| ▲ | root-parent 6 hours ago |
| The US will become insolvent by trying to prop up Japan. "The Insane US-Japan Currency Bailout" - https://youtu.be/yh18YXKMk3g Why does the US need to prop Japan? Because they are the biggest holder of US treasuries ...and if they need to prop up their own currency, they will need to sell them.
<Insert Pearl Harbor reference...> |
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| ▲ | ericmay 5 hours ago | parent | next [-] |
| > The US will become insolvent by trying to prop up Japan. No, it won’t. The worst case we are looking at is paying more interest on debt. It’s not great but we aren’t in danger of becoming insolvent because of Japan. |
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| ▲ | thephyber 4 hours ago | parent | next [-] | | There's a non-zero chance that actually following through on Bessent's statements about support for the largest sovereign buyer of US bonds would push us towards insolvency. You are just stating an opinion that we would stop short of it becoming such a large support program that it would push the US past the tipping point towards inevitable insolvency. | | |
| ▲ | ericmay 4 hours ago | parent [-] | | Then they would just take a different action than go into insolvency. This doesn't make any sense at all. > You are just stating an opinion that... You don't say? |
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| ▲ | IsTom 5 hours ago | parent | prev [-] | | It's already ~20% of US government revenue. Every percentage point more of yield on bonds is going to be tough. | | |
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| ▲ | spott 5 hours ago | parent | prev | next [-] |
| “Biggest holder of us treasuries” 3.1 percent. Just for context. |
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| ▲ | _heimdall 4 hours ago | parent [-] | | If Japan were to quickly unload a meaningful chunk of their $1.2 trillion in treasuries it would wreck the treasuries market. If I'm not mistaken, $1.2T is roughly the year-to-date trading volume of the treasuries market [1]. [1] https://www.sifma.org/research/statistics/us-treasury-securi... | | |
| ▲ | spott 4 hours ago | parent [-] | | Sure. It would also wreck Japan. | | |
| ▲ | _heimdall 4 hours ago | parent [-] | | That would depend on why they do it and what theoney is reallocated to. Though yeah I'm sure they'd be wrecked, I don't think they'd dump treasuries I'd the risk of being wrecked was already very high. |
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| ▲ | thephyber 6 hours ago | parent | prev [-] |
| Yes, and... The US sold Euros to do the propping of Japanese bonds without telling the EU. Not only did we spend a lot to save our biggest sovereign buyer, but we undermined our relationship with another. And we didn't buy the Japanese much time. Worth mentioning that lots of buyers is jumping into Chinese bonds over the past week. It feels like the BRICS are taking over as of this month. |
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| ▲ | ericmay 5 hours ago | parent | next [-] | | > Worth mentioning that lots of buyers is jumping into Chinese bonds over the past week. How many? > It feels like the BRICS are taking over as of this month. Taking over what? | | |
| ▲ | thephyber 5 hours ago | parent [-] | | The news about Chinese bond attractiveness today: https://x.com/macropaperr/status/2089255200918007854?s=46 Obviously we don't measure it in "how many traders", but what the effect their trading has on the instruments they buy. The US Dollar is slipping from the world's reserve currency status and the US treasury is slipping from the default safe haven for liquid assets. The BRICS countries bonds are becoming more attractive as of this month. | | |
| ▲ | kasey_junk 4 hours ago | parent | next [-] | | Brazil, India and South Africa all have 5 year bond yields that are higher now than 5 years ago. Russia is obvious outlier you can’t price well. If there is any news this month in Chinese bonds it’s a) a crazy upward move that corrected and b) the Chinese authorities have upped the quota on foreign bonds that their asset managers are allowed to buy. | | |
| ▲ | bluGill 4 hours ago | parent [-] | | High bond yields are a sign of low trust - if you trust a currency will be stable you need less yield to risk investing in it. | | |
| ▲ | kasey_junk 2 hours ago | parent [-] | | Correct, so the BRICS angle I'm responding to is not what the market is showing. | | |
| ▲ | brazukadev 31 minutes ago | parent [-] | | it was a tongue-in-cheek comment, I think. China is doing well and will try to prop up its BRICS partners as long as it benefit China. It doesn't help that current US government is actively attacking those countries' economies. |
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| ▲ | piva00 4 hours ago | parent | prev | next [-] | | It's not BRICS as a whole, it's China and a little bit of India. Brazil is a major risk given political turmoil and generalised corruption; Bolsonaro attempted a coup in a country already plagued in history by coups, his son is going to run for presidency and has a chance to win it. South Africa's economy is in shambles, their electricity grid can barely function, the country is going backwards socially and economically. Russia I don't think we even need to talk about. That leaves China and India, China has capital controls and is notoriously difficult to invest in. I don't think there's much in common with BRICS as it was in the early 2000s when the acronym surfaced, as of now they are very dissimilar societies and economies. | |
| ▲ | ericmay 4 hours ago | parent | prev [-] | | Bonds go up, bonds go down. This "news" (from a questionable source) needs more context, otherwise it's just noise in isolation. > The US Dollar is slipping from the world's reserve currency status As I always like to remind folks, the US dollar is just one of many currencies that banks keep in reserve. There is no status to lose other than being the one held the most. There are also downsides to being the dominant currency - I'm sure you're aware of those, right? > - and the US treasury is slipping from the default safe haven for liquid assets. Based on what? > The BRICS countries bonds are becoming more attractive as of this month. Are you buying? I'm not buying Chinese bonds. The US stock market is at all-time highs and more people than ever are buying into safe haven American companies. You should provide more details and context about the cause and effects, why it matters, and what it means. Just saying "people find XYZ more attractive" isn't compelling. | | |
| ▲ | brazukadev 27 minutes ago | parent [-] | | > The US stock market is at all-time highs being in an All time high is only better than not being in ATH. With high inflation, it doesn't mean much. It is like Apple every year launching the best iphone ever. | | |
| ▲ | ericmay 15 minutes ago | parent [-] | | Sure but the OP suggested that since some instrument was at some price point it implied some other thing such as investors not having confidence in a country such as the United States. On the other hand the US stock market is at all-time highs due to investor confidence in American markets and the American economy. If investors were seriously worried about the American government going insolvent there would be a flight to safety - you could maybe argue that American stocks would be the safest entity to fly toward due to their intrinsic value, but you could also argue that if the US government went insolvent a lot of these stocks would tank. My point is, the OP was just saying stuff without any evidence or even really much personal analysis. > It is like Apple every year launching the best iPhone ever. In many respects that is technically true. |
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| ▲ | 5 hours ago | parent | prev [-] | | [deleted] |
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