3 Comments on “Rational markets (cont.)”

1. Wall Street wants to lower US bond rating so they can raise the interest on US debt, make more money off us. Will end up to be trillions of dollars , won’t it ? So, the Tea Party faction served the ruling class by giving S and P an excuse to lower US bond rating.

2. I guess Eric Cantor is a “squeezed short?” Somebody should check if he closed out his position after the final vote. I heard that S&P only gave a negative outlook to long-dated US T-notes and bonds. Now how the hell are my finance students going to understand that the US T-Bill is a proxy for the “risk free” rate – now yielding 0.015%!!! I thought an S&P downgrade implies higher risk which always implies higher return?? I guess I’ll have to think of some alternative model to the CAPM (ugh, I hate when reality screws up my lecture notes!!!!).

3. Treasuries are the best in a bad lot now. That doesn’t mean much except to show how depressed the world economy is. And it will only get worse, the ruling class of the West has no answers.

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