4 ms·

Sovereign debt of a more politically stable nation state or other monetary union, if you are investing at these levels. If you're an individual, you have more o

Sovereign debt of a more politically stable nation state or other monetary union, if you are investing at these levels. If you're an individual, you have more options, although there will be fierce debate about the risk profile (as US Treasuries were historically considered to be risk free). https://www.bogleheads.org/forum/viewtopic.php?t=449401 https://www.bogleheads.org/forum/viewtopic.php?t=449401

arjie 10mo ago
The disciple went to his master and said "Master, I am considering stopping doing a thing and starting to do a different thing. But I am not certain what the new thing is that I should be doing". The master turned to the disciple and said: "A better thing" The disciple was enlightened. EDIT: Oh damn it. The entirety of the comment was "Sovereign debt of a more politically stable nation state or other monetary union" at the time I replied. Ah well.
- deleted 10mo ago
  [deleted]
kavalg 10mo ago
But I am having a hard time identifying this union/nation. Unfortunately, it feels like the EU is set on a downward trajectory.
- coredev_ 10mo ago
  I'm a bit baffled by this - are you saying that you can't identify a single market in the whole world that is worth to invest in & stable except US? Also I don't see that EU as a whole is on a downward trajectory, there are a lot of areas that are super strong, one being the defence industry. US on the other hand - who wants to invest in or trade with them when they treat the rest of the world (including close friends) as shit.
  - kasey_junk 10mo ago
    You can’t invest in EU sovereign debt though, only the constituent countries. The problem is that US treasuries have a bunch of features that can’t be replicated because of the size of the US economy. The only choice that comes close is China whose bonds are too illiberal to trade the same (and China has no interest in liberalizing them).
    - jacquesm 10mo ago
      You can actually, but the volumes are too low to absorb a massive sell-off of US treasury paper.
      - toomuchtodo 10mo ago
        So the EU should issue more volume and establish a strategy to start rotating from US debt to EU debt. No one is calling for dumping $8T of treasuries on the market overnight; it's entirely reasonable to start issuing Euro debt and communicating the expectation to start selling down US treasuries to European entities that hold them. "Plan the work and work the plan."
        jacquesm 10mo ago
        Yes, they should. The interesting bit here is that the USA has been an endless sink for funds simply because they have been spending way above their means, and that this worked in large part because there was trust. Breaking that trust is super risky from a US point of view. Europe has been more conservative in their spending and as a result needs a place to park their excesses, because there are not enough ways to spend those internally. I think that this is a luxury problem to have, but at the same time I realize that financing the USA any further is something that is not responsible from an EU perspective.
        kasey_junk 10mo ago
        It’s also part of the reserve currency dynamics. It’s not clear how the modern bond market will work in a post dollar world, we frankly don’t have an example. It’s entirely possible that the EU can overcome the political struggles that a true EU bond brings about (I’d love to see how a bond would work that both the Hungarian and Danish and French and Greek governments would back long term) but it seems just as likely that each country will hold bonds in lots of countries, probably in some similar relationship to their trade imbalance. But this is not some unmitigated win for the EU, there is just as likely to be really inefficient and riskier outcomes for everybody as there is some karmic punishment for the States for allowing Trump to run amok.
loeg 10mo ago
Which nation states might you consider more politically stable than the US, even now?
- toomuchtodo 10mo ago
  https://www.cfr.org/trackers/cfr-sovereign-risk-tracker https://www.cfr.org/trackers/cfr-sovereign-risk-tracker https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile...
  - loeg 10mo ago
    > The CFR Sovereign Risk Tracker can be used to gauge the vulnerability of emerging markets to default on external debt. Sort of definitionally, nothing in that list is going to be more politically stable than the US. In the second link, the author gives slightly lower country risk premiums (0% vs 0.2%) to Australia, Canada, Denmark, Germany, Liechtenstein, Luxembourg, Netherlands, New Zealand, Norway, Singapore, Sweden, and Switzerland. Setting aside the practicality of these recommendations (how much debt does Liechtenstein issue? or Germany, for that matter?): in a world where the US is unstable, it's hard to imagine Canada being risk-free.
    - epgui 10mo ago
      Nothing is risk-free. But Canada is certainly more politically stable than the US.
      - vkou 10mo ago
        Canada is more internally stable, but is less externally stable, given that invasion and occupation is on the table. Canada needs to pursue further armament (Carney is pursuing a doubling of its defense budget) and training in asymmetrical warfare.
      - loeg 10mo ago
        What makes you say "certainly," especially in the hypothetical scenario where the US is unstable? Canada has a relatively much shorter history as an independent nation. Canada heavily benefits from its southern neighbor, and has a host of domestic economic issues (low wages, high housing prices; whatever the farmers are on about) that could cause instability as well. I think Canada is reasonably stable, I just quibble with "certainly" and "more" politically stable as compared with the US.

arjie 10mo ago

The disciple went to his master and said "Master, I am considering stopping doing a thing and starting to do a different thing. But I am not certain what the new thing is that I should be doing". The master turned to the disciple and said: "A better thing" The disciple was enlightened. EDIT: Oh damn it. The entirety of the comment was "Sovereign debt of a more politically stable nation state or other monetary union" at the time I replied. Ah well.

deleted 10mo ago
[deleted]

kavalg 10mo ago

But I am having a hard time identifying this union/nation. Unfortunately, it feels like the EU is set on a downward trajectory.

coredev_ 10mo ago
I'm a bit baffled by this - are you saying that you can't identify a single market in the whole world that is worth to invest in & stable except US? Also I don't see that EU as a whole is on a downward trajectory, there are a lot of areas that are super strong, one being the defence industry. US on the other hand - who wants to invest in or trade with them when they treat the rest of the world (including close friends) as shit.
- kasey_junk 10mo ago
  You can’t invest in EU sovereign debt though, only the constituent countries. The problem is that US treasuries have a bunch of features that can’t be replicated because of the size of the US economy. The only choice that comes close is China whose bonds are too illiberal to trade the same (and China has no interest in liberalizing them).
  - jacquesm 10mo ago
    You can actually, but the volumes are too low to absorb a massive sell-off of US treasury paper.
    - toomuchtodo 10mo ago
      So the EU should issue more volume and establish a strategy to start rotating from US debt to EU debt. No one is calling for dumping $8T of treasuries on the market overnight; it's entirely reasonable to start issuing Euro debt and communicating the expectation to start selling down US treasuries to European entities that hold them. "Plan the work and work the plan."
      - jacquesm 10mo ago
        Yes, they should. The interesting bit here is that the USA has been an endless sink for funds simply because they have been spending way above their means, and that this worked in large part because there was trust. Breaking that trust is super risky from a US point of view. Europe has been more conservative in their spending and as a result needs a place to park their excesses, because there are not enough ways to spend those internally. I think that this is a luxury problem to have, but at the same time I realize that financing the USA any further is something that is not responsible from an EU perspective.
        kasey_junk 10mo ago
        It’s also part of the reserve currency dynamics. It’s not clear how the modern bond market will work in a post dollar world, we frankly don’t have an example. It’s entirely possible that the EU can overcome the political struggles that a true EU bond brings about (I’d love to see how a bond would work that both the Hungarian and Danish and French and Greek governments would back long term) but it seems just as likely that each country will hold bonds in lots of countries, probably in some similar relationship to their trade imbalance. But this is not some unmitigated win for the EU, there is just as likely to be really inefficient and riskier outcomes for everybody as there is some karmic punishment for the States for allowing Trump to run amok.

loeg 10mo ago

Which nation states might you consider more politically stable than the US, even now?

toomuchtodo 10mo ago
https://www.cfr.org/trackers/cfr-sovereign-risk-tracker https://www.cfr.org/trackers/cfr-sovereign-risk-tracker https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/ctryprem.html https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile...
- loeg 10mo ago
  > The CFR Sovereign Risk Tracker can be used to gauge the vulnerability of emerging markets to default on external debt. Sort of definitionally, nothing in that list is going to be more politically stable than the US. In the second link, the author gives slightly lower country risk premiums (0% vs 0.2%) to Australia, Canada, Denmark, Germany, Liechtenstein, Luxembourg, Netherlands, New Zealand, Norway, Singapore, Sweden, and Switzerland. Setting aside the practicality of these recommendations (how much debt does Liechtenstein issue? or Germany, for that matter?): in a world where the US is unstable, it's hard to imagine Canada being risk-free.
  - epgui 10mo ago
    Nothing is risk-free. But Canada is certainly more politically stable than the US.
    - vkou 10mo ago
      Canada is more internally stable, but is less externally stable, given that invasion and occupation is on the table. Canada needs to pursue further armament (Carney is pursuing a doubling of its defense budget) and training in asymmetrical warfare.
    - loeg 10mo ago
      What makes you say "certainly," especially in the hypothetical scenario where the US is unstable? Canada has a relatively much shorter history as an independent nation. Canada heavily benefits from its southern neighbor, and has a host of domestic economic issues (low wages, high housing prices; whatever the farmers are on about) that could cause instability as well. I think Canada is reasonably stable, I just quibble with "certainly" and "more" politically stable as compared with the US.