Bond, Euchre, Senate discussed on The Meb Faber Show

Automatic TRANSCRIPT

Absolutely we can have a problem with that but the mild uptick in long rates that we've seen so far is a little bit like somebody spitting into a like it's really interesting because almost university this is an investment economic whatever you call this financial position that i think is almost universally on the opposite side where most people think of debt almost everyone thinks about it in terms of their own personal sort of construct we're we're dead is bad and if you have too much debt you're going to go bankrupt and yada yada but but it's kind of a different scenario for the government and the way that can presents it listeners i think is is really useful where you think about returns and you know if a lot of the assets people are the us producing and capitalism's earning outstrip a lot of the costs it's it's a it's a positive carey in quite a bit of a positive carry as well think about that return on our equity or the return on our total assets including debt based on normal accounting of which of course normally counting is not terribly accurate there double digit returns where the interest rate is the numbers you know to get double digit returns at two three percent rates across the euchre spectrum is that i mean that's a great tradeoff it it's the same conundrum people have in my usa today column this week i talked briefly about the stupidity of the senate democratic senate bill was introduced sp twenty six five where you know they would like to eliminate the ability of public companies to be able to buy back their own stock in the marketplace and the fact of the matter is they do that on the basis they think that the money should be hoarded and used instead for wages and infrastructure development and capital investment that but the fact of the matter is they kind of missed the point that if you take a triple be raided bond and you think of that as pretax cost and you take the inversion of the p e and you think about as an after tax cost and you borrow longterm money and buy back.

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