Time to Buy Treasuries?
An interesting take on U.S. treasuries as an investment. (HT zerohedge). Chris Pavese over at Zero Hedge provides a contrarian view to the common wisdom that the government printing presses will spawn massive inflation. Chris argues that with our increasingly large debt burden, relatively small increases in yields will substantially increase the cost of servicing our massive debt which will off expansion and keep a lid on inflation.
Chris points out that recent asset bubbles have been burst by successively lower rises in interest rates. Short treasuries is a crowded trade with everyone and their mother calling for massive inflation; that day may very well come, but in the near to mid-term, the risk of inflation may be grossly overstated.
Personally, I believe that with the dual impact of the economic stimulus package rolling off in the second half of 2010 and the massive shadow inventory of foreclosed homes waiting to hit the market, we are on our way to the second leg down.
Filed under business, Economics, Finance, foreign policy, public policy
Pension Benefit Guarantee Corp – Next up for a bailout?
I’ve been following this for a while and even started a blog post about it back in the fall. This is just the latest in a string of examples of what happens when those in government bow to the kiss the ring of the “all-knowing” power brokers on Wall Street. The stock market will fix everything, remember the mantra? Social Security – privatize it, let them invest!
Well it’s no surprise that Bush appointee and former Lehman Brother’s banker would decide that the Pension Benefit Guarantee Corp should invest its funds more aggressively. He pushed to move the investment mix from a very conservative allocation to one that relied heavily upon equities, private equity, and other alternative investments… right at the peak of the market in February of 2008.
Now, the U.S. Senate is asking the Inspector General for the PBGC to investigate Mr. Millard’s contacts with executives of banks who were awarded business by the PBGC about job opportunities for him after his brief stint in public service.
With corporate bankruptcies and poor investment returns pushing the PBGC to the brink of insolvency, guess who will be paying for Mr. Millard’s mistakes. The same folks who have been ponying up to pay for the avarice and greed of Wall Street executives… you and me.
Stay tuned…
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Wealth and College Admissions
Today’s Boston Globe has an article about a subject I reported on earlier. With the economy in tatters and the stock market plunging, college endowments have taken a serious hit at just the time when families are in need of greater financial assistance. This is placing a great deal of pressure on even the wealthiest insitution’s financial aid budgets.
While most colleges have publicly stated that financial aid continues to be held sacrosanct, the reality is that many schools are facing tough budgetary choices. Middlebury College recently announced that even financial aid is on the table as it looks to make budget cuts.
Full-pay students are going to look increasingly attractive to many schools struggling to balance the books. With most schools being need aware at least at the margins, it will be easier for wealthy students to gain admission to the school of their choice, while high-need students will face one more obstacle to economic and social mobility.
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