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US Government Bonds at 13-1/4% Going…going…gone

January 15, 2009

Rocky sadly reports that the US Treasury just called his 13-1/4% of 2014 bonds. Rocky fondly remembers buying these bonds during his salad days in 1984 (although it was scary at the time.) It was fun while it lasted.

Rocky also observes that the current 30-year bond is yielding 2.87%, and he states with 100% mathematical certainty that the buyers of today’s bonds will not achieve the same returns as he did in 1984. (He rather prefers the S&P-500 right now with its 3.4% yield.)

Lastly, he poses the question:
Why did the Treasury leave such expensive debt outstanding for so long?
Answer: Perhaps because the Government doesn’t care about minimizing its costs. How many homeowners still have a 14% mortgage?

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