Asked whether the United States needed to pay its debts in full, or whether he could negotiate a partial repayment, Mr. Trump told the cable network CNBC, “I would borrow, knowing that if the economy crashed, you could make a deal.”Okay Finance 101 bonds are sold on the open market, that means the less confidence a person buying them has in being paid back the less money he is willing to spend upon them. Effectively this means you have to pay a higher effective interest rate. So when a presumptive Presidential nominee who maximized his own profits by paying vendors 80% on the dollar and telling them that it will cost them more than the 20% to sue him for the difference says something like this what do you think happens to the going price of US bonds.
He added, “And if the economy was good, it was good. So, therefore, you can’t lose.”
We've been insanely fortunate that we've been merely walking wounded in the trauma ward of sovereign debt markets. Markets don't "cut deals"; markets buy and sell.
Sorry but apparently all of the so-called financial wizards out there have forgotten that if you (or a gubmint) spend more than you earn (taxes) eventually you are going to run out of 'good faith and credit'. Period.
ReplyDeleteYep, and causing a giant confidence crisis and interest rate increase won't help. Cutting the federal government back to what's covered by Article 1 Section 8 would be too ballsy to major political parties.
DeleteThere is no "deal" to be made, the closest that happens on that with sovereign debt is to turn on the printing press and hyper-inflate your way out.
We are screwed... Hildabeast will just print more and screw financial stability... Sigh
ReplyDeletePretty much, there isn't much to chose between the stated policies of the major presumptive nominees.
Delete"I would borrow..." Probably use Greece as a reference!
ReplyDeleteWell isn't that comforting;)
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