Armageddon, collapse, disaster, Lehman on steroids, and calamitous are just some of the words being used by everyone except bond traders and Treasury holders. The only part of the curve that is selling off this morning in response to all the drama over the weekend is the 30 yr bond and its yield at 4.30% is still below the level of 4.39% it was at just a few weeks ago and well below the high of the year of 4.77% in Feb. The spread between 2′s and 30′s at 391 bps compares to 401 bps in Feb. My point of course is that while the S&P futures seem to be perturbed by the lack of a deal, the US Treasury market, the market most sensitive to the credit worthiness of the US, is barely responding, again. Granted, the treasury market is the most manipulated in the world thru Fed policy, but there is still clearly a message here. A deal will happen in the next few days or few weeks at worst but be sure that unless the ponzi scheme’s of Medicare, Medicaid and Social Security are substantially altered, we will all replay this soap opera again, I guarantee. One last comment on this, a debt default can happen but in a stealth way even if bondholders get their coupon’s and principal back and that is thru a debasement of the US$. That is where we default.

Category: MacroNotes

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “Armageddon, collapse, disaster, yawn”

  1. kdruff says:

    I love how it’s always the rich who can afford health care and retirement that are calling for the end of Medicare, Medicaid and Social Security.

  2. wally says:

    “ponzi scheme’s of Medicare, Medicaid and Social Security”

    They aren’t ponzi schemes, they are how a country takes care of it’s own. But if you care more about yourself than fellow citizens, you’d call them names.

  3. USSofA says:

    “ponzi scheme’s of Medicare, Medicaid and Social Security”

    By definition they are ponzi schemes. The difference is that while a classic ponzi fails when the new investors dont contribute enough to pay the preceeding investors, social security and medicare are being propped up by taxpayer debt.

  4. ilsm says:

    There are two ponzi schemes running here:

    The war machine and the medicine machine, both need to pillage SS…………………

  5. Thalamus says:

    “…ponzi scheme’s of Medicare, Medicaid and Social Security” is a correct statement–there is no cash in a “fund” to support these programs, only the future deposits of employees that keep it liquid. All three programs will have to steal from general tax receipts in increasing amounts the next 20 years as the pyramid starts getting more rectangular.

  6. ilsm says:


    Default on SS and default on it all.

    Just like any other bond holder will steal from general tax receipts.

    SS and medicare paid for the wars, now no one remembers those bonds were built with real money from working folk.

    All debt is a claim, a steal, from future receipts.

    Default on SS and default on it all.

  7. johnl says:

    Ponzi schemes require the voluntary contributions of greedy investors, if paying taxes was voluntary then it the “Ponzi scheme” called the government should have collapsed years ago!
    The problem isn’t social programs it is the accounting of the debt’s of those and other programs.

    To identify the ponzi scheme look to were the voluntary contributions are being made!

  8. realgm says:

    If the US didn’t bailout the bank and took on all the bad mortgages, then the debt issue wouldn’t be as bad as it is.

  9. wally says:

    Apparently lots of people have no idea what a ‘ponzi’ is. The confuse it with pay-as-you-go, which is a completely different thing.

    Further, a bulge in spending that results in a deficit is not disaster – the retiring of boomers is not the end of the world. Stuff happens after that. And after that, too.

  10. pintelho says:

    Dr. Boockvar

    You forgot the Dept. of Defense’s ponzi scheme…dont leave that one out next time please.