Friday, February 06, 2009

Big Bad Voodoo Bonds

The moment has passed. This is the 10 year. Anybody glad they bought those 2.14159%s as a deflation hedge? What is the NPV of a Dec '18 2.1% in a 4% world? About $85. Ouch.

California took another ratings hit today. Still a long way to go and the States' lenders still have no clue. The Sacramento line is that debt always gets paid first. The Treasurer was just on the financial entertainment network saying exactly that. He even went so far as to say bondholders get paid before medical treatment for children. Anybody want to take the over on how long that bet lasts?


Property Flopper said...

FIRST they have to find a way to pay the med bills OR the debtors.

CA is in too deep, it will get VERY ugly before it can be solved.

Rob Dawg said...

Sacramento still thinks once things get bad enough they'll be able to dig a little deeper into our pocketbooks. They are fatally incorrect.

Mr. Outspoken said...

I only buy bonds yielding 3.14159 or higher.

w said...

Come on now, how can they over come the will of the people. 50 folks marched on State Senator Stricklands office today in the rain to protest school cuts. In the rain! For Southern Californians that is like doing a sit in during a Blizzard for New Yorkers. Have you ever tried drinking a Latte in the rain? The lid is all wet and stuff.

Of course they were open to a combination of tax cuts and limited budget cuts to maintain education.

MaxedOutMama said...

Rob - well, if they don't pay the debts, CA comes to a screeching halt.

This is the foreshadowing of the doom of the Pelosi-school Democrats nationally. There comes a time when reality bites you in the butt, and that time is almost here for the US as a whole.