It doesn't seem logical but we get to keep our credit ratings sky high if we elect to raise the debt limit, which is still a default but bloomberg reports 38 out of 40 economists predict that there won't be a default. At least the kind of default that would occur if we didn't raise it, and even though if we do, we're defaulting, we still somehow keep the charade going by robbing Peter to pay Paul after Peter paid Paul, who, in this case, is the United States Federal Reserve with Peter being US citizens and the Treasury. The only thing that could help is another $80 billion profitable trading month by the Fed on our own paper, but reading the bloomberg article it seems reasonable that we will come to some agreement, whether or not we wait until the last second, something will happen most likely being an increase in the debt limit and funny money accounting tricks to produce fiscal spending cuts.
I wouldn't worry about it, once interest rate going up, oil price will falls. It is time to let Arabs nations hooking up more debts before imploding this oil bubbles. US will raid these countries foreign reserves.
can anyone give the upside and downside to owning inflation adjusted treasury bonds... and how is it different if you own shares of TIP. I wonder if perhaps I should should be hoping for a default so the interest rates shoot up. I realize tips seem to react to real interest rates not nominal.
if u know the answer and want to post it just do so. let's see if you have the skill to give an answer in a concise way. otherwise just keep silent.
First of all, the question is too vague and the answer too complicated for there to be "the answer". I have a view, based on my understanding and experience in this mkt. Secondly, giving an answer in a concise way is only possible if you have a basic understanding of the TIPS and nominal treasury products (as I alluded in my response). Finally, did I miss something? Did someone nominate you as the moderator of this discussion, while I wasn't looking? If you're not the moderator and you have nothing of substance to contribute, maybe you're the one who should be keeping silent, rather than myself? At any rate, if there's no interest, I am certainly happy to shut up.
nobody gains from your comment that it is a long story which you are unwilling to answer because you don't want to take the time to answer. you are right. I should have stayed silent. your revealing remark speaks for you. "It's a very long story and it all depends on how much you know about TIPS to begin with."
When did I say I am unwilling to answer? I am perfectly willing, once the person who asked the question, i.e. jem, tells me what he knows. For example, it's important to realize that a TIPS, regardless of its inflation component, retains a whole variety of nominal features.