[duke3522]

$this->bbcode_second_pass_quote('', 'T')reasuries Fall as U.S. Considers Reintroducing 30-Year Bond
May 4 (Bloomberg) -- The 30-year U.S. Treasury bond fell the most in more than a year, leading longer-maturity debt lower, after the government surprised investors by saying it is considering resuming sales of the security.

[gnm]

I believe I read somewhere that the fed defaulted on bonds a couple years back - only paying a percentage of the total back...

I'll see if I can find the article..

-G

[crude_intentions]

$this->bbcode_second_pass_quote('', 'M')aybe the Feds are going to tell all the bond holders "Well we can't pay off those short term bonds you have, but we'll be happy to let you buy a bunch of our 30 year bonds."

[Jack]

Actually, it's a clever move. What the Fed is saying is that they believe rates will go higher. So...sell long term bonds and lock in a low rate. Of course, purchasers of the bonds will rue the day...

[merecat]

ha ha 30 year US bonds... oh my sides... only mugs and marks will be buying these. The us feds a good grifter, i'll give it that! If anyone out there's considering buying them then why not also buy a shed load of bonds from me, good price, i have an inkjet, they will look real purdy, I promise to pay the bearer in 30 years.... you will clean up.... honest!

[lowem]

$this->bbcode_second_pass_quote('gnm', 'I') believe I read somewhere that the fed defaulted on bonds a couple years back - only paying a percentage of the total back...

I'll see if I can find the article..

-G

[Doly]

I don't know anything about investments, but aren't bonds supposed to be one of the safest investments possible?

[Grimnir]

$this->bbcode_second_pass_quote('Doly', 'I') don't know anything about investments, but aren't bonds supposed to be one of the safest investments possible?

[Pfish]

Does a holder of a bond have rights to the assets the bond was issued on?

Case in point: Fannie Mae had been shoveling off these brilliant 2-5 ARMs as bonds on the market. My understanding is China and other Asian nations have bought these. Now, it seems when the market turns there will be a lot of defaults and foreclosures--there always are. But does the holder of the bond have access to the property as collateral?

Back in the 80's the US suckered Japan into buying property at highly inflated values--Sears Tower, Pebble Beach to name a few. As soon as the market swamped, the banks in Japan took it on the nose and did not recover for many years.

So is the US doing it again to a different trading partner? Or would China own title to the land?

PP

[ubercrap]

Isn't Japan still the country most highly invested in the U.S. by a longshot?

[jdmartin]

$this->bbcode_second_pass_quote('Pfish', 'D')oes a holder of a bond have rights to the assets the bond was issued on?

Case in point: Fannie Mae had been shoveling off these brilliant 2-5 ARMs as bonds on the market. My understanding is China and other Asian nations have bought these. Now, it seems when the market turns there will be a lot of defaults and foreclosures--there always are. But does the holder of the bond have access to the property as collateral?

Back in the 80's the US suckered Japan into buying property at highly inflated values--Sears Tower, Pebble Beach to name a few. As soon as the market swamped, the banks in Japan took it on the nose and did not recover for many years.

So is the US doing it again to a different trading partner? Or would China own title to the land?

PP

[Pfish]

JD:

I don't think Fannie Mae is guaranteed by the US gov. In fact, I think this is why Greenspan warned congress (fat lotta good that did him) about the impending bond market created by Fannie Mae. Think about it. The US brings in a couple of financial types from Aisa. Wines them. Dines them. Hooks 'em up with hookers. Shoves a little into the private swiss kitty. Now you are talking! Same show, different ponies than in the 80's. Again, I don't think they are guaranteed by the US currency.

PP

[lowem]

Bond holders are by definition creditors and have first rights to the underlying assets, ahead of shareholders.

So if a company goes belly-up, the creditors will have to be paid first. It's a long and messy process, and everybody loses here and there, but the shareholders who didn't sell off earlier typically won't get much - if anything.

The above is for corporate bonds. Government bonds are a little bit different.

And, "full faith and credit" of the United States government isn't quite 100% nowadays anyway :
http://www.jroller.com/page/lowem/20040 ... t_defaults

[jdmartin]

$this->bbcode_second_pass_quote('Pfish', 'J')D:

I don't think Fannie Mae is guaranteed by the US gov. In fact, I think this is why Greenspan warned congress (fat lotta good that did him) about the impending bond market created by Fannie Mae. Think about it. The US brings in a couple of financial types from Aisa. Wines them. Dines them. Hooks 'em up with hookers. Shoves a little into the private swiss kitty. Now you are talking! Same show, different ponies than in the 80's. Again, I don't think they are guaranteed by the US currency.

PP

[RonMN]

Before we defaulted on bonds & allowed china to actually own US property because of bad debt...i would have to imagine that we would print it all up & pay in worthless (deflated) us dollars.

Again this would be nothing short of an act of war (economic terrorism) but atleast the american land would still belong to america.

[frankthetank]

A question i would have then is, if our borrowing needs grow (most likely!) and people (Japan, CHina) don't want worthless bonds, do they start asking for collateral...say...Yellowstone?

[lowem]

$this->bbcode_second_pass_quote('frankthetank', 'A') question i would have then is, if our borrowing needs grow (most likely!) and people (Japan, CHina) don't want worthless bonds, do they start asking for collateral...say...Yellowstone?

[aahala]

Both Fannie Mae and Freddie Mac were chartered by the government and
have the same housing mandates and regulatory structure. Freddie was
never a federal agency, unlike Fannie.

Any debt offerings of either require the not guranteed by the government
disclaimer.

When Fannie was privatized, the Ginnie Mae functions were retained as
a federal agency. Ginnie Mae securities are backed by the full faith and
credit of the US government, so the rates they pay are almost always
lower than the rates on Fannie and Freddie Mac securities.

[Ayoob_Reloaded]

$this->bbcode_second_pass_quote('aahala', 'B')oth Fannie Mae and Freddie Mac were chartered by the government and
have the same housing mandates and regulatory structure. Freddie was
never a federal agency, unlike Fannie.

Any debt offerings of either require the not guranteed by the government
disclaimer.

When Fannie was privatized, the Ginnie Mae functions were retained as
a federal agency. Ginnie Mae securities are backed by the full faith and
credit of the US government, so the rates they pay are almost always
lower than the rates on Fannie and Freddie Mac securities.

[aahala]

Reload

I think you have confused the private companies, Freddie and Fannie,
and the government agency Ginnie. Ginnie is a federal agency, and
any gurantee Ginnie makes runs against the government.

Ginnie gurantees the timely payment of interest and principal of
the securities, which the underlining home loans have been guranteed
or insured by other government agencies, primarily VA and FHA.