For me...my MBA taught me how the world works. It is surprising how few people understand how it truly works - yet they speak as if they know. For that single achievement alone, I would encourage everyone to get an MBA.
That sounds like quite a claim. Can you shed some lights on how the world works from an MBA's perspective?
Well...I can't speak from an "MBA's" perspective, because there isn't 1 MBA perspective.
In terms of the way the world works, I can say that politicians are not in the business of running the world the way it should be run - they are in the business of politicking.
It has become fanciful in the last decade or so, to blame bankers, wall street, the 1%, capitalism, etc. for all the worlds ills - but that's just not the case.
Politicians (many who I support also) are just as guilty.
Here is 1 truism that no politician of a heavily indebted country will say - bond markets are dead right.
If they demand a higher yield on a country's debt - it isn't because there are some "nefarious speculators" trying to make bank off of the demise of the poor people in that country. It's because the stupid policymakers and politician s have fleeced the country, the affairs are not in order and in order for them (bond market investors) to lend to your country in the crappy state it is in, they charge more than they will charge to lend to the US Treasury, Germany, etc.
Likewise, if the bond markets are showing very low yields to America despite all the rhetoric of America's economy in shambles and the debt-to-GDP ratio being too high at 90% - clearly something else is at work and the situation is not as bad as it seems. Financial markets are forward looking indicators - and by all indications, as a general rule, when it comes to properly (and easily) communicating what is TRULY happening with the state's finances, they tend to be spot on.
The issue is that politicians hate it because bond markets show up their lies and untruths. So they blame 'wreckless speculators' and tax bankers. When half of the time, the investors that are wrecking their bond yields are not even BANKERS!
But...it sounds good in a newsbyte because people like to believe conspiracy stories about the wealthy bankers that are enslaving the masses with interest on debt.
The fact is, debt, equity financing & capitalism in general have been the best mechanisms for growth, poverty reduction and standard of living increases over the past few centuries.
Most things you hear politicians blame things on, are just simply scapegoats that people accept because they know no better.
Markets do not predict the future, they only represent the current state of mind about the future.
The fact that U.S. bond rates are so low does not mean that "something else is at work and the situation is not as bad as it seems." It just means that right now, folks can't think of a better place to put their money than in U.S. bonds. That mindset could change quickly if market conditions change. It was not that long ago that mortgage-backed securities were highly rated and well-funded.
Note: I'm not predicting doom for the U.S. here--just making the point that financial instruments really need to be evaluated by their business fundamentals, not how popular they are with other investors.
Furthermore, while the U.S. bond market is resistance to manipulation due to its size, smaller bond markets are not so protected. Here's one example:
> Markets do not predict the future, they only represent the current state of mind about the future.
I never said markets predict the future.
I said they are a good forward looking indicator. Major difference ;)
> The fact that U.S. bond rates are so low does not mean that "something else is at work and the situation is not as bad as it seems." It just means that right now, folks can't think of a better place to put their money than in U.S. bonds.
Well....implicit in my example was that what people tend to do is to complain about America's debt-to-GDP and then suggest some other asset class that investors should be putting their money in - like gold or w/e. Given the large gold sell off a few days ago, I am sure many of those guys are pissed.
Either way, my point was simply that as a general rule, the sovereign bond markets are usually good, forward looking indicators about the health of the economy of a country (relative to others). That's all I was saying - which is contrary to what politicians tell the people. But because they don't know any better, they accept what they hear as gospel because it fits a narrative in their head - bankers are stealing the wealth of the world.
I agree with you on the relative long-term safety of U.S. debt instruments, especially compared to a volatile commodity like gold.
I still disagree that bond prices are good forward looking indicators about the health of a national economy. From January to September 2009, yields on Greek bonds actually fell almost a point--by your criteria, seeming to indicate strengthening future prospects for the Greek economy. Instead we all know what happened next.
> I still disagree that bond prices are good forward looking indicators about the health of a national economy. From January to September 2009, yields on Greek bonds actually fell almost a point--by your criteria, seeming to indicate strengthening future prospects for the Greek economy. Instead we all know what happened next.
I would definitely not say that low eurobond yields on Greek debt is related to strengthening prospects in Greece. But rather an expected likelihood that Germany and the ECB would bailout Greece at terms favorable to bondholders.
That sounds like quite a claim. Can you shed some lights on how the world works from an MBA's perspective?