mentioned it already so I didn't want to say it again in my reply. I do agree with you. But I did want to ask you some questions about your comments.
I don't quite understand why you said Treasuries don't compete. I mean generally speaking, people buy bonds and people buy stocks. One or the other. Slight swings in interest rates or perceptions about the economy makes money move in large amounts real quickly between the two. So what am I not understanding?
Also concerning the budget surplus of around $50 billion. You are assuming we, US taxpayers, are going to get this back via lower taxes, then most will put our rebate(so to speak) back into the equities market? If so, this isn't a given yet. Congress may spend it for us.
As far as the $300 billion, for those that don't know, this is the figure that the US government has to pay in interest to treasury holders, be they T-Bills, T-Bonds, or T-Notes. Another potential source of cash for the purchase of stocks.
Thanks for your comments,
MikeM(From Florida) |
