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Bond rout starting to sound market alarm bells

reuters.com

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Re: Bond rout starting to sound market alarm bells

#101

Post by AnimalMuppet »

SideburnsOfDoom wrote: post #17
roenxi wrote: post #12

Earlier quoted context omitted.

Even that argument is starting to fall apart. What are the theatres where the US is supposed to be able to put on a strong showing? It doesn't seem to be Europe, they've got war on their doorstep and if anyone thinks the US is helping they should reflect on their reasoning. It doesn't seem to be the Middle East, the US has made the region less safe. They're not going to be able to act effectively against China given…

> Even that argument is starting to fall apart. Yes, that's what's happening. They were paying tribute, based on a mutually beneficial status quo. Now they're asking if they should continue to.

They weren't (for the most part) paying tribute. They were putting their money somewhere safe - somewhere where the risks of default, inflation, and devaluation were lower than other places.

But I agree, now they're asking if they should continue, because those assumptions are starting to look invalid.

Re: Bond rout starting to sound market alarm bells

#102

Post by [deleted] »

AnimalMuppet wrote: post #100
intended wrote: post #21

There are several things at play. 1) Trump is playing a storyline. The Market place of ideas in America has one side which is under a monopoly. It sets its own prices, decides what information enters and exits, decides what the market SHOULD look like. It manages half the voting population. This is why “Trump does what he says” resonated. Previous lawmakers played the role on TV, but in back room deals, acted as if r…

> If Americans want a snowballs chance in hell, there need to be special elections around the country in 2025, to take control of congress. Perhaps, though I don't see how you're going to get them without changing or violating the Constitution. And changing the Constitution would mean acceptance by those you're trying to get rid of. Bluntly, the only way this could happen is a civil war - a real, shooting civil war,…

[deleted]

Re: Bond rout starting to sound market alarm bells

#103

Post by EdiX »

griffzhowl wrote: post #95
EdiX wrote: post #82

Earlier quoted context omitted.

> It's a commonplace of international relations, and intuitively obvious, that the more integrated are the economies of two countries, the less likely they are to start wars with each other This is indeed a common way of thinking and intuitively obvious but I think it has also been proven wrong by the war in Ukraine. We sanctioned Russia as hard as we could and it 3 years later they're still there. Withholding some n…

Just as a matter of logic, you can't prove wrong a rule of thumb that admits exceptions by pointing to an exception. There can always be reasons why, despite economic integration, other factors take precedence, e.g. perceived existential risks can push countries into war despite foreseen economic shocks. In the case of Russia, while there were subtantial sanctions, it was still trading natural gas to the EU, and I be…

I don't disagree, but you're just explaining why it doesn't work.

Re: Bond rout starting to sound market alarm bells

#104

Post by _DeadFred_ »

griffzhowl wrote: post #96
tarsinge wrote: post #84

Earlier quoted context omitted.

> the strategic cost-benefit analysis Is there anything pointing to this supposed thorough analysis really being done behind the doors? Genuinely asking, because for now in my opinion from POTUS communications I don’t make me think there is and this comment is another instance of trying to make something irrational rational.

No specific evidence, just that the State department and the analysis branches of various agencies still exist and are staffed by professionals whose job it is to conduct such analyses. It's not out of the question that some of these might have filtered up and in some way influence decisions. If the tariffs remain in place then one result that is guaranteed is that they will reduce trade between the US and the rest o…

Trump has talked about his tariff idea since the 80s, and talked to Oprah about it way back when we lived in a completely different world. I'm not sure his 80s era plan is based on 2025 dynamics that somehow filtered up to him in his first months of office.

Re: Bond rout starting to sound market alarm bells

#105

Post by tastyface »

const_cast wrote: post #92
roenxi wrote: post #70

Earlier quoted context omitted.

Is it weird to be consistent? The "federal government is inherently evil" is a principle that doesn't magically go away when small-government people get in to power. The argument never was nor will be that [this thing] is bad when [the wrong people] do it; the argument is that [this thing] is bad. There isn't an expectation that a right wing government will somehow transcend the realities of government. The ideal soc…

> The "federal government is inherently evil" is a principle that doesn't magically go away when small-government people get in to power. In my experience it’s exactly this. The principle vanishes quickly, because none of those “small government” people were really so. The primary small government faction in the US is conservatives. They’ve been, for a few decades now, VERY large government. Bordering on fascist. The…

I’m not sure why this comment was killed. Completely accurate assessment. Republicans are only “small government” until states try to do something they don’t like. (Support trans athletes or undocumented immigrants? Have fun getting all your federal funding pulled.) And the monarchy of the executive is something they’ve been eagerly proselytizing for years: https://en.m.wikipedia.org/wiki/Unitary_executive_theory

Re: Bond rout starting to sound market alarm bells

#106

Post by griffzhowl »

_DeadFred_ wrote: post #104
griffzhowl wrote: post #96

Earlier quoted context omitted.

No specific evidence, just that the State department and the analysis branches of various agencies still exist and are staffed by professionals whose job it is to conduct such analyses. It's not out of the question that some of these might have filtered up and in some way influence decisions. If the tariffs remain in place then one result that is guaranteed is that they will reduce trade between the US and the rest o…

Trump has talked about his tariff idea since the 80s, and talked to Oprah about it way back when we lived in a completely different world. I'm not sure his 80s era plan is based on 2025 dynamics that somehow filtered up to him in his first months of office.

Fair point. It's reasonable to conclude that a lot of the impetus is coming from Trump himself. On the other hand, the Biden admin quietly kept Trump's first-term China tariffs, even though they reversed many other Trump policies. So that suggests some involvement of the wider foreign policy establishment that's continuous over changing administrations

Re: Bond rout starting to sound market alarm bells

#107

Post by const_cast »

tastyface wrote: post #105
const_cast wrote: post #92

Earlier quoted context omitted.

> The "federal government is inherently evil" is a principle that doesn't magically go away when small-government people get in to power. In my experience it’s exactly this. The principle vanishes quickly, because none of those “small government” people were really so. The primary small government faction in the US is conservatives. They’ve been, for a few decades now, VERY large government. Bordering on fascist. The…

I’m not sure why this comment was killed. Completely accurate assessment. Republicans are only “small government” until states try to do something they don’t like. (Support trans athletes or undocumented immigrants? Have fun getting all your federal funding pulled.) And the monarchy of the executive is something they’ve been eagerly proselytizing for years: https://en.m.wikipedia.org/wiki/Unitary_executive_theory

It’s unpopular because conservatives hate it when you tell them what their representatives are doing. Again, they’re allergic to accountability!

To this day, millions deny the impact of project 2025. Like it’s some made up liberal strawman.

Guys, half the writers are in his cabinet. He’s following it to a tee. I don’t think we could’ve asked for a more perfect establishment Republican if we tried.

They’re not some little guys dismantling the system. They ARE the system.

Re: Bond rout starting to sound market alarm bells

#108

Post by tastyface »

const_cast wrote: post #107
tastyface wrote: post #105

Earlier quoted context omitted.

I’m not sure why this comment was killed. Completely accurate assessment. Republicans are only “small government” until states try to do something they don’t like. (Support trans athletes or undocumented immigrants? Have fun getting all your federal funding pulled.) And the monarchy of the executive is something they’ve been eagerly proselytizing for years: https://en.m.wikipedia.org/wiki/Unitary_executive_theory

It’s unpopular because conservatives hate it when you tell them what their representatives are doing. Again, they’re allergic to accountability! To this day, millions deny the impact of project 2025. Like it’s some made up liberal strawman. Guys, half the writers are in his cabinet. He’s following it to a tee. I don’t think we could’ve asked for a more perfect establishment Republican if we tried. They’re not some li…

Yep: https://www.project2025.observer/

Re: Bond rout starting to sound market alarm bells

#109

Post by roenxi »

ac29 wrote: post #94
roenxi wrote: post #77

Earlier quoted context omitted.

Do a walk through of what you're implying there - you're suggesting the US is going to lump trillions of dollars worth of inflation losses onto the voting public to protect foreign investors. At a time when the public are extremely twitchy and sensitive to price rises. There is a clear risk that the US will instead lump trillions of losses on foreign investors and attempt to protect the purchasing power of their vote…

> to protect foreign investors There is a common misconception that most US debt is held by foreign investors, but that is wrong - 80% of treasuries are held domestically.

The domestic bondholders would pay the inflation tax and are all wealthy enough to have savings, ie, they are also taxpayers. They're not getting out of this no matter what happens; they're going to lose out.

The question is really do the bondholders directly eat the losses (20% foreigners) or US consumers and their tax base eats them (potentially ~0% foreigners although inflation is so complicated in practice it is hard to tell). It'd be pretty easy to handle the situation by a standard default and probably better for the voting base. The risk of the politicians breaking that way is obviously present.

It is risk, it doesn't even have to be likely. It is just the question of "will the bondholder get all the money they're promised?" and the answer can obviously be no. The US can't afford to repay their bonds, purposefully triggering vast inflation would be quite damaging to the US political class and there is a chance they decide not to. It isn't a negligible chance.

Re: Bond rout starting to sound market alarm bells

#110

Post by roenxi »

pjc50 wrote: post #81
roenxi wrote: post #46

Earlier quoted context omitted.

> But the bond stuff isn't "tribute" or nationalism; remember, it's being made by private sector investors, not national governments. Are you sure about that? Back in 2022 the US Treaury reckoned that most holdings were foreign governments [0] - they had Foreign Official at ~3.9 trillion and foreign total at ~7.5 trillion. That has been shifting towards the private sector since then but the market has heavy sovereign…

> there isn't a reasonable path to them paying the money back Indefinite rollover is completely fine! Yes there are problems if the total interest payment gets too large, and there's scope for discussion about that, but there's no hard cutoff, it just becomes more and more uncomfortable. People saying there will be a default: deadline please. Or is this just a general assumption that mortality is inevitable for state…

It isn't completely fine and the interest payments are too large.

Sure the US can afford its debts if it avoids paying fair interest and never returns the principle. The idea that is reasonable from a lender's perspective is fantasy and we live in reality.

> The UK has never defaulted, for example.

The UK has traditionally not been in a state of running up debts; they borrowed money for things like world wars then spent most of their time paying loans down. The US isn't behaving like a creditworthy country because they borrow to consume and they aren't attempting to shrink the debt.

If the US tended to be repaying the money it borrowed then it'd be plausible that they intend to avoid a default.

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