Wednesday, July 13, 2011

Debt ceiling; UST bond ratings

Moody's follows S&P in putting US bonds on watch negative.  However, they state that this is specifically related to any possible inability to raise the debt ceiling.

I have complete confidence that our gov't will figure out a last second solution for raising the ceiling.  That's simply how negotiations go... the vast majority of standoffs get done at the last second.  Also, there are so many possible workarounds to avoid default, it's not even funny.  So in that sense, I will be looking to make a bet on no-default as we increasingly approach a deadline.

However, in the longer-term sense, it's interesting to see the market finally start to see the big macro events unfolding... one day, US debt could easily be in the same situation as Greece is now.

It was very funny listening to Bernanke respond to Ron Paul's question about whether Bernanke considers gold to be money.  Bernanke's job is to keep foreigners buying USTs and USDs for as long as possible rather than gold/silver, so obviously he has to deny that gold is money while no doubt knowing the opposite to be true.  Bernanke's not an idiot... his position is political.