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Re: My God, you are an idiot.
Quote:
Originally Posted by Greedy,Greedy,Greedy
Actually, I think he is circling around but not closing on a key point. There will be a flight of capital out of treasuries, and out of US corporate and municipal bonds. That will benefit companies and governments in other parts of the world. Probably not enough to offset the collapse of equities markets and the grinding to a halt of the financial system, but, in the long term, it will be a big step on the road from the American to the Asian century.
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I think this is the wrong way to think about what will happen. I would be surprised if you see a huge change in where capital is invested. People are not going to stop buying Treasuries. BUT, rates will change. Many different types of bonds will get more expensive, and none are going to get cheaper. A company or government in another part of the world is not going lend money for less than they do today, just because buyers are going to find other options less attractive. To the contrary -- they may be able to ask more than they do today, since there will be fewer alternatives.
It's like a huge, massive tax.
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