The Ties That Bond

Financially literate bloggers continue to be critical of the seemingly bizarre actions of Team Obama at the U. S. Treasury. If all this seems utterly arcane, allow me to offer a simplified explanation. The Treasury is taking actions on many fronts to aid bond holders at the expense of stock owners. You can argue that this is wise or you can argue that it is unwise, but I will argue that it is predictable. The issue is not stock and bond owners – the issue is about the companies that issue stocks and bonds. Small growing companies depend upon equity financing (stocks) in their early years. Well established companies can issue bonds at a reasonable cost. It’s also the well established companies that can afford lobbyists and can (indirectly) make campaign contributions. Tilting the table to favor bond owners helps the well established companies, threatens their upstart competitors, and assures future income for politicians.

You might want to consider increasing your exposure to corporate bonds.

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One response to this post.

  1. Posted by K on April 20, 2009 at 5:03 pm

    You make a good point. The ass hats on Capitol Hill use that special interest money to outspend challengers by a wide margin. Despite staggeringly high disapproval rates, incumbents enjoy very high re-election rates.

    It’s a circle of corruption. The turds keep whipping around the bowl rather than going down the pipe where they belong.

    The sheeple need to wake up and realize this is not a Bush vs Obama, or democrat vs republican issue. This is a systemic issue where special interests win out over the people’s interests every time.

    Reply

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