Free Republic

Obama proposed this last year and now its back on the table: This week, the Wall Street Journal’s John D. McKinnon and Andrew Ackerman are reporting that House Speaker John Boehner “is willing to consider curbing the tax-exempt status of municipal-bond interest, subject to negotiations with the White House.” Reality check...the only reason investors buy muni bonds is because of the tax exempt status. They pay less interest than other bonds that are already taxed so if they are gonna tax the muni's....might as well get the higher interest rate. So what happens then? Local, county and state municipalities will...

The financial disaster of the loss of over one Trillion Taxpayer Dollars per year by the incompetent financial stewardship of Benghazi-Coward B. Hussein Obama continues without significant opposition by the cowardly US House of Representatives. Sobber of the House Boehner is so fearful of the negative opinions that will always come from the Commie Liberal Agenda Media, (CLAM), that Boehner is willing to tearfully impale himself on Obama's threat of a veto just to "save" America from not getting a "Deal" by the end of 2012. Conservatives do not want a "Deal." What we want is for the US House...

Another bond-buying program seems likely as the Federal Reserve tries to boost the economy. But long term, it will lead to higher interest rates, inflation and bond market turmoil.

More than 200 school districts across California are taking a second look at the high price of the debt they've taken on using risky financial arrangements. Collectively, the districts have borrowed billions in loans that defer payments for years — leaving many districts owing far more than they borrowed.

SAN LUIS OBISPO, Calif. (MarketWatch) — Big money managers are warning investors. They’re now citing the Bible: “Seven lean years.” No recovery till 2016. That was Jeremy Grantham back a few years ago. His GMO firm manages $104 billion. Now Bill Gross and Mohamed El-Erian, the co-CEOs at the $2 trillion Pimco money managers, are citing the same biblical warning to jar investors awake and prepare for the coming lean years of slow, low growth and austerity. Except in Pimco’s new warning, the future just got much, much darker for investors — no recovery until 2022. Earlier in the summer...

PIMCO: 'THE US WILL GET DOWNGRADED' Rob WileOctober 18, 2012 PIMCO has seen enough of the federal government's "fiscal theatre" and now says the U.S.'s credit rating will inevitably be slashed, Bloomberg's Tracy Withers reports. “The U.S. will get downgraded, it’s a question of when,” Withers quotes Scott Mather, Pimco’s head of global portfolio management, as saying. “It depends on what the end of the year looks like, but it could be fairly soon after that.” If President Obama is reelected, Mather said, it's likely resolution of the country's deficit “doesn’t happen in a nice way, and we have disruption...

Regardless of who the President is after this close election, the equity markets and the U.S. economy are in trouble. Debt has spread throughout the Western world. The fallout is political dissonance, growing economic hardship and, in some places, mob violence.Ground zero for the spreading fear and panic is Greece, which was once the worldÂ’s greatest civilization and the birthplace of democracy, poetry and philosophy.There is violent evidence of the contradiction from what the ancients taught and what is unraveling in Greece. It would all just be another boring story at the end of the news day, except there is...

The picture below shows $15 trillion dollars worth of $100 bills on $10 million dollar pallets stacked on top of each other over an area that is one third larger than a regulation football field. An electronics van is parked between the stack and the Statue of Liberty. A single $100 million dollar pallet rests in front of the truck’s cab. See it?Recently, I reported that the Federal Reserve Bank (FED) secretly gave ten trillion dollars of interest-free loans to over a dozen European banks to shore up the Euro and keep them financially solvent. I later found out that...

QE3 certainly has wreaked havoc on the agency mortgage-backed securities market. The Fannie Mae 30 year current coupon (rate to MBS investors on new Fannie MBS) spread over 10 year Treasures has gone NEGATIVE! As in -3.65 basis points. But if we compare the Fannie 30 year current coupon to 5 year Treasury yields, we have a positive yield spread of about 100 basis points. Meanwhile, Fannie Mae 3.5 MBS duration just went negative! So, The Fed’s QInfinity has really done a number on MBS yields … and risk. MBS investors may be lining up to dump agency MBS on...

Japanese Finance Ministry To Japanese Bondholders: You’re Screwed! Wolf Richter, Testosterone PitSep. 25, 2012, 7:53 AMThis has got to be the icing on the Japanese cake. The otherwise bland website of the Japanese Ministry of Finance, more specifically the FAQ page on government bonds, has been catapulted to stardom on Facebook and Twitter. Not in a good way. As you flip through the MoF’s website, page after page, you will mostly see zero Facebook likes and zero tweets. Social media and the MoF ignore each other. But go to the FAQ page, to item 4, Government bonds. Under the second...

Beijing Hints At Bond Attack On JapanThe Telegraph (UK)Evans Ambrose-Pritchard A senior advisor to the Chinese government has called for an attack on the Japanese bond market to precipitate a funding crisis and bring the country to its knees, unless Tokyo reverses its decision to nationalise the disputed Senkaku/Diaoyu islands in the East China Sea. Jin Baisong from the Chinese Academy of International Trade – a branch of the commerce ministry – said China should use its power as Japan’s biggest creditor with $230bn (£141bn) of bonds to “impose sanctions on Japan in the most effective manner” and bring Tokyo’s...

MOODY'S THREATENS TO CUT USA RATING WITHOUT DEAL TO CUT DEBT/GDP Sam RoSeptember 11, 2012Moody's is warning that it may cut the US government's credit rating from the Aaa to Aa1 if it is unable to negotiate a deal to materially reduce its federal debt to GDP ratio. Here's the annoucnement from Moody's: ------------------- Moody's issues update on the outlook for the US government's debt rating: Budget negotiations key Global Credit Research - 11 Sep 2012 New York, September 11, 2012 -- Budget negotiations during the 2013 Congressional legislative session will likely determine the direction of the US government's Aaa...

On July 18th, 2012, the German government sold US$5.13 billion worth of 2-year bonds at an average yield of -0.06%. Please note the negative symbol in front of that yield number. What this means is that the German government was able to borrow money for less than nothing. When those specific bonds expire in two years’ time, the German government will pay back the original $5.13 billion minus 0.06%. Expressed another way, investors knowingly and willingly bid the German government $5.13 billion in exchange for bonds that will pay no interest and are guaranteed to lose them money on expiration.1...

A decision by Warren Buffett's Berkshire Hathaway Inc. BRKB -0.15% to end a large wager on the municipal-bond market is deepening questions from some investors about the risks of buying debt issued by cities, states and other public entities. The Omaha, Neb., company recently terminated credit-default swaps insuring $8.25 billion of municipal debt. The termination, disclosed in a quarterly filing with regulators this month, ended five years early a bullish bet that Mr. Buffett made before the financial crisis that more than a dozen U.S. states would keep paying their bills on time, according to a person familiar with the...

GARY SHILLING: Bonds Are Great, Stocks Are About To Plunge 40% Henry Blodget Aug. 9, 2012, 12:51 PM |It's hard to find anything in investing that everyone agrees on, but one thing almost everyone agrees on right now is the theory that bonds are terrible investment because interest rates are about to soar. In fact, over the last several years, a parade of respectable economists and strategists have made the seemingly obvious observation that "interest rates have nowhere to go but up," suggesting that anyone who is dumb enough to buy bonds will get killed. And, so far, they've all...

How To Prepare For The U.S. Treasury Bond Market Apocalypse Interest-Rates / US Bonds Aug 05, 2012 - 04:52 AM By: Investment U Alexander Green writes: The Wall Street Journal made an interesting observation recently, “Treasury bonds are priced for the end of the world.” It was a news article, not an opinion piece. But it happens to be the viewpoint of virtually every investor with half a brain – or a modicum of common sense. A few months ago, for instance, the world’s best-known investor, Warren Buffett, wrote in his annual letter to shareholders, “Right now bonds should come...

(CNSNews.com) - Since President Barack Obama was inaugurated in January 2009, the Federal Reserve’s holdings of U.S. government debt have quintupled, according to the Fed’s official monthly balance sheet. On Jan. 28, 2009, a week after Obama’s nomination, the Fed owned $302 billion in U.S. Treasury securities. On April 25, 2012, the latest date reported, the Fed owned five and a half time that much in U.S. Treasury securities--$1.668 trillion. That is an increase from January 2009 of $1.366 trillion—or 452 percent. Under Obama, the Federal Reserve has become the single largest owner of U.S. government debt. When Obama entered...

DYLAN GRICE: The Next Crisis Will Be Born Out Of The US Treasury Market Matthew Boesler Jul. 1, 2012, 6:23 AM SocGen investment strategist Dylan Grice does not think "safe-haven" assets are very safe. In Grice's latest note to clients, he compares the illusion of safety created by faulty regulation before the 2008 financial crisis to the new, impending wave of financial regulation on the table like Dodd-Frank in the U.S. and Basel requirements on a global scale. Grice warns "madness is going on in the government bond markets" today, furnishing this long term chart of US Treasury yields going...

Investors who find Treasury yields too meager can choose from a long menu of meatier government bond yields abroad. But finding the right combination of risk and return is getting trickier. Most investors hold a sizable chunk of government debt in their bond portfolios, for safety more than the income the bonds generate. Not long ago, that slice consisted of one kind of bond: U.S. Treasurys. But the relationship between yields and risk in government bonds has taken an odd turn. As a result, even cautious investors should consider branching out from the U.S. to places like Australia and Mexico....

(CNSNews.com) - Since President Barack Obama was inaugurated in January 2009, the Federal Reserve’s holdings of U.S. government debt have quintupled, according to the Fed’s official monthly balance sheet. On Jan. 28, 2009, a week after Obama’s nomination, the Fed owned $302 billion in U.S. Treasury securities. On April 25, 2012, the latest date reported, the Fed owned five and a half time that much in U.S. Treasury securities--$1.668 trillion. That is an increase from January 2009 of $1.366 trillion—or 452 percent. Under Obama, the Federal Reserve has become the single largest owner of U.S. government debt. When Obama entered...