Chris Gaffney of the Daily Pfennig writes this morning:
“The situation here is bad and seems to be getting worse. The major question remains: Who will be standing in line to purchase all of this debt? And what happens to the dollar if/when foreign investors decide they have enough IOUs from the US Treasury and need to be enticed to purchase more. The result will be higher rates here in the US as fewer buyers will demand higher interest to encourage them to purchase the new debt. Another way for the US to entice foreign investors is to lower the value of the US$ in order to make these new Treasury securities cheaper to purchase. I believe we will likely see a combination of the two, higher rates along with a falling US$.”
Chris and Chuck at the Daily Pfennig are about as sharp as they come – I follow these guys closely, they are usually right on the mark. Sometimes early into a trend, but usually on the correct side.