I lost $25k on an investment back in 2008 that was what I consider to be a safe investment. No investment is without risk. Anyone investing in US govt bonds cannot honestly say they haven't heard of our large, growing, financial debt. Or the problems that are never solved with regards to how social security etc will be funded.
Bagholders is the term. When you're sold a story about a stock and stuck holding worthless shares after it collapses, that's exactly what our govt bonds are going to be eventually IMO.
Real estate was the exact same "can't go down, sure way to make money" investment, but that went bust in 08/09.
What I don't like is taxpayers bailing out people when their "sure bets" go south. Nobody bailed me out when I lost $25k. Meanwhile at the same time I was hearing about TARP and the folks at AIG getting bailed out so they can go on a $400,000 weekend spa trip with taxpayer money, because they are "too big to fail"
The US govt is a fraudulent, corrupt, thieving service for the poor and ultra rich, and I just hope I don't stuck with the bill when everyone starts to realize this truth and runs from this as an investment. Maybe they have been, and that's why the fed needs to pump the interest rate up by having govt buy its own bonds (wtf is that logic???)
I agree whole heartedly about the moral hazard of having the tax payer left holding the bag for banks and corporations. I have a strong streak of anarco-capitalism in me, and it an worries me when I see the trend to "socialize the risk and capitalize the profit" that came up with the financial collapse before. I realize why we bailed out the banks, but I think that any of these institutions that are "too big to fail" need to be heavily regulated so that they do not take risks with their money.
I have also been stuck with underperforming stocks after the .com bust in the early 2000's. But from a practical point of view it seems to me to be a very different situation between a stock holder in a private firm and someone who holds US government bonds. Our government needs a steady stream of cash, and the bonds are currently that stream. It may sound like an easy thing to do to just write off the US government debt, but in doing so we are destroying the stream of income that the government needs to function on a day to day basis.
I heard a lot of people seriously float around the idea of the US writing off its debt. They seem to have the idea that this will just screw rich Chinese investors who they would like to screw anyways.
Ignoring that a very large percentage of the US debt is held by US corporations and citizens, I want to point out that the trust in the US as a safe economic haven would be destroyed, and this would screw us all, if we just "wrote off the US debt".
The US government is going in the wrong direction. I agree that it seems to be very bent on helping large institutions at the cost of the middle class lately. The frustrating thing is that both parties seem be just as bad, the only difference is which special interest groups they support. I wish people would vote for third parties and break up the power that the Republicrats seem to hold.
At the same time I do not want to see us go through the economic melt down that would occur if we did just default on our debt. That feels like defaulting on your house payments because you are tired of paying property taxes.