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Originally Posted by Greg
It's the oldest market in the world... Our debt is "cheap" (Low coupon rates) because we are seen as having the ability to pay back the debt with the interest. Europe's debt carries a high coupon rate because there is a far higher risk of default.
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Quote:
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Originally Posted by Greg
Just look across the pond at Europe if you'd like to see where we're headed... Debt and an entitled population...
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Just a couple of points here.
1. "Europe" can't sell debt government debt. Only sovereign governments can, and there's a big difference in yields between Spanish yields and German yields in bond markets. That's a significant problem in how the euro is set up. Shared currency, but not a shared ability to raise money via bond auction.
2. I agree with you about why the yields are so different between the US and Spain, or the US and Italy. The markets see the US as the safe place to invest their funds, with little risk of default or future inflation. That's why yields are so low, and they are low on 10 year bonds too. IOW: the market disagrees with your assertion (and BucketList's) that the US is headed for debt difficulties similar to that in southern European governments within the next decade.