{"id":516375,"date":"2010-04-05T12:29:54","date_gmt":"2010-04-05T16:29:54","guid":{"rendered":"http:\/\/www.businessinsider.com\/bond-market-its-safer-to-lend-to-buffett-than-obama-2010-4"},"modified":"2010-04-05T12:29:54","modified_gmt":"2010-04-05T16:29:54","slug":"bond-market-%e2%80%9cit%e2%80%99s-safer-to-lend-to-buffett-than-obama%e2%80%9d","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/516375","title":{"rendered":"Bond Market: \u201cIt\u2019s Safer to Lend to Buffett than Obama\u201d"},"content":{"rendered":"<p><em>(This is a guest post by Chris Wood from <a href=\"http:\/\/www.caseyresearch.com\/editorial\/3311?ppref=DLC169ED0310DHe\">Casey Research<\/a>.)<\/em><\/p>\n<p>A few weeks ago, the Federal Reserve released the new Z.1 Flow of Funds  document, which covers flows and outstandings through the fourth quarter  of 2009.<\/p>\n<p>What does the document reveal?<\/p>\n<p>You guessed it &ndash; more of the same reckless behavior that got us into  this mess in the first place.  While households and businesses were able  to shed debt across the board, increases in local, state, and federal  debt outstanding were enough to bring total debt outstanding to a new  all-time high, over $34.7 trillion, if you can believe it.<\/p>\n<p>Consider some of the salient statistics from the Z.1 document:<\/p>\n<ul>\n<li>Total household debt outstanding  shrank by an annualized 1.2% in the fourth quarter, while total business  debt outstanding declined at a 3.1% annualized clip.<\/li>\n<li>Combined, total household and business debt outstanding fell to  $24.535 trillion, reflecting an annualized decline in the fourth quarter  of 2.1%.<\/li>\n<li>State and local government debt outstanding climbed by an annualized  4.7% in the fourth quarter, while federal government debt outstanding  increased at an annualized rate of 12.6%.<\/li>\n<li>Combined, state, local, and federal government debt outstanding grew  to a record-breaking $10.168 trillion, reflecting an annualized increase  in the fourth quarter of 10.7%. <\/li>\n<\/ul>\n<p>So, while consumers and businesses are acting at least somewhat more  responsibly, governments at all levels grow more reckless every day. And  don&rsquo;t think this has gone unnoticed by others.<\/p>\n<p>At the federal level, we can see that the bond market is growing  increasingly wary of the government&rsquo;s spendthrift and &ldquo;kick the can&rdquo;  attitude.<\/p>\n<p>A March 22 article from <em>Bloomberg<\/em> titled &ldquo;Obama Pays More Than  Buffett as U.S. Risks AAA Rating&rdquo; reveals that two-year notes sold in  February by Warren Buffett&rsquo;s Berkshire Hathaway yield 3.5 basis points  less than Treasuries of similar maturity.<\/p>\n<p>While 3.5 basis points is not a huge amount (100 basis points equals one  percentage point), the simple fact that the bond market is saying that  it&rsquo;s safer to lend to Warren Buffett than Barack Obama is telling.<\/p>\n<p>And Buffett is not the only one enjoying this safer than &ldquo;risk free&rdquo;  rate on his notes. Procter &amp; Gamble Co., Johnson &amp; Johnson, and  Lowe&rsquo;s Cos. debt also traded at lower yields than Treasuries of similar  maturity in recent weeks, a situation former Lehman Brothers Holdings  Inc. chief fixed-income strategist Jack Malvey called an &ldquo;exceedingly  rare&rdquo; event in the history of the bond market.<\/p>\n<p>Rare as this situation may be in historical terms, we expect to see lots  more of it in the future.<\/p>\n<p>When conventional investments are not the safe haven anymore they used  to be, gold is the way to go. Being a traditional inflation hedge,  gold&rsquo;s value has never gone to zero. Learn all about where to buy  physical gold and how to store it &ndash; plus prudent, gold-related  investments that can give you up to 4:1 leverage &ndash; by <a href=\"http:\/\/www.caseyresearch.com\/crpmkt\/crpSolo.php?id=169&amp;ppref=DLC169ED0310DHe\" ><span style=\"color: #800000;\"><span style=\"text-decoration: underline;\">clicking here<\/span><\/span><\/a>.<\/p>\n<p><a href=\"http:\/\/www.businessinsider.com\/bond-market-its-safer-to-lend-to-buffett-than-obama-2010-4#comments\">Join the conversation about this story &#187;<\/a><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheMoneyGame\/~4\/MyOJIJ3ckPM\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(This is a guest post by Chris Wood from Casey Research.) A few weeks ago, the Federal Reserve released the new Z.1 Flow of Funds document, which covers flows and outstandings through the fourth quarter of 2009. What does the document reveal? You guessed it &ndash; more of the same reckless behavior that got us [&hellip;]<\/p>\n","protected":false},"author":6637,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-516375","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/516375","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/6637"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=516375"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/516375\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=516375"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=516375"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=516375"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}