What happens when we default?

There will be a spike in bond yields. Or at least the perception of risk now going forward is enough to crush the weaker players.

This is bad news for banks on a few fronts and for commercial real estate that would be hanging on regardless. Combined there is going to be carnage.

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If bond yields spike, bond prices fall, with a decent yield you get risk free return and a free call…

Be great time to buy government bonds.



If US govt bond yields go up due to Congress choosing to default, you can bet the Vulture Capitalists will be buying as many/much of the defaulted paper as possible as fast as possible (particularly the short-term debt). Why? Because the US govt has (thus far, anyway) always paid its debts–and that won’t change with a delay in payments. The govt will add extra interest to their payment, when it is paid, because it is LATE payment. This has happened before and is no big deal.


yep you’d only have inside of a week to two week window to snatch things up.