Why Won’t The Fed Tell Congress the Truth About Our Debt?
By Warren Mosler
Daily Archives: January 26, 2012 @ 5:14 pm (Thursday)
The Fed’s operation tweet vs twist
Seems to me the force keeping yields down on the short end can be called operation tweet, as the Fed is simply announcing its forecasts for lower rates, which are subject to immediate change, data dependent.
But with operation twist, the Fed actually buys the longer term securities vs just talking about them, as it also lightens up on the shorter term securities.
So after the current knee jerk reaction to tweet I’m looking at the ramifications of twist to dominate.
Japan Sees Its Public Debt Exceeding A Quadrillion Yen Next Year
THEN they’ll be the next Greece…
Japan Sees Its Public Debt Exceeding A Quadrillion Yen Next Year
Jan 26 (Bloomberg) — Japan’s Finance Ministry said the country’s public debt will probably exceed a quadrillion yen for the first time next year, adding pressure on Prime Minister Yoshihiko Noda to raise taxes to restore the nation’s finances.
Greece hopes for debt swap deal by end of week
So it could be that the creditors have agreed to swap their bonds for 30 year bonds with ‘half their face value’ but maybe also with about equal economic value, which can in theory be done if the coupon and quality of the new bonds is high enough.
But, again, seven months of negotiations shows it’s not all that easy to come to agreement, and also that for reasons probably not entirely disclosed the bond holders have substantial bargaining power.
Greece hopes for debt swap deal by end of week
Jan 26 (AP) — Greece is aiming to complete negotiations on its debt swap deal by the end of the week, the government’s spokesman said Wednesday, adding that the talks were at their “most delicate phase.” Charles Dallara, head of the Institute of International Finance will head back to Athens on Thursday for the negotiations on a bond swap, known as the Private Sector Involvement. Athens is trying to get its private creditors to swap their Greek government bonds for new ones with half their face value, thereby slicing some euro100 billion ($130 billion) off its debt. The new bonds would also push the repayment deadlines 20 to 30 years into the future.