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Global bond yields hit 2008 highs, raising stakes for big borrowers

reuters.com

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Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#131

Post by __alexs »

logicchains wrote: post #115
smallmancontrov wrote: post #71

Earlier quoted context omitted.

The system was always working, ZIRP was the market screaming that it had more capital than things to do with the capital. Of course, thinking about this too hard quickly leads to the idea of rolling back some of the enormous tax and policy privileges granted to capital, so it was critical for us to not think about it too hard.

"Capital" gets tax privileges to encourage investing, because investing creates things, consumption destroys things. We want more of the former than the latter.

You want supply to exceed demand? That doesn't seem very sustainable.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#132

Post by nostrademons »

neilwilson wrote: post #59
skybrian wrote: post #19

They have different kinds of risk, but do AI investments and bonds compete for investors?

Only in the secondary market. In the primary market they require different types of money for settlement. If you buy an AI issue, then the AI company has the bank deposit and the bank still has the matching reserves needed to buy government bonds in the primary market. All that changes is the ownership tag on the bank deposit.

"Money flows through markets, not into markets."

That said, there is a meaningful difference in terms of who has control of the money, and what they choose to do with it. Bank reserves are a red-herring; before the investor chose to buy either AI or government bonds with it, it was sitting in a bank deposit where the bank had parked it in short-term Treasuries. But prices are set on the margin (because again, money flows through markets, not into them), and so it is the act of that investor choosing to buy AI company bonds rather than government bonds that sets the relevant interest rates of both.

A related confusion is that the bank reserves are parked in short-term T-bills, whose interest rate is largely controlled by the Fed, while the investments we're talking about are AI corporate bonds vs. long-term government bonds. These are three different asset classes that trade on three different markets with three different interest rates.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#133

Post by lukifer »

logicchains wrote: post #115
smallmancontrov wrote: post #71

Earlier quoted context omitted.

The system was always working, ZIRP was the market screaming that it had more capital than things to do with the capital. Of course, thinking about this too hard quickly leads to the idea of rolling back some of the enormous tax and policy privileges granted to capital, so it was critical for us to not think about it too hard.

"Capital" gets tax privileges to encourage investing, because investing creates things, consumption destroys things. We want more of the former than the latter.

> investing creates things

Predatory private equity. Unproductive rent-seeking. Anti-competitive "acquihires".

> consumption destroys things

Health care. Education. Selling/renting unoccupied housing.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#134

Post by CursedSilicon »

ethagnawl wrote: post #37
danans wrote: post #9

Earlier quoted context omitted.

> You can print money, but you can only ""print"" oil for a short time from reserves, which the US and China have been draining. What's different between the two is that apparently China hasn't made an equivalent dent in its oil reserves, despite no significant reduction in travel, and despite reducing its import demand by 1 OPEC. It's not entirely clear how - but theories include shifts from flights to train travel…

> It's not entirely clear how - but theories include shifts from flights to train travel and shifts from gasoline cars to EVs. From a distance, those look like pretty sound theories. It's wild that the pols and talking heads in the US have been screeching about how "dangerous" China is since the 90s (I remember family members making crude jokes about why I should be learning Mandarin instead of Spanish in middle scho…

As The Onion put it eons ago [1]

"There's no shame in being second best!"

[1] https://youtu.be/53tGLKlsQv8

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#135

Post by smallmancontrov »

zeroonetwothree wrote: post #105
smallmancontrov wrote: post #90

Earlier quoted context omitted.

> Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly? Conservatives: +-------------------------+----------------------------------------+ | President Name | Deficit Increase (+) or Decrease (-) | +-------------------------+----------------------------------------+ | Donald Trump (2nd term) | N/A | | Donald Trump (1st term…

Republican != conservative :) Also some of the numbers are very sensitive to start/end dates (remind me, did anything happen in 2020?)

Yeah, in 2020 we let Trump print $4T in a single election year and then he spent the next four years successfully convincing the weak minded that Biden caused the pandemic inflation by printing $2T over the next four years, running the printer at 1/8th the rate.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#136

Post by smallmancontrov »

CharlesDodgson wrote: post #119
smallmancontrov wrote: post #90

Earlier quoted context omitted.

> Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly? Conservatives: +-------------------------+----------------------------------------+ | President Name | Deficit Increase (+) or Decrease (-) | +-------------------------+----------------------------------------+ | Donald Trump (2nd term) | N/A | | Donald Trump (1st term…

Could this be a lagging indicator, as in programmes take a while to setup and the budgetary pressure falls into the next term?

You really don't want to accept that our deficit expansion has been overwhelmingly due to Republican largesse, do you?

Democrats aren't fiscal conservatives, but the last time they were able to expand the deficit in pursuit of social spending was LBJ. Deficit expansion during my lifetime has been overwhelmingly driven by regressive tax cuts, regressive bailouts, and wars in the middle east.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#137

Post by sfblah »

smallmancontrov wrote: post #71
tananaev wrote: post #2

Finally some evidence that the system is working. Most countries are borrowing like there's no tomorrow, so obviously rates should go up to compensate the risk of not paying back.

The system was always working, ZIRP was the market screaming that it had more capital than things to do with the capital. Of course, thinking about this too hard quickly leads to the idea of rolling back some of the enormous tax and policy privileges granted to capital, so it was critical for us to not think about it too hard.

I don't actually think this interpretation is correct. ZIRP was the government printing money and buying bonds off the market. I think it had more to do with velocity of money, which ordinarily would have been corrected through a recession, but the government prevented that, which will create a much bigger recession at some point in the future.

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#138

Post by caconym_ »

logicchains wrote: post #115
smallmancontrov wrote: post #71

Earlier quoted context omitted.

The system was always working, ZIRP was the market screaming that it had more capital than things to do with the capital. Of course, thinking about this too hard quickly leads to the idea of rolling back some of the enormous tax and policy privileges granted to capital, so it was critical for us to not think about it too hard.

"Capital" gets tax privileges to encourage investing, because investing creates things, consumption destroys things. We want more of the former than the latter.

Sounds like a self-fulfilling prophecy. If you draw a line between capital and consumers, and the latter are so tightly squeezed as a result of the "privilege" imbalance that they can barely afford housing, health care, child care, etc., how do you expect them to engage in entrepreneurship? How do you expect them to efficiently allocate their labor?

Meanwhile we see an absurd consolidation of capital that leaves consumers with fewer and fewer choices for basic products and services, allowing capital to make those products and services worse and more extractive. Rinse and repeat. The contempt for consumers and attitude that capital should be "privileged" manifests in our government's total indifference to the former's plight, despite the well known fact that they are the engine of our economy.

How do you think it's going?

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#139

Post by malfist »

chollida1 wrote: post #121
throw0101c wrote: post #44

Italian and Greek bonds now have lower yields/rates (i.e., considered lower risk(?)) than US bonds: * https://www.investing.com/rates-bonds/

> Italian and Greek bonds now have lower yields/rates (i.e., considered lower risk(?)) than US bonds That's not what rates indicate. its one component, but its far from a straight line from higher rates to more risk. You can't really compare bonds that pay in different currencies by Rate alone.

Why not? Percentage is the same for dollars as it is for yen or franks or pesos

Re: Global bond yields hit 2008 highs, raising stakes for big borrowers

#140

Post by NalNezumi »

method_capital wrote: post #7
tananaev wrote: post #2

Finally some evidence that the system is working. Most countries are borrowing like there's no tomorrow, so obviously rates should go up to compensate the risk of not paying back.

Working is an interesting term (which I agree with btw) because place like Japan with debt at 200%+ of gdp, rates rising are going to annihilate spending in other important areas. Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly?

Maybe it's time some people to update their understanding of the "Japan 200%+ debt" slogan that is mindlessly repeated.

https://www.hbs.edu/faculty/Pages/item.aspx?num=68142

Accounting for the asset holding, Japan's net debt is even lower than UK/US.

>The key lies in the Japanese public sector’s operation of a de facto sovereign wealth fund. Unlike countries such as Norway and Saudi Arabia, which fund such vehicles with national savings from natural resources, Japan finances its investments largely through domestic borrowing at very low floating interest rates

.... >In the case of Japan, evaluating fiscal positions solely through the lens of gross government debt can present a highly distorted picture of the overall fiscal health of the country.

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