4 ms·

I predict the Federal Reserve will buy them at close to 100% non-default value while dry heaving over their involuntary involvement in politics. I further pred

I predict the Federal Reserve will buy them at close to 100% non-default value while dry heaving over their involuntary involvement in politics. I further predict that those shorting the securities will lose their court case against the Fed, since the action would be protected by the 14th amendment: Section 4 The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

ISL 4y ago
If someone's shorting the security at maturity, there won't be a court case; they'll simply lose money when the inevitable government action redeems the notes at face value via some mechanism. While it is possible that the United States could default, a naked short to take that position would be like saying, "Hey, I bet you $100 that this steamroller will stop if I jump right in front of it." If you think the US will default, it might be wiser to go long something that will grow in value in the chaos that would immediately follow.