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View Diary: Market Humiliates S&P — Rejects Downgrade (266 comments)

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  •  No really, there's a market for US treasuries (6+ / 0-)

    You can participate if you want to: Linky.

    The interest rate is decided by the government. The price is determined at auction. There's no central bank conspiracy here...

    Try looking at things another way.

    by atheistben on Mon Aug 08, 2011 at 08:56:02 AM PDT

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    •  LOL (1+ / 0-)
      Recommended by:

      do you even understand what QE1 and QE 2 were?  no really?

      Do you understand what the ECB announced friday to stop the slide?  what they are doing today?  

      Bad is never good until worse happens

      by dark daze on Mon Aug 08, 2011 at 09:14:53 AM PDT

      [ Parent ]

      •  Do YOU understand what they were? (0+ / 0-)

        Normally, the Federal Reserve manipulates the Treasury auction by buying and selling T-bills (quantity adjustment) to achieve desired interest rates.  So, yes, there is a market.  Not a free market, but definitely a market -- the Fed isn't the only player!

        However, in QE1 and QE2, the Fed changed their policy -- they sold T-bills to buy junk.  This is a very different policy, which has no practical effect on interest rates (which are already basically zero).  It does, however, make the Fed potentially insolvent if the Fed doesn't spend some time printing Federal Reserve Notes.

        Read pp. 1-7 of Krugman's _The Great Unraveling_ (available from Google Books). NOW.

        by neroden on Mon Aug 08, 2011 at 07:58:29 PM PDT

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    •  exactly (4+ / 0-)
      Recommended by:
      Mets102, vcmvo2, atheistben, neroden

      people think the treasuries market is some opaque beast or something. it's easier to understand than the stock market, for sure.

      countries and investors are still willing to buy treasuries hand over fist. the fact that yields haven't spiked at all in response to this news just goes to show what horseshit the decision was.

      and this is in spite of the fact that the fed hasn't decided on another round of bond purchases. they aren't at the head of the pack right now, threatening to buy up treasuries if yields look like they're going to rise. the market is doing this all on its own.

      anyone born after the McDLT has no business stomping around acting punk rock

      by chopper on Mon Aug 08, 2011 at 10:05:13 AM PDT

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