Friday, October 11, 2013
JP Morgan Chase Sells Off All Short-Term Government Debt
http://www.huffingtonpost.com/2013/10/10/jpmorgan-chase-government-debt-sells_n_4080996.html. DUE 21 OCT 2013. Why do banks invest in US bonds in the first place?? Why are the banks selling off their bonds?? What does the impending debt ceiling have to do with selling off the bonds?? Is the US Economy in trouble?
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Banks invest in US bonds in the first place because buying bonds stimulates the economy, and earns the banks money. Whenever a bank buys a bond, they expect that at least the money they put into it will be returned. Banks are selling off their bonds because with the economic recession going on, banks fear their investments may not be returned to them. The impending debt ceiling will be reached again in the near future, and as a result bond ratings will go down. Bond ratings determine how much money the banks will make or lose. If a country has a high bond rating, investors can expect to gain more than they invested. Likewise, if a country has a low bond rating, investors should not expect to get their money back. Yes, the US economy is in trouble because if banks no longer invest in bonds, the United States' economy will see its downfall. When a bank buys bonds, the United States economy can stay afloat.
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Banks invest in US bonds because there is less risk than buying in stock. Stock is based on the prosperity of a business and with a stock, there is more security in a bond's stability which is beneficial to the national economy. Banks are selling off their bonds because they fear that they will not make capital gain off of their investments in the US bonds. Partly due to the recession or an upcoming dip in the economy, the value of the bond may be peaking. If you foresee that the value could potentially go down, you would sell your bonds immediately. The impending debt ceiling will coming very soon as we all should know, and bond ratings are expected to fall. Bond ratings determine how much money the banks will make or lose. High bond ratings mean high opportunities to make capital gain. I believe that the US economy could be facing some serious adversity sometime soon. If banks and the American people fail to invest in the US economy after the debt ceiling, our economy will plummet. Money makes the world go 'round!
ReplyDeleteBanks sells the U.S. bonds as soon as the they realize that the U.S. economy will soon go downhill. Banks do not want to lose money when the bonds are no longer worth what they used to be. The U.S.economy is in trouble because, given the fact that banks are cashing out their bonds, the U.S. government not only has to pay for their debt from other sources, but also the for the bonds that the banks sold. The selling of the $257 billions USD that JPMorgan owns will surely heighten the pressure the U.S. is getting.
ReplyDeleteBanks invest in U.S. bonds because they are more stable than stocks are. Since bonds involve less risk, they are more beneficial to the national economy. The banks are selling off their bonds because they are concerned about whether or not they will gain any money at this point. With the government debt standing where it's at, the impending debt ceiling is coming down on the banks, and they are selling out their investments as quickly as they can. The debt ceiling will result in the downgrade of bond ratings, which leads to less opportunities to make capital gain. With these predicaments, one can only assume for a downfall of the economy in the near future.
ReplyDeleteBanks invest in U.S. bonds for reasons that can be found on a financial planning pyramid. Compared to other assets, U.S. bonds are considerably stable, especially when compared to stocks. To avoid a loss of money, banks are selling off there bonds. With the potential for another recession banks are eliminating the risks of losing capital. Banks believe the U.S. will no longer be able to avoid the ever impending debt ceiling. Banks no longer believe they will gain money from U.S. bonds. These banks know that the impending debt ceiling will destroy bond ratings. Considering that bond ratings determine how much money a bank will make or lose, banks are selling their bonds before they fall. The U.S. economy is in a poor position. Lack of confidence in consumers to buy assets has slowed the growth of the economy. Also, greed driven leaders in the government are hurting the American economy to fill their own wallets. The economy is not in complete turmoil, however, it is certainly facing that direction.
ReplyDeleteBanks invest in bonds because they are a relatively low risk easy money maker. Banks are taking their money out of bonds right now because they don’t want to own government debt. They fear that if we default, that they will not get the money they invested into the bonds. If we reach the debt ceiling then the government won’t be paying people what they are owed because they cannot go over the debt ceiling. I think that because of the way the economy is expected to go, people will hold on to their money and not invest. People don’t realize that you need to spend money to make money. So yes, the American economy is in trouble. I think selling stocks soon would be a good idea.--IAN HUNT
ReplyDeleteBanks invest in US bond since they tend to be more stable than stocks, meaning there is an increased chance for a return of money. But recently, the banks have been selling off bonds since the economy these days has been going downhill and they want to make sure they get the most they can before something significant happens and the value changes. The debt ceiling is bound to be reached soon enough and with it will come a decrease in the bond value which determines how valuable the bond can be. In my opinion, the US is currently facing troubles and if it continues that way, will end up in deep trouble.
ReplyDeleteBanks typically began investing in US bonds because they have pretty much always been super safe to invest in. There is guarantee that the banks will be able to buy and sell when investing in US bonds. Banks are selling off their bonds because they're afraid that the US may end up hitting a debt ceiling resulting in unpaid bondholders. Selling off the bonds before the US actually hits the debt ceiling means that in case bondholders don't get paid after it happens, they would have already made their money from the sale of the bonds the hold. Ken Sweet of Huffingtonpost stated “money market funds like JP Morgan and Fidelity have been cutting back their exposure to short-term U.S. government debt for the last three weeks and investors have concerns that if the U.S. government were to hit the debt ceiling, it would not be able to promptly pay back bondholders.” The US economy is always in trouble. As of right now, we're in a hole but it's not as deep as it will be if we don't get it together quick, fast, and in a hurry.
ReplyDeleteTypically, banks invest in US bonds because, unlike stocks, the risks associated with bond investment are particularly low. Short-term debt, like that of the United States government, can be bought and sold with ease. US bonds mature quickly and while the U.S. government spent the last two weeks at a standstill, the debt ceiling has yet to be raised. Bond investment banks like JPMorgan Chase & Co. are taking precautionary measures to ensure protecting their investors by selling off these bonds. The question in most of the world’s mind is whether the US will go bankrupt as many other countries have done in recent years. The Huffington Post article says that JPMorgan Chase & Co. believes that the likelihood of a U.S. government default is low. However, as a citizen witnessing the failure of a bipartisan government to rise above politics and act to place the well being of its constituents above all else, my sense of security has been shaken. Additionally, when investment banks and large investors begin to jump ship in numbers by selling off government bonds that have been considered “a safe investment,” US citizens should become even more concerned about a further US economic downturn.
ReplyDeleteBanks invest in U.S. bonds because not only are they more stable than stocks, but also because they have a lower risk of losing money. As of right now the banks are selling off their bonds due to the dropping of the economy, they are worried about losing their money, If we reach the debt ceiling,then the government wont have any money to pay people what is owed to them.The United States economy is definitely in trouble consider how much debt the country is. If the country keeps spending more rather than making money, the economy will be in a more serious situation,
ReplyDeleteBanks invest in US bonds because there is less risk than buying in stock. Stock is based on the prosperity of a business and with a stock, there is more security in a bond's stability which is beneficial to the national economy. Banks are selling off their bonds because they fear that they will not make capital gain off of their investments in the US bonds. Partly due to the recession or an upcoming dip in the economy, the value of the bond may be peaking. The debt ceiling will result in the downgrade of bond ratings, which leads to less opportunities to make capital gain. With these predicaments, one can only assume for a downfall of the economy in the near future.
ReplyDeleteBanks invest in US bonds so they can borrow money. They also buy entire issues of bonds and re-sell them to investors. Also because bonds have less risk than stocks. The banks are selling off their bonds because to take safety measures for its investors and because they think that we may hit the debt ceiling very soon. If that does happen then we will have reached the maximum debt that we can afford and won’t be able to pay people back. Yes, the US Economy is in trouble if they don’t take measures to not reach the debt ceiling.
ReplyDeleteBanks invest in US bonds because it is a less of a risk than actually buying a stock. This means that they have an increased chance of getting a higher profit. There is usually a guarantee that the banks will be able to buy and sell when investing in US bonds. Many people have been selling off their bonds because they feel like they won’t get back all of their money so they are selling them before the debt ceiling because they are trying to get as much as they can back. They are mainly doing this because the decrease in there bond values and how they might even devalue more after the debt ceiling. In my opinion if things continue the way they are with this major debt crisis that we are facing, the United States will be in such a deep hole they might not be able to fully recover from it.
ReplyDeleteBanks invest in US bonds because they carry less risk than investing in stocks. Whenever a bank buys a bond, they expect that at least the money they put into it will be returned. The downward spiral of the economy has perpetuated a growing sense of fear to the Banks, causing them to sell off their bonds. The Banks do not want to lose any money, so they are preemptively selling the bonds before the debt ceiling is hit and they lose money. The impending debt ceiling will cause bond ratings to fall. Bond ratings determine how much money the banks will make or lose. If the people of the US fail to invest in the economy after the debt ceiling, our economy will effectively implode on itself.
ReplyDeleteBanks choose to invest in US bonds because there are not as risky as purchasing stocks. Most banks expect that when they purchase a bond they will receive what they invested and more as a profit. Lots of banks have been selling their bonds as they have noticed the downturn the economy has taken in the previous month. The banks do not want to lose money, so they are selling now before the debt ceiling so that they can not lose any money. Therefore the debt ceiling will decrease the value of bond ratings, and these bond ratings determine how much the banks make, or lose in this case. When people invest, the economy is stable, because people are selling their bonds, the economy will plummet.
ReplyDeleteBanks prefer investing in US bonds because of the reduced risk when compared to stocks. banks are supposed to make a profit when they cash in their bonds, which is their main incentive for buying them in the first place. Because of the government debt and the upcoming debt ceiling standing, it is likely that the US Bond Rating will fall, thus making it harder for the banks to have less of a chance to make a capital gain. This is why the banks are trying to sell their bonds as quickly as possible, before being affected by the debt ceiling. All of these issues coupled together leave nothing but a bleak-looking future for the U.S. economy.
ReplyDeleteBanks invest in US bonds because it makes money for the banks with much lower risk than other methods like investing in stocks. They still make money on interest when it reaches the maturity date and the national economy also benefits. This way, banks don’t have to risk investment in stocks where they could lose money and not be able to pay their investors. The banks are selling off their bonds because they are afraid they will lose money at this point when we hit the debt ceiling. When we hit the debt ceiling, our bond ratings will plummet and if the banks hold on to their bonds, they will lose money and won’t be able to sell them. So, they are selling them while they still have value and they can make some capital gain. The US economy is most definitely screwed if banks and other companies are getting spooked enough to sell all their bonds. It means the US economy is losing credibility, and will probably lose ratings when we hit the ceiling, and people will be less willing to throw their money into a sinking economy, which will only cause further damage.
ReplyDeleteBanks invest u.s bonds to create more money for themselves, not only that but because they carry the lowest risk compared to that of the peoples money. The think that the bonds will not be paid due to the debt ceiling, therefore worry about the bondholder not being able to pay back.I f we cant pay bonds back that means a lower credit rating for thye country. We are in trouble as an economy if we dont renew the debt ceiling.
ReplyDeleteBanks invest in US bonds to increase their own income and because they are almost risk free. The banks are selling off their bonds because of the effects of the new debt ceiling as they fear the people may not pay their bonds off. If we cannot pay back our bonds, our credit rating will drop. This will put our economy in jeopardy unless we renew the debt ceiling.
ReplyDeleteBanks invest in US bonds because they are one of the safest investments and they expect to be paid back everything they invest. Banks are selling off their bonds because they are afraid that we will reach the debt ceiling and the bonds won't be able to be paid back. Yes, the US economy is in trouble because now people will be afraid to invest and if we do hit the debt ceiling the people who invested and had not sold their bonds, won't be paid back.
ReplyDeleteThe government sells bonds so that they can get money from investors to use productively, consequently making more money and paying investors back plus interest. Currently, the governments bond rating is very high and it doesn't have to pay high interest on its bonds. Unfortunately, if the economy tanks, then the rating of bonds goes down and the government will have to pay more interest on its bonds. That will only make the economy progressively worse; it won't be able to pay out what it owes our economy will fail completely if big investors decide to collect. The United States needs to worry more about saving its economy in order to protect itself as a nation, because this is an issue where our security is dependent on economy.
ReplyDeleteBanks invest in US bonds because they are less risky than stocks and they want to make as much money as possible. They expect an economic downturn to occur in the near future so they invest, knowing that their value will decrease from what they are valued at now. Banks, such as JP Morgan, are now selling off their bonds because the nation is coming close to reaching their borrowing limit with other countries. Because of this, banks do not want to hold any of the government’s debt. With an impending debt ceiling, bond prices are expected to fall, which banks do not want, so they choose to sell the current bonds that they hold. The economy is not in immediate trouble, but if it continues this path then we can expect a recession, or even an economic depression in the future.
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