Imagine you have the problem of managing $100,000,000,000. Where will you put them? In gold? Oil? Europe? Stocks? US is the bank of choice. There are no other banks. Monopoly for years to come.
It'll never happen. the Fed will just buy the new issues (already are to some extent, in my opinion).
I have been making money in this market more long than short. But the market is NOTHING more than a PARKING LOT for BIG money. Big money thinks stocks is a better lighted and more secure parking lot than treasuries or real estate. AT SOME POINT, the reality that this economy is INCAPABLE of CREATING PRIVATE SECTOR JOBS will hit the market, and the time will come to be short. Am I BABBLING or do I have clue about what I am talking about? I am not sure, but I was profitable and made my living when the tech bubble burst in the late nineties and I not only survived but profited when the Dow's value was cut in half in the last couple of years. But that does NOT mean I AM PIMPING THE POWERS THAT BE. The BOYS AND GIRLS running this MESS of nation are CLUECLESS, and it saddens me that I will most likely be profitable while their STUPIDITY contiunues to DESTROY the heart and soul of this nation which is and always has been its MIDDLE CLASS which believes in working HARD and PLAYING by the RULES. You can trust and trumpet the STATUS QUO if you like, but I will maintain what I believe is my HEALTHY DISREGARD of it.
Why do you by CD from a bank? Because you have other business to do and the bank knows how to make better profit from your money and give you a cut. This is why other governments by treasuries. US is a huge bank for many governments with money to invest. Now we all know that the bank had a major problem but it is still working and things are getting better. Remember even the worst US trouble is 100 better then some other options. There are no other options. One reliable bank on planet earth. When another one opens then may be US will be in trouble. Just watch and see what will happen in the next 2 years. If the financial system becomes more responsible then there will be more money invested in the USA. Think about it. Do you want another Iceland or Baltic investment? Good luck with the euro. Just a small tension in the union will bring doubts to the currency. And you have to be blind no to see that tension will come. Just visit all the new members and check the situation. Never mind Italy.
nobody has ever been able to accurately pinpoint when financial disaster will occur. many investors survived the 1929 crash only to succumb to bankruptcy in the crash of 32. because the increase in money supply has not resulted in hyperinflation to date does not make the doomsday scenario false. because the derivatives mess has not unwound the financial system does not mean that it will not happen. jobs are not being created in the private sector. expansion of he public sector does not create wealth but destroys it. faber is correct if there is hyperinflation there will be a bubble in equity prices. whatever conspiracy theory you subscribe to the end result will be the bankruptcy of the middle class and the control of wealth by a few small groups
Weak Treasury Auctions Raise Worries About US Debt Burden http://www.cnbc.com/id/32201716 Good clip w/ Santelli in link.
Faber has been long stocks since march actually and agrees with you on the US getting trough this crisis beter then many other places in the world relatively speaking because 'they don't produce anything anymore'. 'Americans might lose some weight which will do them good' That's a direct quote.
The title of the thread is 'what if US is unable to sell treasuries?'. The answer is 'we'd be <i>royally screwed</i>'. And no amount of sugar coating is going to get around that.