Is A “Vicious” Treasury Market Emergency At Our Doorstep?
Submitted by QTR’s Fringe Finance When Henry Paulson steps back into the public conversation after years of relative silence, it’s not random timing. This is someone who sat at the center of the 2008 financial crisis and understands how quickly confidence can evaporate once stress begins to build in core markets. Paulson also appears to be one of about…oh, I don’t know…six people in the entire nation who know that $39 trillion in debt is an unsustainable level for the country. If you ask me, his recent interview with Bloomberg that is being passed around by traders should be read less as random innocuous commentary and more as a timing signal. In his interview, Paulson is explicitly warning that the scale of U.S. borrowing is now testing confidence in the Treasury market itself. With federal debt approaching $39 trillion, he points to the risk that the long-standing assumption of endless demand for U.S. government debt may no longer hold. As he put it, “That’s a dangerous thing,” describing a scenario where foreign demand declines and Treasury prices fall. …






