Tea Party kicks Boehner in the teeth - again

[Riot]

This is a private blog, so you have to vet it yourself. I think the author overstates the impact on bonds.

Wed Jul 27, 2011 at 11:01 AM PDT
Two signs Wall Street is starting to believe in default

First: the price of credit default swaps (CDS) against US treasuries has spiked. And very, very unusually, the price of a one year CDS is now higher than the price of a five year CDS.

Second: the stock market AND the bond market are down today. It is fairly common for investors to rotate from one into the other depending on outlook. When both are down sharply, as is happening today, it means investors are selling everything and keeping their money as money. That is - Wall Street is starting to put their investment money under their mattress.

[ snip]

Once upon a time the default result of a financial panic was called a "flight to quality" - sell stocks and corporate bonds, buy US treasuries. The Republicans have destroyed the image of US bonds as quality. It will be years or decades before that image can be restored.

Also worth noting - US treasuries are sold at auction. No one wants to pay full price for something that is dropping in value like a rock. This will require this week's treasury auctions to sell more bonds to achieve the same level of cash for the government. In other words, the GOP has added to the deficit already, just by playing games.

If the US citizens understood how morally and intellectually bankrupt these elephant scat are, the GOP would cease to exist.

http://www.dailykos.com/story/2011/0...lt?via=siderec