Fifth, some argued that highly indebted sovereigns would push investors into gold as government bonds became more risky.

Government bonds, on the other hand, have no covenants.

With interest rates on government bonds in the US, Japan, the United Kingdom, Germany, and Switzerland at ridiculously low levels, investors are on a global quest for yield.

Yes, 300 billion in treasury bonds. Want me to find out?

As a result, the rating on the Government's recent bond issue has been upgraded.17

Interest rates on government bonds were racing upward.

The dam is being funded by government bonds and private donations.

They would pay a price, since investors in these bonds would initially demand a novelty premium.

Yet this new thinking has yet to influence significantly the behavior of bond investors and rating agencies.

Interest rates will rise to compensate investors both for having to accept a larger share of government bonds in their portfolio and for an increasing risk that governments will be tempted to inflate away the value of their debts, or even default.

Encouraging participation by foreign investors is a quick way to jump start local bond market activity.

Sovereign obligations, such as bonds, are commonplace in the capital markets, and demonstrate strong investor demand and confidence.

Adding cocos to government bonds will require solving a host of technical problems.

Hence, the Fed s intervention in the housing market is really an intervention in the government bond market the purported switch from buying mortgages to buying government bonds is of little significance.

In fact, the success of banks in issuing cocos suggests that investors do have the appetite for them.

The FED replies saying sure, we'll buy ten billion in government bonds from you .

American investors who sell bonds to the Fed will want to diversify the dollars that they receive from it.

The stumbling block has been potential investors fear that accounting fiascos in emerging countries would render the bonds unsafe.

Bond market vigilantes already have taken aim at Greece, Spain, Portugal, the United Kingdom, Ireland, and Iceland, pushing government bond yields higher.

European governments are not in a position to instruct the ECB to purchase government bonds.

Holders of European government bonds believed that they knew what they had bought.

For example, individual countries government bonds could be replaced by Eurobonds.

Although individual foreign investors can sell the dollar securities that they own, they can only sell them to other foreign investors. As long as the US has a current account deficit, the stock of foreign owned claims on the US economy must rise.

A shift in foreign investors portfolio preferences away from long term bonds could easily trigger such a run up in rates.

Investors are buying long term bonds at the current low interest rates because the interest rate on short term investments is now close to zero.

This week, such government debt paid around 3.2 , which is very low by historical standards.

The first ever bond issued by a national government was issued by the Bank of England in 1693 to raise money to fund a war against France.

During the global financial crisis, even the safety of bank deposits and government bonds was in doubt for some investors.

Both sums dwarf the sums controlled by hedge funds and private equity groups.

In the generation before World War I, the safe assets were thought to be the debt of governments tied to the gold standard, which supposedly offered protection against the inflationary populist viruses that afflicted countries like Mexico, France, or the United States. But investors in British government debt faced huge losses when Britain s commitment to World War I produced inflation, and investors in Czarist bonds papered their bathrooms with them after the October Revolution.

And that is why investors are right to worry that inflation could return, even if the Fed s massive bond purchases in recent years have not brought it about.

Let's say they bond here, they bond here, and they bond here.

At this point, inflationary expectations will increase, long term government bond yields will rise, and the recovery will be crowded out.

So 1 billion of government bonds, that's an asset that says the government owes me a billion dollars.

The Fed is unlikely to be able to reduce long term rates any further. Their level is now so low that many investors rightly fear that we are looking at a bubble in bond and stock prices.

The proposed crisis mechanism would effectively insure government bond purchasers against the risk of insolvency, but it would entail deductibles that compel bondholders to assume some of the investment risk.

The fundamental benchmark interest rates in modern financial markets are the so called risk free rates on government bonds.

So seed VCs are kind of the first round.

Meanwhile, rising fiscal deficits in most economies are now pushing up the yields of long term government bonds. Some of the rise in long rates is a necessary correction, as investors are now pricing a global recovery.

In view of the large role played by the private sector, including individual investors, greater transparency and open communication between the Government and creditors are essential to ensure investor confidence and avoid panic selling of Government bonds issued by developing countries.

The best policy should categorically exclude bondholders from the set of potential beneficiaries of government bailouts.

Later, the Basel accords whetted banks appetite for more government bonds by ruling them virtually risk free.

In the current crisis, even the private rating agencies dramatically underestimated the risks involved, which helped lure international financial investors into purchasing mortgage backed securities at exaggerated prices.

Economists like to subtract the nominal government bond yield from the inflation indexed bond yield of the same maturity to get a market estimate of the inflation rate from now to that maturity date.

Of course, he would also have been one of the major investors in the wind power and natural gas companies that would benefit from government subsidies.