Archive for September, 2008

A Prediction

Sunday, September 21st, 2008

Within one year from this date, September 21, 2008, US 5 Year Treasury Bonds will be paying at least 6.5%. That is more than double today’s yield of 3.05%. This will place a huge burden on the Federal Treasury as it struggles to pay skyrocketing interest rate costs, and it will raise the borrowing cost for everyone else to crippling levels. All in all, by this time next year government officials will be wishing they had today’s problems.

I say that knowing that it is generally foolish to make predictions. But sometimes the future seems so obvious that it is hard not to. When you see dark clouds coming over the horizon, you feel safe predicting rain. When you see a match being put to dry grass, you feel safe predicting a fire. I feel a similar level of safety predicting that the US Government will soon have to offer an interest rate of at least 6.5% to attract bids on its bonds.