Was admitted to Carleton University for Quantitative and Mathematical Economics for September!
Only took 3 years to get in...
Saturday, July 9, 2011
Friday, July 8, 2011
Short USA conviction
I added a few more otm SHY options the other day (remind me to rant about the execution given to me by my broker...market was 0.10/0.15, market filled me at 0.15 then dropped to 0.05/0.10)...ANYWHO
I am now convicted that the USA will indeed default on their short term loans. If not default, they will create a QE3 which will roll their short term debt into long term debt, essentially doing the same thing that Greece is doing (except Moody's doesn't threaten to lower US debt for the rollovers). BUT by rolling their debt, people will begin to demand more interest for short term loans because of the risk of default on the ever growing debt crisis that the USA has yet to resolve. This higher interest idea came to me after how poorly the 2y auctions have been doing. People clearly do not want to buy bonds at this low of a rate anymore, if nobody is there to buy, the rate will go down until someone starts buying.
Obama reported he wanted to cut 20billion a year over the next decade...even by rolling your debts into longer term debts, your still paying interest, and that debt is going to grow exponentially.
Realistically, If shy drops 3% I will be a happy person (81.00). Lower than that I would be ecstatic.
I am now convicted that the USA will indeed default on their short term loans. If not default, they will create a QE3 which will roll their short term debt into long term debt, essentially doing the same thing that Greece is doing (except Moody's doesn't threaten to lower US debt for the rollovers). BUT by rolling their debt, people will begin to demand more interest for short term loans because of the risk of default on the ever growing debt crisis that the USA has yet to resolve. This higher interest idea came to me after how poorly the 2y auctions have been doing. People clearly do not want to buy bonds at this low of a rate anymore, if nobody is there to buy, the rate will go down until someone starts buying.
Obama reported he wanted to cut 20billion a year over the next decade...even by rolling your debts into longer term debts, your still paying interest, and that debt is going to grow exponentially.
Realistically, If shy drops 3% I will be a happy person (81.00). Lower than that I would be ecstatic.
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