Don't Let the Falling UST Prices Fool You

It could be a boon for the US Coffers--at least according to our favorite little regulatory body: FASB.

Just a thought:
Will the US Treasury begin booking the devaluation in US treasuries as a gain, ala Jamie Dimon's comments a few weeks ago about accounting standards (banks mark-to-market profits when their bonds fall due to buy-back costs declining)?  It would surely be the finest gov't accounting scandal YTD.

Maybe M2M isn't looking so bad afterall.

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Disclosure: Massively short the US in multiple forms.

Comments

[john]

agreed, but that would imply that at some point in the future yeilds would have to be higher in order to justify a decline in the buy-back cost. At what point does the yeild curve begin to shrink (better read, at what point does the govt stop allowing banks to book tremendous profits on a steep yeild curve)?

[Weary Willie]

Too long; didn't read.