I am sorry. Your future has been spent. Debt means that future income must go to pay off what you borrowed. Your income is insufficient because a large part of it is being used to pay off the debt. Count on your condition getting worse as the USA debt load increases. I am sorry but it is just the nature of things and will happen as sure as the sun comes up tomorrow.
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Yep, Davefairtex, I am in full agreement. This is exactly the maneuver.
What are you asking? Red Lines, Sandā¦ Metaphorical? Please explain
Sorry. A bit of a mega comment encapsulating all the things I probably donāt understand in this thread!
Been hearing about the disaster El Nino is about to cause since the 80s. Not happened. Plus grain shortages were predicted in 2022 due to Ukraine War. Not happened. Maybe 2027 is the year.
It would be helpful if we got explanations (not sure from who - not saying it should be you) as to why earlier predictions of doom didnāt happen. What was it that made it work out? eg in 2022 did Ukraine continue to produce and export? Did other countries take up the slack.
I think the context of @the-blame-e 's comment was that you were saying 2027 would be a rough year for food - as in a global disaster due to El Nino. Thatās what he was replying to. With respect, in this comment youāre changing the argument by now talking about a long series of ārough yearsā for youngsters in terms of house buying etc. Thatās a very different discussion.
But you pay a price that gives you a Yield to Maturity of the current rate. You get 5% (or whatever) as the 1.87% coupon plus a gain that accrues between purchase and maturity.
Unless the Treasury is paying face value to buy these bonds, then they arenāt swapping 1.87% for 5%. Are they?
By buying back long and borrowing short, they are instead replacing long term rates (5%) with whatever short term rates are. And they change the profile of their cashflow.
Borrowing short may well have liquidity right now as people wait for a crash in short term bonds. The problem with borrowing short is that people can change their minds. Once they pivot to another asset, and they donāt swap their expiring debt for new debt - thereās a sudden big shortfall. Whereas if someone has a 30 year bond and wants out, itās their problem to sell it on the market to a new mug. I mean pension fund.
It isnāt a matter of income. Itās a matter of assets. In the words of Col. Macgregor: āIāve been telling people, if it comes from the ground buy it. Gold, silver, copper, and other things. And bitcoin, although no one in my generation agrees with me on that.ā
That is, position for the destruction of the financialized economy and a return to the industrial and commodities economy. Which is where China already is, and is leading from. Pass that positioning to the next generation.
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Boomers already tried passing on physical and moveable wealth to their children by hoarding Beanie Babies and snatching them out of the hands of other children. This was when they were middle aged in the 90s.
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Ha! I opted for feral pet rocks for my kids.
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Lending short vs long is like 1) having a home loan that āadjustsā vs one thatās 2) fixed-rate. If short rates scream higher, that adjustable home loan will ā¦ be really annoying. And if we go full 1970s, then having all that short-term debt wonāt be fun at all.
Hereās a fun thought. If Bessent buys up all those 1.5% 30 year bonds, heāll probably get them at a 50% discount (maybe thatās why ābonds are for doughā, due to the massive price changes at the long end). So that could be his way to (temporarily) eliminate a chunk of the national debt.
He could literally eliminate half of the (30-year) debt lent out in 2020/2021 if he did this - at the cost of raising interest payments. Question is: do you want less debt at a higher short-rate, or more debt at a lower long rate?
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In '08, I was heads down, working my butt off, not consuming news or social media. I had no idea there was a GFC - I just knew house prices were going crazy which is why my wife and I sold out of California to move to North Carolina in summer of '06.
There was a certain bliss to ignoring all the information, but after being sober to the risks, Iād rather know they exist than pretend they donāt. A risk doesnāt have to manifest for it to be useful. For example, if the brakes on my car and reaction time lets me stop with a certain safe following distance, it would be great to know Iām less than that. Sure, nothing may happen, but I should be aware that it is risky.
However, you do bring up a good point. For the person who chooses to take no action, this information is likely worse than being uninformed as it will just add anxiety.
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āGood. Thatās establishedā ??? Nice tautology.
Why so hostile? I am a fan. I bought your book. Gave it away because I donāt loan books. Now that thatās established . . . .
Your comment couldnāt be farther from the truth. I am retired, an old age pensioner, on a fixed income. All the money I have is all the money Iāll ever have from now until I die. And I am disabled. And Monroe County DHS just stole almost 9-percent (one-third of my disability), of my net income to pay for Medicare Part B ā because āI make too much money.ā
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The Bible says: āHonor thy parents.ā
And then, in Ephesians 6:4 (KJV) says āAnd, ye fathers, provoke not your children to wrath . . . .ā
And then, Colossians 3:21 adds: āFathers, do not provoke your children, lest they become discouraged. Do not anger thy children."
Kind of a double bind.
My parents wished they had never had children. I honored that. I am out of the stock market. I donāt own a smartphone. And I donāt have children.
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I was at the gym during the GFC and Crash of 2008-09. I watched on TV, along with everyone else, as the stock market lost 670 points in just one session. My 401K took between a 40- to 50-percent hit, money, that due to inflation, I will never get back. Now, the sense of dread and danger I feel is ten times worse, mainly because I really donāt know what is going on. The fact that none of the alternative voices know anything either terrifies me.
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I keep wondering why you are so bitter about boomers. I suspect Chris plays into it to ingratiate himself with a younger demographic aka, marketing. Although, there is a kernel of truth behind it.
Things have gotten worse for the average person over the last 60 years. So the older a person is, the ābetterā their chances of getting ahead were, although there were plenty of pitfalls that could wipe out all gains. And like people of every age group, there are plenty of assholes among the boomers.
My āgreatest generationā parents built their first home in 1952 on land bought on back taxes for $400. Much of the extended family were in the trades so pretty much everything was done without outside help. They traveled, always owned 2 cars without financing, and had a decent amount of social security income to retire in dignity. My mother was a widow for almost 20 years when she died. By then she had spent most everything, lived with my family for several years, and ironically my inheritance was her beenie babies and about $2,000.
But it was her money! Why should I have expected anything different? Should I have been bitter about not having the opportunity to buy a building lot a stones throw outside NYC for $400? Things change and clearly not for our benefit.
Iāll make the same comment I made previously in response to the claim that all boomers are in shit shape and on a ton of meds. If everyone you know between the ages of 62 and 80 is a selfish prick, then you need a better class of acquaintances.
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Some fertilizer wisdom from the guy who found that everything he wants to do is illegal
https://x.com/idahobeef/status/2090592566446293146
This reminds me of the greenhouse farmers in the Netherlands in 2022 during the natural gas price boom. Instead of using their low-priced contracted gas to grow tomatoes and peppers, they all sold their gas on the spot market for 3x-5x and made a killing, leaving their greenhouses dark and cold.
Complex systems at work.
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Hereās the answer:
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Is it bad when the US gets to buy back its 30-year treasury bonds at a 29% discount?
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Iām new here and want to say hello.
Iām in the commercial HVAC industry specializing in the H. As a boiler mechanic I am around commercial industrial equipment every day and am always looking at investment opportunities.
I came across one recently and wanted you guys to tear apart my theory so I can attempt to make a better decision that removes my personal bias.
The specific industry is refrigerant recycling.
I believe in 29ā 50% of all refrigerant sold in America must be from recycled sources and by 36ā the US government will phase out all virgin CFC refrigerants.
This comes as a result of the AIM act.
There currently is a refrigerant glut on the market which is expected to normalize around 27ā due to distributors trying to get a head of the new regulations.
Now I know oil, diesel and fertilizer are the topic of the discussion around the closure of the strait of Hormuz, but 30% of the worldās refrigerant precursors come out of there as well
My theory is that with a potential shortage on the way and government regulations coming up there will be a price spike in refrigerants.
Iām looking at one of Americaās largest recyclers in the space they are a microcap company which is extremely risky to invest in but they carry no real debt and have 35%market share . Currently priced below book value and signed a contract with the government to supply all military equipment and bases with recycled refrigerants.
What am I missing or overlooking here ?
Thanks in advance.
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Awesome comment. Very additive. Thankyou.
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Pure, cold, logic.
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To the extent that they issue new debt, they donāt get to ākeepā the discount as such. Instead, they have changed the cashflow profile of their debt and interest payments and their exposure to interest rate changes.
I thought that is what we discussed earlier, anyway.