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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: prosperous who wrote (117423)	12/30/2008 11:07:17 AM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Pros, The long bond has already acted like it will act with short rates at zero. The next move on short rates is not likely to be down. The Fed has been monetizing for more than a decade. The problem is, how do you build infrastructure, bail out the financials and the industrial giants without selling, not buying, long bonds? Also, if any of the bailouts work, will people start buying BBB corporates again? What about junks? If so, you will have a huge supply of Treasuries with lower rates competing in the market with these corporates. Of course, if we are truly in a depression and we aren't coming back, long rates could stay down for the duration.