Treasury default

Will the Treasury Default and Ruin Bonds?

   On Friday, September 29 it is the deadline to raise the federal budget deficit before a crisis starts on October 1. Trump threatens to not to cooperate unless a border wall is built. To get the budget done Congress would have to authorize paying $30 billion to $60 billion for the wall. But this is a capital expenditure, so the amortized cost might be 3% of the capital cost a year. That’s only $3 to $6 per person a year, plus interest. Trump may find that the senators who can protect him from impeachment are a valuable resource of contacts to build alliances with, rather than to antagonize, so there will be room for compromise. The idea that U.S.

2017-08-23T14:55:37-07:00 August 23rd, 2017|mayflowercapital blog|Comments Off on Will the Treasury Default and Ruin Bonds?

Treasury Default Risk

   In mid-November the U.S. Treasury will run out of borrowing authority and thus run out of cash unless Congress increases the deficit or raises taxes. There is the risk that members of the House of Representatives will not allow a debt extension bill unless their demands are met and for which the president would not agree to accept these demands. This could result in a repeat of the July 31, 2011 crisis where the government almost defaulted on its debt, or it could lead to default.    The main paradigm in bonds is that the worse the economy gets the more that people seek to buy sovereign debt from the giant “print and pay” nations thus causing rates to

2015-10-08T14:30:00-07:00 October 8th, 2015|mayflowercapital blog|Comments Off on Treasury Default Risk

Wisconsin election implies deflation: Independent financial advice

Govenor Scott Walker of Wisconsin survived a recall election tonight which was about his attempts to reign in excessive government spending. This implies that voters will seek to turn back the policies of excess government spending which could ultimately lead to lower taxes and greater economic efficiency. However, in the short run, since this would be accomplished with wage cuts and layoffs, this would be deflationary, so bond prices could go up and stocks could go down.

2017-01-10T23:30:36-08:00 June 5th, 2012|mayflowercapital blog|Comments Off on Wisconsin election implies deflation: Independent financial advice