Can anyone even imagine 10 year treasuries yielding 13%
U.S. 10 year treasuries are now yielding 1.96% (yes, below the rate of inflation). But Portugal's 10 year treasuries in today's market yield over 13%.
"The Euro fell slightly against the Dollar immediately following the LTRO, though it recovered much of the loss by lunchtime. European stock markets barely moved, although yields on 10-Year Portuguese government bonds did start rising immediately following the news, hitting their highest level in nearly three weeks at 13.6%."
So why do U.S. 10 year treasuries provide such dramatically different yields over other similarly indebted nations? Risk of sovereign default...you say???? Or...we can always print the money to pay the interest expense?????
Just imagine what will inevitably happen when U.S. treasuries yield above 10%. Market forces will drive the interest rate to those levels in time. I've maintained that those lofty interest rates would be hit this year, 2012. If not, 2013 for sure. The U.S will never be able to afford the carrying costs of it's debts. Got gold...got silver???