[select:
Developers are seeking new sources of funding after a U.S. tax incentive expired last year. They may have to pay higher interest rates than more established asset-backed bonds to attract investors. Companies such as SunRun Inc. and SolarCity Corp. are ... First Solar Bonds Financing .6 Billion U.S. Panel Boom
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There has been a lot of recent discussion over whether or not there is a bubble in U.S. treasury bonds, and to tell you the truth there are some very compelling arguments for both sides. But before we get into some of these arguments Id like to take a moment to review the significance of the U.S. treasury bonds market.
If you ever wondered how countries are able to finance their spending while accumulating debt, the answer is that it would be through government bonds, which in our case are called U.S. treasuries. Treasuries are the debt financing instruments of the United States Federal government; they allow investors an opportunity to put their money into our country, offering a yield on their investment while financing our debt; essentially a loan. These investments are regarded by many to be one of the safest on the planet; however, there are some risks to investing in government bonds. If a country continually racks up too much debt and simultaneously takes a severe hit in their ability to generate tax revenues to repay that debt, then it is quite possible that investors would begin to slack off from buying their bonds, or worse yet, sell them. Remember, the higher the demand for bonds, the lower the yields or interest rates, while the lower the demand, the higher the yields and interest rates. Higher interest rates can cause great difficulty for these countries to repay their debt, so this development in many cases is a very unwelcome one.
Unfortunately, the preceding is what we saw in Greece and Spain this year. These countries have been building up tremendous debt through their reckless spending binges, and when the world went through a colossal down turn, their ability to repay their debts was severely diminished. It was at this time that bond holders began to rethink whether or not it was a wise idea to keep holding on to their debt. What ensued was a mass exodus of Greek and Spanish bonds, interest rates went through the roof making it almost impossible to repay their debt, and all of a sudden within just a few weeks there were fears of default, which basically meant that they wouldnt be able to meet their debt obligations. This sort of turn of events would have an extremely large negative effect. Greece and Spain have very small economies relative to the U.S., but the danger lies in the possible collateral damage. What most people dont realize is that many large banks are financing these countries debts, therefore if a country were to default on their bond obligations, the banks and investors that bought these bonds would end up with a huge loss. If these banks take a huge loss then their confidence to lend would diminish, banks could freeze up again not lending even to one another, and we could again be stuck with another round of systemic risk similar to what we saw in 2008 where investors sold out of their investment holdings driving down the prices of virtually every single asset class on the planet.
These turnings of events actually caused a positive unintended consequence for the U.S., as many of the banks, governments, and investors which were buying these Greek and Spanish bonds looked to invest their holdings elsewhere, and by default U.S. treasury bonds became a prime destination. So consequently as a result, demand for our debt went higher and yields went lower, allowing our country to borrow more money at a cheaper interest rate.
This is not the only driving force or source of demand for our U.S. treasury bonds. An area that is causing tremendous anxiety is our economy where there are fears of a double-dip recession or worse yet, a Japanese style loss of 2 decades. With these sorts of fears, they are causing many investors to move into U.S. treasuries and precious metals as opposed to other riskier assets such as stocks. When interest rates move lower on our debt that means that the bond market is signaling to the world that we are in for a very slow growth period for a protracted period of time.
So the question that everyone is asking, is there a bubble in U.S. treasury bonds? If you look at the sort of buying that is occurring and the amount of inflows that have gone into U.S. treasuries, it would indicate a bubble. However, there are many supporting arguments that would indicate that a bubble doesnt exist in the U.S. treasury bond markets.
1. Risky Southern European countries debt load is causing a rush into U.S. treasury bonds.
2.Slow U.S. economy is causing many investors to flee into U.S. bonds rather than stocks, indicating a very slow economy for the foreseeable future.
3.Fears of deflation and the absence of inflation (according to the Feds gauges) support lower U.S. treasury yields.
4.Savings rates are rising because people want to rebuild their finances following large losses on their homes and stocks. This means money will continue to funnel its way into investments deemed relatively safe such as U.S. treasuries and precious metals.
5.Bonds (and precious metals) are considered by many investors a good hedge and insurance against equity losses. In this sort of environment, it makes a lot of sense to try to protect your investment portfolio.
6.The elephant in the room is the Federal Reserve. The Federal Reserve is printing money and buying U.S. treasuries. This action from the Federal Reserve pumps more printed money into the economy and artificially keeps rates lower in order to attempt to revitalize our flailing economy (which wont be good for the value of the U.S. dollar in the medium to long-term).
On the other hand, when you look at our U.S. debt position, it would appear to be in conflict with sound business decisions that investors would want to pile into U.S. treasuries considering how much debt our country is accumulating. If investors began to reconsider owning U.S. treasury bonds just as they did with Greece and Spain, then wed highly likely see a snowball effect on our economy; interest rates would soar, the possibility of default on U.S. debt would rise dramatically, banks would freeze, investor sentiment would be next to zero, the economy would go back into a recession and possibly a depression, and the dollar would almost certainly plummet.
I would say that there are very powerful forces that are driving the U.S. bond market that would indicate that there isnt a bubble in U.S. treasuries. Having said that, the risks of default are tremendous and the markets can suddenly change without a clear warning to many seasoned investors. In my view, the warning IS clear, and personally I dont believe U.S. treasuries offer as much safety over the medium to long-term as what most people would believe. The risk vs. reward ratio in my opinion doesnt warrant the demand it has been receiving. A great friend of mine once said that bubbles can grow very large for a very long time before they burst. I wouldnt be surprised if this trend in U.S. treasury bonds continues for quite some time, but if it does begin to show cracks in its armor, which I believe it will, one of two things will occur, either we will default on our U.S. treasury bonds, or even more likely the Federal Reserve will have to switch gears on the printing presses from full throttle to hyper warp speed, which effectively will diminish the value of the U.S. dollar.
Remember folks, as the value of paper currencies become devalued, the value of alternate currencies such as precious metals becomes worth more.
Matthew Goldfuss
www.gold-observer.com
Related Bond Bubble? Articles
Question by NONAME: Do I sound like a Democrat or a Republican? How I would have voted if I were a Member of Congress: American Recovery and Reinvestment Act of 2009: Nay Lilly Ledbetter Fair Pay Act: Yea Matthew Sheppard Hate Crimes Prevention Act: Nay Patient Protection and Affordable Care Act: Nay Health Care and Education Reconciliation Act of 2010: Nay Doddâ€"Frank Wall Street Reform and Consumer Protection Act: Nay Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010: Yea Don't Ask, Don't Tell Repeal Act of 2010: Yea American Clean Energy and Security Act: Nay District of Columbia House Voting Rights Act: Nay Domestic Partnership Benefits and Obligations Act: Yea DREAM Act: Yea Employee Free Choice Act: Nay Employment Non-Discrimination Act: Yea Gun Show Loophole Closing Act of 2009: Nay Public Option Act: Nay Respect for Marriage Act: Yea Stem Cell Research Enhancement Act: Nay No Taxpayer Funding for Abortion Act: Yea Protect Life Act: Yea Repealing the Job-Killing Health Care Law Act: Yea How I voted on California ballot propositions (2008, 2009, and 2010): Prop 1A: 9.95 billion bond for high-speed rail: No Prop 2: Regulations on animal confinement practices: No Prop 3: $ 980 million in bonds for children’s hospitals: No Prop 4: Waiting period and parental notification before minors obtain abortions: Yes Prop 5: Treatment for youth; rehab and shorter parole for nonviolent adult drug offenders: Yes Prop 6: Increase crime prevention programs, harsher penalties on crime: Yes Prop 7: Promotes use of alternative fuels: No Prop 8: Eliminates the right of same-sex couples to marry: No Prop 9: Laws governing treatment crime victims and parole procedures: No Prop 10: Promotes use of alternative fuels: No Prop 11: Independent commission to draw legislative district boundaries: Yes Prop 12: $ 900 million in bonds for home, farm purchasing assistance for vets: No Proposition 1A: Prop 1A combines a 4-year tax hike of about $ 16 billion with a state spending cap: No Prop 1B: Modification of California Proposition 98 (1998) to free up money for state's budget overruns: No Prop 1C: Sell rights to future lottery proceeds as a way of raising some cash now for state budget: No Prop 1D: Asks voters to approve taking money from Prop 10 in 1998 for purposes not allowed in that 1998 vote: No Prop 1E: Asks voters to take money from Prop 63 for purposes not allowed in that 2004 vote: No Prop 1F: No pay raises for state legislators in years when there is a state budget deficit: Yes Prop 13: Seismic retrofitting should not add to property's tax assessed value: Yes Prop 14: Top two primary vote getters move to general regardless of party affiliation: Yes Prop 15: Public funding of politician's campaigns: No Prop 16: New two-thirds vote requirement for local public electricity providers: Yes Prop 17: Discount for those who have had continuous auto insurance coverage: Yes Prop 19: Legalize and tax marijuana: Yes Prop 20: Congressional district lines to be re-drawn by a committee: Yes Prop 21: Increase vehicle license fees by $ 18 a year to fund state parks: Yes Prop 22: State government prohibited from taking designated types of local funds: Yes Prop 23: Suspend AB 32, the "Global Warming Solutions Act" until unemployment falls below 5.5% for a year: Yes Prop 24: Eliminates three business tax breaks: No Prop 25: Budget and related legislation can be passed with simple majority, rather than current 2/3rds requirement: No Prop 26: Requires a 2/3 supermajority vote in the legislature to pass certain state and local fees: Yes Prop 27: Return task of redistricting to the California State Legislature (repealing Prop 11): No Best answer for Do I sound like a Democrat or a Republican?:
Answer by Carlos
you sound like you have too much time on your hands.
Answer by Lawrence Pearson
Well, to be honest with you most would consider you a "RINO"...that is Republican in Name Only.This is a group of liberal Republicans in California that put "Arnold" in two times and helped destroy the entire state through Big Government, union policies. Your support of many Big Government programs and waste make you a Republican In Name Only.
Answer by Mr. Smartypants
You are more Republican than Democrat, with a liberal (no pun intended) dose of libertarian thrown in. The thing is, because of the Tea Party, the Republican Party is today burdened with a big group of 'shibboleth' issues. These are issues that politicians talk about during elections, but forget about between them. Like gay marriage and legalizing pot and abortion and the 10 commandments. If you don't give the right answers on ALL of those issues, you're a go**amned f**king a**hole RINO. And you can go to Hell! PthSppooott! (That's the sound of Tea Partiers spitting on you!) Then, after the election, the issues won't be discussed again until the next election, so you're cool. But I would say the GOP would still be grateful for your vote. 8^)
Answer by My Pin-Up Sailor
In English, your a Liberal Republican. Congrats! But your 2nd political party believes is Democrat. -Me I'm a Modern-Democrat.
Answer by Ahpiah
Generally a conservative Republican with some libertarian tendencies.
Question by : Why does the church claim illegal immigration is a God event? ALBUQUERQUE, N.M. (AP) -- A Unitarian church in New Mexico sends supplies to the border for recent deportees. A coalition of church leaders gathers under a statue of colonial America religious figure Anne Hutchinson at the Massachusetts Statehouse to denounce immigration checks by police. A Methodist minister in Texas recites Isaiah 58:6, a passage about loosening the bonds of injustice, as she's thrown in jail after protesting alongside illegal immigrant students outside a U.S. senator's office. As some states pass laws aimed at cracking down on illegal immigration and federal lawmakers balk at passing any immigration reforms, religious leaders from various denominations are jumping into the debate. They're holding rallies, walking in the Arizona desert, gathering testimonies from immigrants. The leaders fast, get arrested, and sometimes put their own health on the line in an attempt to draw attention to what they see as inhumane treatment of immigrants and to the laws that target them. "Some of us feel very strongly about this," said Rev. Peter Morales, president of the Unitarian Universalist Association, who was arrested last year with immigrant advocates in Arizona for protesting Arizona's much debated, tough immigration law. "It's a humanitarian issue." From New York to Utah and across denominations, religious leaders have used their positions from the pulpit in an effort to influence legislation or rally church members in protest. Earlier this year, for example, more than 20 religious leaders and officials with church-operated charities in Alabama spoke out against a stringent new anti-immigration law that they said would block them from providing food, shelter and transportation to the poor. Meanwhile, the Rev. Angela Herrera, an assistant minister with the First Unitarian Church of Albuquerque, helped organized her members and other religious leader in successful rallies against an effort by New Mexico Gov. Susana Martinez to overturn a state law allowing illegal immigrants to obtain drivers' licenses. And last year, St. Leo's Catholic Church in Queens, N.Y. sent Sen. Chuck Schumer, D-N.Y., testimonies from more than 230 people asking for immigration reform. It was one of many Catholic churches around the country that pushed immigration reform. "Immigration is a God event." said Rev. Lorenza Andrade Smith, the United Methodist pastor who was arrested outside of the offices of Sen. Kay Bailey Hutchinson, R-Texas. Many religious leaders point to immigration stories in the Bible as personal reflections that influence their calling to push immigration reform.http://hosted.ap.org/dynamic/stories/N/NM_RELIGION_IMMIGRATION_AZOL-?SITE=AZCAS&SECTION=STATE&TEMPLATE=DEFAULT So does this mean document fraud is legal since immigration is a God event ? Is driving without a license and insurance is also a God event ? Is lying on I-9 tax forms under perjury of law, a God event as well ? Best answer for Why does the church claim illegal immigration is a God event?:
Answer by Fred
your kidding.more collections.i mean who don't know the answer to that question.
Answer by david r
What does your last couple of sentences have to do with the passage you quote? Anyway, the church is making a stand with suffering people who are being persecuted by the current fashion for being tough on immigration. When a particular group in society is being persecuted, that is the time when God challenges us all to decide whether to assist them or to walk by on the other side. A moment of challenge such as this, when God tests us, is what some people call a God event.
Answer by hdean45
It makes them feel important and superior to the rest of us because they clam they are doing God's work but you don't see them helping the familes of the ranchers who, were killed by the illegals crossing the border or that some of them are criminals.
Answer by RETUSAF
Because churches like businesses don't care if you are illegal. The more customers they have the more money they make. Churches should have their tax exempt status withdrawn.
Answer by Maricopa County
God challenges us all to decide whether to assist them or to walk by on the other side. A moment of challenge such as this, when God tests us, is what some people call a God event. Let me see if I understand this right. First illegals hire drug cartel members to bring them across illegally, since the Mexico drug cartels controls all entry routes. Next the illegals are transported to stash houses, next they must buy fake or stolen documents, in order to gain employment, which is document fraud. Yes when they fill out that I-9 tax form they use dishonest information. According to what many churches say, illegals pay income taxes, but leave out, document fraud made paying income taxes possible. Next they say illegals when driving their cars, pay gas tax and sales taxes, nothing is said about not having a license and no insurance and nothing is ever said about how they are able to reach these locations.Next illegals they say illegals pay property tax , unless the illegals are buying the home, property tax is paid by the landlord.So is the church saying, smugglers, legal, document fraud, legal, driving without license and insurance, legal, lying on government documents, legal ..What actual laws are illegals suppose to comply with ? And where all the same these churches at in Mexico, they make runs across the border, deliver supplies, but wait,they do not have any problems or concerns with Mexico immigration laws ? What is up with that ? Do illegals have their own special bible ? What about thy shall not steal ? Thy shall not lie ? Thy shall obey laws of the country ? All these do not apply as long as you seeking a better life ?
Answer by blank
I guess we are sapost too give up everything so the illegals( who don't even respect America in any way) can come in and turn are country into a third world shlt hole just like they made Mexico,and in a hundred years they will be in the same place they are now, but we will be there with them. Ya, hell ya bring them all over here! I love gangs, crime, and ghetto's! God bless...
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Spanish 10-year bonds fell, pushing the yield to more than 7 percent, amid concern euro-area finance ministers meeting in Brussels will fail to agree on sufficient crisis-fighting measures to stem the region's financial woes. German Two-Year Yields Approach Record Low Before Crisis Meeting
There has been a lot of recent discussion over whether or not there is a bubble in U.S. treasury bonds, and to tell you the truth there are some very compelling arguments for both sides. But before we get into some of these arguments Id like to take a moment to review the significance of the U.S. treasury bonds market.
If you ever wondered how countries are able to finance their spending while accumulating debt, the answer is that it would be through government bonds, which in our case are called U.S. treasuries. Treasuries are the debt financing instruments of the United States Federal government; they allow investors an opportunity to put their money into our country, offering a yield on their investment while financing our debt; essentially a loan. These investments are regarded by many to be one of the safest on the planet; however, there are some risks to investing in government bonds. If a country continually racks up too much debt and simultaneously takes a severe hit in their ability to generate tax revenues to repay that debt, then it is quite possible that investors would begin to slack off from buying their bonds, or worse yet, sell them. Remember, the higher the demand for bonds, the lower the yields or interest rates, while the lower the demand, the higher the yields and interest rates. Higher interest rates can cause great difficulty for these countries to repay their debt, so this development in many cases is a very unwelcome one.
Unfortunately, the preceding is what we saw in Greece and Spain this year. These countries have been building up tremendous debt through their reckless spending binges, and when the world went through a colossal down turn, their ability to repay their debts was severely diminished. It was at this time that bond holders began to rethink whether or not it was a wise idea to keep holding on to their debt. What ensued was a mass exodus of Greek and Spanish bonds, interest rates went through the roof making it almost impossible to repay their debt, and all of a sudden within just a few weeks there were fears of default, which basically meant that they wouldnt be able to meet their debt obligations. This sort of turn of events would have an extremely large negative effect. Greece and Spain have very small economies relative to the U.S., but the danger lies in the possible collateral damage. What most people dont realize is that many large banks are financing these countries debts, therefore if a country were to default on their bond obligations, the banks and investors that bought these bonds would end up with a huge loss. If these banks take a huge loss then their confidence to lend would diminish, banks could freeze up again not lending even to one another, and we could again be stuck with another round of systemic risk similar to what we saw in 2008 where investors sold out of their investment holdings driving down the prices of virtually every single asset class on the planet.
These turnings of events actually caused a positive unintended consequence for the U.S., as many of the banks, governments, and investors which were buying these Greek and Spanish bonds looked to invest their holdings elsewhere, and by default U.S. treasury bonds became a prime destination. So consequently as a result, demand for our debt went higher and yields went lower, allowing our country to borrow more money at a cheaper interest rate.
This is not the only driving force or source of demand for our U.S. treasury bonds. An area that is causing tremendous anxiety is our economy where there are fears of a double-dip recession or worse yet, a Japanese style loss of 2 decades. With these sorts of fears, they are causing many investors to move into U.S. treasuries and precious metals as opposed to other riskier assets such as stocks. When interest rates move lower on our debt that means that the bond market is signaling to the world that we are in for a very slow growth period for a protracted period of time.
So the question that everyone is asking, is there a bubble in U.S. treasury bonds? If you look at the sort of buying that is occurring and the amount of inflows that have gone into U.S. treasuries, it would indicate a bubble. However, there are many supporting arguments that would indicate that a bubble doesnt exist in the U.S. treasury bond markets.
1. Risky Southern European countries debt load is causing a rush into U.S. treasury bonds.
2.Slow U.S. economy is causing many investors to flee into U.S. bonds rather than stocks, indicating a very slow economy for the foreseeable future.
3.Fears of deflation and the absence of inflation (according to the Feds gauges) support lower U.S. treasury yields.
4.Savings rates are rising because people want to rebuild their finances following large losses on their homes and stocks. This means money will continue to funnel its way into investments deemed relatively safe such as U.S. treasuries and precious metals.
5.Bonds (and precious metals) are considered by many investors a good hedge and insurance against equity losses. In this sort of environment, it makes a lot of sense to try to protect your investment portfolio.
6.The elephant in the room is the Federal Reserve. The Federal Reserve is printing money and buying U.S. treasuries. This action from the Federal Reserve pumps more printed money into the economy and artificially keeps rates lower in order to attempt to revitalize our flailing economy (which wont be good for the value of the U.S. dollar in the medium to long-term).
On the other hand, when you look at our U.S. debt position, it would appear to be in conflict with sound business decisions that investors would want to pile into U.S. treasuries considering how much debt our country is accumulating. If investors began to reconsider owning U.S. treasury bonds just as they did with Greece and Spain, then wed highly likely see a snowball effect on our economy; interest rates would soar, the possibility of default on U.S. debt would rise dramatically, banks would freeze, investor sentiment would be next to zero, the economy would go back into a recession and possibly a depression, and the dollar would almost certainly plummet.
I would say that there are very powerful forces that are driving the U.S. bond market that would indicate that there isnt a bubble in U.S. treasuries. Having said that, the risks of default are tremendous and the markets can suddenly change without a clear warning to many seasoned investors. In my view, the warning IS clear, and personally I dont believe U.S. treasuries offer as much safety over the medium to long-term as what most people would believe. The risk vs. reward ratio in my opinion doesnt warrant the demand it has been receiving. A great friend of mine once said that bubbles can grow very large for a very long time before they burst. I wouldnt be surprised if this trend in U.S. treasury bonds continues for quite some time, but if it does begin to show cracks in its armor, which I believe it will, one of two things will occur, either we will default on our U.S. treasury bonds, or even more likely the Federal Reserve will have to switch gears on the printing presses from full throttle to hyper warp speed, which effectively will diminish the value of the U.S. dollar.
Remember folks, as the value of paper currencies become devalued, the value of alternate currencies such as precious metals becomes worth more.
Matthew Goldfuss
www.gold-observer.com
If you are you looking for a way to invest, and gain a tax advantage at the same time, consider investing in savings bonds. They can be purchased for as little as twenty-five dollars, or in larger denominations if desired.
Savings bonds are a good investment choice, partly because income tax liability can be deferred until the year that the bond is cashed. You will not be required to pay income tax from the interest earned on a bond until the year that you cash the bond, which lets you determine the best time for the interest to be reported to the IRS. This type of reporting is called cash basis reporting. If you decide to report the accrued interest each year on your tax return, this is called accrual basis reporting. Once you start with this type of reporting, you must continue until the bond is cashed. You can decide with method of reporting will be best for you.
When you do redeem the bond, you may be in a lower tax bracket than you are now, so the amount of tax that you owe would be lower than if you were required to pay tax on the interest earned each year.
If you purchase electronic bonds from the TreasuryDirect website one thing to note is that when the bond stops earning interest, the bonds are automatically redeemed and the accrued interest is reported for that tax year.In some cases, you may be required to pay federal income tax early. These reportable events include:
In these events, the person that is giving up the ownership of the bond will be responsible for reporting the income tax.
The IRS will send a form 1099-INT to the former owner of the bond.So who must report the interest on a bond?
Savings bonds can be redeemed without penalty if the bond is at least 5 years old. If you redeem a bond that is less than 5 years old, you will lose three months of accrued interest.
Recommend Savings Bond Tax Considerations Topics |www.accounting101.org The balance sheet is easy to understand... once you understand why what goes where. The balance sheet example on this page, as well as the video, will help explain what the balance sheet is, how it's organized, and how to interpret the information on it. The balance sheet is an extremely useful tool for all users to quickly get an idea of how a company is doing. The balance sheet is usually described as a snapshot of a company's financial position. This is because the balance sheet is accounting for a single moment in time; not over a period such as the income statement. You'll notice in the example below, that the date is December 31, 2011. It basically means, "this is what we have, and this is who owns it as of today, December 31st, 2011." In contrast, the income statement would show a time period, such as "for the period ending December 31, 2011." As you can see in the example above, there are three major parts or sections that make up the balance sheet. These are: Assets Liabilities Owners' Equity Assets are the things the company owns. These are things such as cash, accounts receivable, inventory, prepaid insurance, prepaid rent, and goodwill. There are basically two classifications of assets; current assets and fixed (or long-term) assets. Current assets are assets that will be used within one year. Current assets include cash, accounts receivable, inventory, prepaid insurance, and prepaid rent. There are other types of current assets, but ...
insurancesbusiness.blogspot.com A Balance Sheet Example
Spanish Prime Minister Mariano Rajoy may unveil a third austerity round within days as his six-month- old government tries to avoid a second bailout amid hemorrhaging tax receipts. Spain Braces for Renewed Rajoy Austerity as Tax Take Hemorrhages
There has been a lot of recent discussion over whether or not there is a bubble in U.S. treasury bonds, and to tell you the truth there are some very compelling arguments for both sides. But before we get into some of these arguments Id like to take a moment to review the significance of the U.S. treasury bonds market.
If you ever wondered how countries are able to finance their spending while accumulating debt, the answer is that it would be through government bonds, which in our case are called U.S. treasuries. Treasuries are the debt financing instruments of the United States Federal government; they allow investors an opportunity to put their money into our country, offering a yield on their investment while financing our debt; essentially a loan. These investments are regarded by many to be one of the safest on the planet; however, there are some risks to investing in government bonds. If a country continually racks up too much debt and simultaneously takes a severe hit in their ability to generate tax revenues to repay that debt, then it is quite possible that investors would begin to slack off from buying their bonds, or worse yet, sell them. Remember, the higher the demand for bonds, the lower the yields or interest rates, while the lower the demand, the higher the yields and interest rates. Higher interest rates can cause great difficulty for these countries to repay their debt, so this development in many cases is a very unwelcome one.
Unfortunately, the preceding is what we saw in Greece and Spain this year. These countries have been building up tremendous debt through their reckless spending binges, and when the world went through a colossal down turn, their ability to repay their debts was severely diminished. It was at this time that bond holders began to rethink whether or not it was a wise idea to keep holding on to their debt. What ensued was a mass exodus of Greek and Spanish bonds, interest rates went through the roof making it almost impossible to repay their debt, and all of a sudden within just a few weeks there were fears of default, which basically meant that they wouldnt be able to meet their debt obligations. This sort of turn of events would have an extremely large negative effect. Greece and Spain have very small economies relative to the U.S., but the danger lies in the possible collateral damage. What most people dont realize is that many large banks are financing these countries debts, therefore if a country were to default on their bond obligations, the banks and investors that bought these bonds would end up with a huge loss. If these banks take a huge loss then their confidence to lend would diminish, banks could freeze up again not lending even to one another, and we could again be stuck with another round of systemic risk similar to what we saw in 2008 where investors sold out of their investment holdings driving down the prices of virtually every single asset class on the planet.
These turnings of events actually caused a positive unintended consequence for the U.S., as many of the banks, governments, and investors which were buying these Greek and Spanish bonds looked to invest their holdings elsewhere, and by default U.S. treasury bonds became a prime destination. So consequently as a result, demand for our debt went higher and yields went lower, allowing our country to borrow more money at a cheaper interest rate.
This is not the only driving force or source of demand for our U.S. treasury bonds. An area that is causing tremendous anxiety is our economy where there are fears of a double-dip recession or worse yet, a Japanese style loss of 2 decades. With these sorts of fears, they are causing many investors to move into U.S. treasuries and precious metals as opposed to other riskier assets such as stocks. When interest rates move lower on our debt that means that the bond market is signaling to the world that we are in for a very slow growth period for a protracted period of time.
So the question that everyone is asking, is there a bubble in U.S. treasury bonds? If you look at the sort of buying that is occurring and the amount of inflows that have gone into U.S. treasuries, it would indicate a bubble. However, there are many supporting arguments that would indicate that a bubble doesnt exist in the U.S. treasury bond markets.
1. Risky Southern European countries debt load is causing a rush into U.S. treasury bonds.
2.Slow U.S. economy is causing many investors to flee into U.S. bonds rather than stocks, indicating a very slow economy for the foreseeable future.
3.Fears of deflation and the absence of inflation (according to the Feds gauges) support lower U.S. treasury yields.
4.Savings rates are rising because people want to rebuild their finances following large losses on their homes and stocks. This means money will continue to funnel its way into investments deemed relatively safe such as U.S. treasuries and precious metals.
5.Bonds (and precious metals) are considered by many investors a good hedge and insurance against equity losses. In this sort of environment, it makes a lot of sense to try to protect your investment portfolio.
6.The elephant in the room is the Federal Reserve. The Federal Reserve is printing money and buying U.S. treasuries. This action from the Federal Reserve pumps more printed money into the economy and artificially keeps rates lower in order to attempt to revitalize our flailing economy (which wont be good for the value of the U.S. dollar in the medium to long-term).
On the other hand, when you look at our U.S. debt position, it would appear to be in conflict with sound business decisions that investors would want to pile into U.S. treasuries considering how much debt our country is accumulating. If investors began to reconsider owning U.S. treasury bonds just as they did with Greece and Spain, then wed highly likely see a snowball effect on our economy; interest rates would soar, the possibility of default on U.S. debt would rise dramatically, banks would freeze, investor sentiment would be next to zero, the economy would go back into a recession and possibly a depression, and the dollar would almost certainly plummet.
I would say that there are very powerful forces that are driving the U.S. bond market that would indicate that there isnt a bubble in U.S. treasuries. Having said that, the risks of default are tremendous and the markets can suddenly change without a clear warning to many seasoned investors. In my view, the warning IS clear, and personally I dont believe U.S. treasuries offer as much safety over the medium to long-term as what most people would believe. The risk vs. reward ratio in my opinion doesnt warrant the demand it has been receiving. A great friend of mine once said that bubbles can grow very large for a very long time before they burst. I wouldnt be surprised if this trend in U.S. treasury bonds continues for quite some time, but if it does begin to show cracks in its armor, which I believe it will, one of two things will occur, either we will default on our U.S. treasury bonds, or even more likely the Federal Reserve will have to switch gears on the printing presses from full throttle to hyper warp speed, which effectively will diminish the value of the U.S. dollar.
Remember folks, as the value of paper currencies become devalued, the value of alternate currencies such as precious metals becomes worth more.
Matthew Goldfuss
www.gold-observer.com
If you are you looking for a way to invest, and gain a tax advantage at the same time, consider investing in savings bonds. They can be purchased for as little as twenty-five dollars, or in larger denominations if desired.
Savings bonds are a good investment choice, partly because income tax liability can be deferred until the year that the bond is cashed. You will not be required to pay income tax from the interest earned on a bond until the year that you cash the bond, which lets you determine the best time for the interest to be reported to the IRS. This type of reporting is called cash basis reporting. If you decide to report the accrued interest each year on your tax return, this is called accrual basis reporting. Once you start with this type of reporting, you must continue until the bond is cashed. You can decide with method of reporting will be best for you.
When you do redeem the bond, you may be in a lower tax bracket than you are now, so the amount of tax that you owe would be lower than if you were required to pay tax on the interest earned each year.
If you purchase electronic bonds from the TreasuryDirect website one thing to note is that when the bond stops earning interest, the bonds are automatically redeemed and the accrued interest is reported for that tax year.In some cases, you may be required to pay federal income tax early. These reportable events include:
In these events, the person that is giving up the ownership of the bond will be responsible for reporting the income tax.
The IRS will send a form 1099-INT to the former owner of the bond.So who must report the interest on a bond?
Savings bonds can be redeemed without penalty if the bond is at least 5 years old. If you redeem a bond that is less than 5 years old, you will lose three months of accrued interest.
Are you new to bonding and need help?
If you're an insurance agent that specializing in personal lines you may not be ready when you get a request for a surety bond. There is not a lot of information as well as literature on the subject.
So how can you help your customer if your school you went did not teach you anything about bonding?
First and foremost a surety bond is a reverse insurance policy unlike insurance you can't choose your limit or additional coverage's. The bond form, policy if you will, is drafted by the obligee. The obligee is the one that is requiring you to have the bond. Most of the time the obligee is a state or city requiring your business to carrier a bond in order to grant you your license.
Here are some of the most common questions and answers that you will be asked about bonding.
How much does a bond cost?
The cost of the bond is indeterminable until an application has been underwritten.
Since you are applying for a form of surety credit and your credit as well as financials will determine the rate, we won't know until everything has been reviewed.Where can I get the bond form?
You can get the bond form from the obligee the obligee is the entity that drafted the form to protect their interests
Can I change the coverage?
Since the bond does not cover you or protect your interests you cannot. Keep in mind the bond protects the obligee.
Why do I need a bond?
You need a bond because most of the time it's the law. The state requires bonds to protect the public from a variety of issues such as fraud, payment of taxes and other state laws and statues drafted in the bond form.
The state said I need to change the name of my company how can I do that?
The only way you can have changes made to the surety bond is if you have a rider issued.
A rider is an amendment to the bond. More Top Surety Bond Questions IssuesQuestion by snoobling: I turned myself in to Obama's fascist Website, how about you? Everyone turn themselves in! What will they do? Subject: I say this, you stinking fascist maggots! KISS MY FORKING ***! COME GET ME! NOW **** YOU! NOW! You know Obama wants you to turn me in for telling you Democrats deliberately ran up health care to take over? That's right, Obama wants you to turn me in, what do you think they will do to me? I can only say to them, come get some you pieces of crap. This is against the law in the US, expressly against the law to keep track of free speech and those who spoke it. The backers of the leftists who are in control now not only deliberately run up health care expenses by turning loose lawyers to sue over any little thing, and making frivolous law suits come with no penalty so people and lawyers just roll the dice all the time in law suits with no down side. Even if there is no merit often medical providers just pay up to save the costs of litigation. They also deliberately made Medicare and Medicaid easy to steal from, conducive to fraud, to drive up costs. They also made Medicaid and Medicare available to illegal aliens, and forced Hospitals to treat anyone without recompense from the government who mandated it, to drive up costs. Made it wide spread, and pushed down on the price they pay for treatment, so that the medical providers would have to overcharge those left, especially those without insurance who just get raped. The democrats also stop legislation that would allow competition between insurance companies in different states, to destroy competition and drive up the cost. There are people living 20 miles from each other, and one has to pay 40% more for the same exact coverage. Why would they do that? The goals are obvious by the obvious target of the results of their actions. These are all actions the Democrats have taken, which is obviously, in my considered opinion (after years of looking for answers why, coming to light in consideration of these things implemented by the Obama administration) to drive up the cost of health care in the most vile Machiavellian way imaginable, so that they could take over. And that's not the only thing. They destroyed the economy using fuel as a weapon to trigger the bomb democrats set up in the mortgage based securities market. When you see what actions they have taken, you can see that plan plain as day. There is so much more. Now they are buying off groups like AARP to do things which are totally against their members best interests. As the president is using advirors like Rahm Immanuels brother, Ezekial, Cass Sunstien, and the medical Czar what's their name? who Each advocate limiting health care to the very old and very young, denying expensive treatments that many old people require, to cut costs way down. These people are sick, and they see people as live stock, but of course all of this wouldn't apply to Government officials, they are better than us live stock. They are also using the green movement to help destroy the economy, not because they care about the environment more than anyone else, but in order to destroy the economy and put in their own people, their own Oligarchy as they did with the Auto Companies when they stole them and gave them to their friends, and used our tax money to pump those friends of theirs up. So much more, you better investigate for yourself and you can't trust TV or the entertainment industry because they are all thick as thieves and getting your resources as payment, like GE which owns NBC got a big ol government contract and is expecting many more. They go after everyone, especially media, who speaks out against them and work to ruin them. They vilify those who don't agree with them and paint them as evil people. They say all those who complain are backed by the rich republicans, when that is exactly how the democrats work, sending out Acorn and Unions after AIG executives, driving them by their homes on a bus, making them fear for their lives, and threatening the bond holders of GM debt who were legally in first place into giving up their legal position, same with Chrysler. It doesn't matter if you are a republican or democrat, I am neither and I don't like either. You better start paying attention or your behind will be in the soup, just like everyone else. Look what Obama did to those black DC school kids who had vouchers to get them better and so much safer schooling, he just had them jerked away even though they saved about 40% on education costs and provided excellent education in stead of terribly substandard and dangerous education. Best answer for I turned myself in to Obama's fascist Website, how about you? Everyone turn themselves in! What will they do?:
Answer by Blue
Wow, you certainly make the Neocon movement sound like its being backed by a bunch of pre-cognitive whiny 12 year olds.
Answer by CaptainFreon
I thank that "blue" and "taste" should actually come up with something original. Maybe even worth reading that would have some intelligent twist in some way. snoobling, I have read through your words. Right on. You are so right on the entire piece. We are at a point where all we can do is tell the facts. The majority elected the democRATS, people were just sick of Bush2 and that transformed Washington. When the loony liberal mess comes to a head, then this nation will be hurting real bad, including the loonies. It may be too late for our nation as we know it, some say it will end in 2010... we will see. I was reading some of the other answers... There a many confused people out there. Oh, and what if? What if Joe the plumber was a democrat and the Republicans went through his trash? The democRATS are hypocritical lying dirty self righteous toads.
Answer by I want tastebuds
Who has time to read your pointless rant?
Answer by terry t
Uh-oh. Rahm "the Bomb" is gonna get you....
Answer by ssparkle63
Wow----- what more can I say???? I to believe they make it so easy to fraud the system. I saw it everyday at work, unbelieved able.
Answer by firewomen
You really really give the President to much credit.*
Answer by FlimsyWimsy
I cant believe u wasted ur time cutting n pasting or typing this. No one will read all that.
Answer by lonesome
I have a feeling it's mostly attention starved conservatives trying to pretend that they are relevant and a threat to "The Man" that are turning in the most info, all on themselves. And you've reported yourself how many times? Get a hobby, a life...
Answer by Gina
Seek help!
Answer by Austin S
tl;dr
Answer by Lorenzo the Itinerant
many excellent points, one of the best posts I have seen on YA! Huzzah! the whole Rockefeller-no-longer-Republican thing just didn't make a dent with the useful idiots who are such idiots that they are proving useful to fascists. Even this week I have heard them wheedle about Bush and AT&T even though AT&T provided the DNC tote bags. Many of them believe that fascist proclivities are something like genetic traits that some groups of people could never manifest, preach diversity while demanding ideological conformity, lobby vociferously for the traditions of whatever xandau-culture is expediently dictated to them as fashionable while vilifying the traditions of their own less "progressive" neighbors , and scramble for a place of "excellence" among the so-called elite by writing tomes about democracy. go figure.
Answer by Mobsters in the Attic
Didn't read anything you typed.. too damn long. But I have turned myself in... 14 times and counting. And each one contains the "misinformation" they have asked for. Each one contains quotes from our President.
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