u.s. treasury bonds. the u.s. treasury bond is you loaning the united states money in exchange for a promise from the united states the country will pay you back with interest. that's the only thing that got bought today, that and gold. our friends at newmont mining corporation happen to be one of the largest gold miners. other than gold, u.s. treasury bonds. everybody in the market fleeing to the security of the full faith and credit of the united states of america. the tectonic thing that happened in american finance and also in american politics over the last three days is that a ratings agency, standard & poors, said don't buy u.s. treasury bonds. standard & poor's said if you loan money to the united states, we are less sure than we used to be the country will pay you back. the whole point of the downgrade was to say the u.s. treasury essentially can no longer be trusted. the market responded by giving the u.s. treasury all of their money. >> it's kind of hard to sell treasuries when you have a market meltdown

u.s. treasurys.> money is slowing into what else, u.s. treasurys. >> jon: are you (beep) serious? are you (beep) serious? the u.s. gets downgraded so the financial institutions are flushing their money out of stocks from a booen goose to stash it in the safest place they can find, freshly downgraded u.s. treasurys. basically you burn up the (beep) house down and then you have the balls to come over and go, hey, is your basement still standing? you mind if i, you know, put my money there for a little bit? just until i can find a nicer place for it to live? between you and me singapore is looking pretty nice this time of year. forget, you guys. we can go other places for money. you're not the only game in town. hey, what's up, isle of mann? can i talk to you? would you be able to float us some whatever your currency is, mann-bucks. i don't know. oh, i saw that footage of the pool. it was a (beep). what is the country code for luxembourg? we'll be right back. hop to, gang. it's showtime. uh, do you know

u.s. treasuries? >> we had weak economic data and then trechet made an announcement that they were going to be vigilant against inflation, and it's simply the wrong battle to be fighting now. it's more about growth than inflation. >> suzanne: three weeks ago, you were on our program, and you told us that you were staying away from treasuries with your $20 billion fund, you were completely avoiding treasury. was that a mistake? >> no, not at all. we're very focused on the long-term and while treasuries had a tremendous day today -- we saw the long bond up four points, so rates really going to all-time lows and when you think about the long-term, that's not a very attractive rate of return. the market is clearly in a mode of flight to quality, looking for a safe haven but that's very short-sighted in the moment. i think that investors are reacting to what they remember about 2008, and so there is this crawl into the treasury market. a very fast pace to find that liquidity but you're giving up a lot of y

u.s. treasuries monday. >> if you're looking for a safe home for your cash, many people, definitely u.s. treasuries. >> investors are looking for a boost when federal reserve officials meet in washington today. but here on wall street, traders aren't expecting much. >> they're not going to lower interest rates, because they're at zero. and they're not going to raise them, that's for sure. >> reporter: the fed could end up reinstating a bond buying program to bolster the economy. but experts believe the market mayhem will likely continue for some time. >> i think over the long-term, we will see better days and we will be okay. it's just going to be a slog here in the middle. >> reporter: but the longer that downturn lasts, the more of a devastating impact it could have on the economy, and the already weak job market. now randall, bank stocks in particular are in the spotlight today. they plunged 11% yesterday. their biggest one-day drop in more than two years. investors were questioning how well big financial firms will weather an unprecedented downgrade of u.s. debt. randall? >> alexis, s

u.s. treasuries? >> we had weak economic data and then trechet made an announcement that they were going to be vigilant against inflation, and it's simply the wrong battle to be fighting now. it's more about growth than inflation. >> suzanne: three weeks ago, you were on our program, and you told us that you were staying away from treasuries with your $20 billion fund, you were completely avoiding treasury. was that a mistake? >> no, not at all. we're very focused on the long-term and while treasuries had a tremendous day today -- we saw the long bond up four points, so rates really going to all-time lows and when you think about the long-term, that's not a very attractive rate of return. the market is clearly in a mode of flight to quality, looking for a safe haven but that's very short-sighted in the moment. i think that investors are reacting to what they remember about 2008, and so there is this crawl into the treasury market. a very fast pace to find that liquidity but you're giving up a lot of y

u.s. treasury bonds they might actually want to invest more in certain factories in china but obviously we can't predict exactly what's going to happen yet but it's clearly creating a domino effect across the world and asia is going to continue to watch to see what happens. well asia's nations which of course hold the lion's share of american government could turn their backs on its bombs as the chairman of the hong kong based credit ratings agency has been telling her to. probably. country in nature will try to. buy. my version of. mystic because getting such a. waiting. for. us coming years. coming coming so. bank that it will. make operation an. economy. that. europe's exchanges are on the slide again after already dipping in early trading argues daniel garcelle in brussels explains why. markets in europe are expected to further slide over the course of the day that's despite the pledge by the european central bank to boy up spanish debts investors have been fleeing spain on fears that the country of control so this was supposed to calm the markets the g seven g twenty group of leading

u.s. treasuries or gold, so much of it went into u.s. it just feels a little bit like the people that got us into this mess, that destroyed the infrastructure of our economy as it's crumbling down came to us with the bags of money they were able to get out and go, can you hold this for me until this all gets fixed. >> yes, good. i like that analogy. [applause] >> jon: you're supposed to say no. thank you very much for giving us the overview. we appreciate it. professor john coffee. thanks for being here. [applause] >> jon: that's our sh. join us tomorrow night at 11:00. here it, is your moamg of zen. >> for decades view verse pointed to what they say is subtle and not so sutd l evidence of a love affair. what do you think about bert and ernie? just friends? let us know atcaptioning sponsoy comedy central captioned by media access group at wgbh access.wgbh.org

u.s. treasury bond market and it's connected to the thigh bone connected to the hip bone connected to the foot bone connected to the yeah baby it's all connected so to downgrade you start to pull the thread on the u.s. dollar the whole kit and caboodle gets on rival yeah you all might also say however that it's own related to s. and p. itself and moody's and fitch because the u.s. and france are in such bad shape due to all the so-called aaa rated collateralized debt obligations and other credit derivatives that s.m.p. allowed to be rated aaa and then these country's banks bought these toxic debt yeah that's an interesting part of the history isn't it during the period leading up to the financial crisis the selling of collateralized debt obligations see the rows as they're known and other flora and fauna of the derivatives fear spawned by the which are self blith masters. fish and moody's and s. and p. gave these cancer nations these abominations their aaa rating and it created this huge ponzi scheme now they've pulled the rug out from underneath them well max another story related to thi

u.s. treasuries?s, because we've been in a world which is going to go into a recession, inflation is going to become lower, the fed is going to save their interest rates for years to come, wherever there's a risk aversion people doubt emerging markets and euro and they go to the safety of the dollar and treasuries and china, in spite of complaining about u.s. treasuries, no option to keep on buying them because otherwise its currency would appreciate so manufacturers are keeping interest rates low and they immediate lead them lower if there's going to be a recession so the downgrade affect of lowering interest rates on treasury bonds. >> rose: you think there's a real threat of a double-dip recession? >> i think there is at this point at least a 50% probability. old economic data from the g.d.p. suggests less than 1% growth in the first half of the year. that means that unless you reaccelerate and go to escape velocity, you're going start to fall down. the labor market dynamic, housing is dynamic, inv

u.s. treasuries and selling other credits as a general right to quality people get scared and run away from riskier assets i mean running back to just those u.s. treasuries that were just downgraded i think bigger risk is to the word huge market with a very fragile situation in u.s. housing as well as car loans credit conditions generally and i would remind people to the s. and p. didn't just downgrade the united states they put us on further downgrade watch so they're suggesting that this downgrade may be big beginning of a process and not the am actually the start of the discussion you mention the reaction there nice not china america's biggest lender clearly unhappy about this downgrade has already suggested that the world needs a new reserve currency i mean it seems unthinkable maybe not what think could happen if china does actually abandon the dollar. chinese are an awful lot of exposure to the dollar and they very much like dollars that allows them to keep the renminbi or the want their currency below where the market would set it so to some extent they have helped to aggravate this

u.s. treasuries or gold, so much of it went into u.s. on: it just feels a little bit like the people that got us into this mess, that destroyed the infrastructure of our economy as it's crumbling down came to us with the bags of money they were able to get out and go, can you hold this for me until this all gets fixed. >> yes, good. i like that analogy. [applause] >> jon: you're supposed to say no. thank you very much for giving us the overview. we appreciate it. professor john coffee. thanks for being here. [applause]

u.s. treasuries because of the low yield. they provide port folio balance.s warren buffett invested in bank of america stock. financial stocks have been villified until now they've been the worse performing s&p industry group this year down 25% at one point. as warren buffett recognizes, there are selective bargains to be had in the financial services sector. next month i'll have an interview with morning star's bruce berk berkowitz who has ind in financial stocks. next week we'll be revisiting a interview several months ago with niall ferguson with his new book civilization, the west and the rest and the last 500 years of economic history and why the course of that narrative is changing so dramatically. in the meantime i want to ask you the viewers a favor. sponsors asked for information about our audience. would you fill out our survey on our website, www.wealthtrack.com. thank you for watching and make the week ahead profit and and productive. captioned by media access group at wgbh access.wgbh.org

u.s. treasury bills, u.s. debt enjoys, what are the people in the market saying about whether that aaa rating could be maintained, nina? >> that's something that started creeping into the forefront of investors' minds. last week people started saying even if we do get an 11th hour deal, it's perhaps not going to make much of a difference to the credit ratings agencies who are already ahead of the curve on this one. it was very interesting to note, charles, just last week we spoke to a number of investors last week. he was telling me that u.s. lost its aaa coveted rating a long time ago, so some people say perhaps it's already priced into the market. we should still stress that the u.s. treasuries are trading at lower yields than many other government bonds, even at lower euros. that means despite all of this, they're being the least risky out of these sovereign debt options that people have to invest in. you mentioned gold. the metals trading desk is behind me. they're having a bit of a quiet day, as you can i

u.s. treasuries too so maybe the bigger question that we ought to be asking is where is the country and the global economy heading look looking forward to ask that question i want to first look back i want to go back to two thousand and eight when the u.s. was bailing out the financial system listen to this concern at the time from congressman ron paul. sincere conviction by doing more mischief in not allowing markets to or just get to be liquidated you're going to guarantee a depression it's going to be prolong the agony is going to be there for a lot longer than if you like markets to adjust liquidation and then let her let the good assets come up. and let the market correct let the market pay the price instead we've got bailouts for banks so is what paul was talking about in two thousand and eight what we're saying now did leaders kick the can down the road and is the global economy headed for a collapse essentially their leaders how contrary to that those are the questions that we're going to discussing at five pm with gerald celente of trends research group you won't want to miss it no

u.s. treasury is going to back stop them. so, it doesn't really matter that much where their debt trades, in terms of where mortgage rates might go. in addition to the fannie and freddie downgrades, s&p also cut the ratings of senior debt at 10 of the 12 federal home loan banks. those banks also provide funding for home loans. >> in the same way that we suspect that the increase in funding cost for fannie mae and freddie mac, we think that also applies to the federal home loan banks. so, it's a somewhat different program, same bottom-line result. tom, today of all days freddie mac ask the the government for another 1.5 billion dollars in aid. >> tom: trouble in the house market clearly continues it was the shot heard around the world with that debt downgrade heard late on friday. let's get everybody upgraded now with specifics on tonight's market focus. there was massive selling pressure today in stocks, making today's session a historic one. here's what the s&p 500 stock index looked like today. a mid-afternoon effort to sta

u.s. treasuries in the short term there's no immediate solution to that we've seen the u.s. dollar somewhat just selling off against us which apparently is however strengthening ironically again ever against emerging markets piracies today and this is going to be the case in the near term we haven't seen any more selling dramatic the magnitude so far in terms of future indicators in the treasuries we don't expect that to happen again and near term the u.s. is no closer to bankruptcy or to default today versus what it was last friday and everyone clearly understands that and there's no selling in treasuries because the s. and p. downgrade just one downgrade out of four nationally recognized rating agencies therefore according to these second regulation market money money market funds are not forced to sell based on this a technical downgrade so apart from statements coming like from china to get rid of the dollar as a reserve currency its position has such a currency has not really been undermined by this downgrade. exactly i would completely agree with that it's just that th

u.s. treasuries, john? or will they stop buying new ones?n going on, all this commentary, i think the short answer to your question is no. it's a complicated system. now, the chinese have created this system, because they run these massive trade surpluses every month, they have billions, hundreds of billions of dollars, and they need to park it somewhere. and the only place they can actually park it is the united states. it's the only place which is big enough and liquid enough. and it's all about, without going into the weeds of it, it's all about manipulating the currency. it wants to keep its currency cheap, but it has to continue to buy u.s. treasuries. so they are looking for alternatives here, but right now, there are no alternatives. bottom line, in all of this, the chinese buy american debt not because they want to help americans, but because they think it's good for the chinese economy. christine? >> yeah, let me get this straight, they lend us money so we can buy things that america can't afford made in china, so they can take the

u.s. treasuries, ali. >> ken, christine makes an interesting point here. u.s. suries continue to be a safe haven, in other words, for all the turmoil that's going on out there and for all the risky markets in the world whether you want to buy their bonds or stocks, u.s. treasuries, even downgraded, might still be a better bet and you might actually see yields or interest rates going down as opposed to up. do you think that's possible? >> that's absolutely possible, ali. where are you going to go? it's not easy to know right now where to put your money. the stock market is very volatile. are you going to go to europe with your money. >> that's volatile. there's only so much gold and that has risk. the chinese put the money in china instead of the united states? i don't think there will be a dramatic effect. but this is a very fragile moment. there's a lot of emotion, there's a lot of tension. and the biggest crisis right now, the biggest crisis is in the leadership, in europe, in the united states, and the public is losing confidence. this underscores it. that's

u.s. treasuries, japan stopped, other countries stopped buying u.s. treasuries and started. could see an interest rate spike. if we see an interest rate spike, that will weaken an already soft economy that, as neil suggested, is to the tottering on the brink of recession again, and that would lead to higher unemployment. this can cut a lot of ways. if you get the expected or conventional response from the downgrade that rates go up, it also is a burden on the government to pay its bills and creates all sorts of complications that can deepen a recession. >> before i get to another tweet that i want to go through you with you, vera, you and i were talking about the concept of raising revenue as being something that couldn't be done. you talked about the simpson bolles item on the agenda that were congress to vote on that, you talk about this is all during the commercial guys. we were talking brsh i wanted you to agree with me. >> inside joke. >> bring this up to the viewers. there would be a way to raise revenues without raising taxes according to the report. >> absolutely. th

u.s. treasuries but by the way also eurozone doesn't look better against of the u.s. we are very optimistic on it ok jeffrey in cambridge of anger to you is that too bleak of a picture there i mean the past the point of no return now to markets right. well absolutely not i'm not sure i heard that right there is there's no chance we're going to have a restructuring of the. i mean we have a very serious long term debt problem we've had it for quite a while and it's long term in two ways one that the problem is the deficits the moment the problem is retirements and the rapidly increase in pensions and health spending medicare and social security that are going to come over the next few decades that's a problem it's also long term in the sense that we we've been facing this problem for thirty years many people like myself have been worried about this for thirty years there's nothing that chick about about this year the only thing that's magic about this here is it's become a political issue this year the american political system kind of bizarrely swings back and forth be

u.s. treasuries smile and trillion dollar deficits as far as i'm no skansen if some cons are those largest economy has to go for growth and even that isn't possible can it handle that but to criticism of the learns on strategy and spiraling prices for anything priced in the greenback on the line having confidence in the u.s. dollar and the global economy that is it that it should last for across the arts. ok mark let me go to you first i'd like to read something to you benighted states of america if we didn't have the dollar is the reserve currency of the world we'd be greece i mean we're broke bankrupt really bankrupt and now with treasury secretary james baker how do you reflect upon those words. big loss for us was saying that the u.s. is actually out creaking of a greek speedo's if you add all the i'm funded liabilities to the national debt figure i mean the national debt figure. isn't really what this is really about but really the unfunded liabilities are the so-called fiscal government that's two hundred and two trillion us dollars saw in many ways that then greece the budget defici