Who's going to buy these Bonds?

[paparush]

AP
Government announces plans to borrow $27 billion
Wednesday July 30, 9:37 am ET
By Martin Crutsinger, AP Economics Writer
Bush plans $27 billion in borrowing next week as part of effort to handle soaring deficits

WASHINGTON (AP) -- The Bush administration gave details Wednesday on how it plans to borrow the billions of dollars it will need to cope with the soaring budget deficits.

Those plans include raising $27 billion by selling a new 10-year note and a new 30-year bond at the regularly scheduled quarterly auctions to be held next week. The government needs to borrow $171 billion during the current July-September quarter, the second highest quarterly borrowing total on record.

http://biz.yahoo.com/ap/080730/federal_borrowing.html

[sinkingfeeling]

1. How does borrowing more money cope with budget deficit? Doesn't borrowing more make deficits higher?

[DJ13]

2. I think Im going to borrow more from Mastercard to ease my personal debt

:crazy:

[Tempest]

3. Countries who don't have our best interests in mind

Saudi Arabia and China, for example.

What country wouldn't want the chance to gain influence over the U.S. by using economic blackmail?

[paparush]

7. That's EXACTLY what I thought...we are lining up economic terrorists.

[benld74]

4. Do bond holders HAVE to be paid when the bonds mature?

[A HERETIC I AM]

5. Absolutely.

Not paying the principal back at maturity is a default.

If the United States Treasury ever defaulted on any of its bonds it would be disastrous for the economy.

Would you purchase a bond with a face value of $1,000.00 if you knew you were unlikely to get your grand back?

If the bond had a rating of DDD, one can expect much higher levels of risk. Not so with a Treasury bond. They technically don't carry a credit rating because they are seen as having virtually zero risk.

[dixiegrrrrl]

6. No.. bonds can default

Mostly a history of municipal bonds defaulting, but now there are state, cities and large companies defaulting.
Great example is Washington State Utility company defaulted some years ago.
Lots of people lose pension money in the defaults.
To make bonds 'safe" they are rated and insured by what are called "monoline"
companies.
Unfortunately, as the current housing debacle has shown, the monoline companies were in bed with the lenders and the safety ratings were not valid.

US Treasury bonds used to be seen as the safest, "backed by the full faith of the US Government".This was back in the days when the government had integrity.

I would invest as much as my faith in the US government let me.
which, in my case, is minus zero.
this country has no money, only debt, and is trying to get past the elections before manure and the fan meet.


Good explanation of bonds and ratings and etc at
bankrate.com

[Tempest]

8. Bond holders can agree to a reissue as well

Bond issuers can keep from paying out as long as bond holders agree roll over the bond proceeds into another bond.

I've been doing that with a small amount of Treasury bonds for 35 years now.