Magazine

Some Baffling Calls on Treasury Bonds


U.S. Treasury officials have a horrible track record when it comes to managing the public debt in the interests of taxpayers ("What bonds are saying," News: Analysis & Commentary, Aug. 4). Today's failure to issue 30-year and even 40-year bonds at record-setting low rates is just the flip side of a decision made in the early 1980s. At that time, 30-year Treasuries were callable after 25 years -- a call period so extended that it had virtually no impact on the pricing of the bond. Yet, inexplicably, Treasury officials decided at that time of record-high interest rates to make 30-year bonds noncallable. One of the first issues under that new policy was the 13.25% due in 2014. Thus did Treasury lock the taxpayer into one of the highest rates ever paid on a 30-year Treasury bond.

This lays to rest one of the arguments of the "cons" in your article, since 30-year bonds were paying a lower interest rate than 10-year notes at the time. So, using this logic, we will begin to issue 30-year bonds only when the yield curve is again downward sloping, which, as any bond professional can tell you, is almost always a time of higher-than-normal interest rates. My suggestion is to begin reissuance of 30-year Treasury bonds immediately but to have the foresight to make them callable after 20 years. The danger of not doing so will result in many short-term issues maturing at the same time as deficits and interest rates are climbing.

Rod Everson

Melrose, Wis.

Editor's note: The writer ran the Tennessee Consolidated Retirement System's bond portfolio from 1975 to 1979 and was an institutional bond broker in the 1980s.

BusinessWeek has gone out of its way, like Federal Reserve Chairman Alan Greenspan, to try to cheerlead our economy out of recession. The bond market is telling us what it told us in 1990, 1987, and 1985. It hates huge federal deficits as far as the eye can see. If the fiscal doves want to continue to run the printing presses day and night, the bond market is going to respond with higher interest rates. It won't be much longer before the 10-year Treasury note is quickly heading over 5.00% and the last two standing legs of the economy, autos and housing, collapse.

Geoffrey Lenart

Ventura, Calif. I'm glad that Verizon Communications Inc. (VZ) Chief Executive Officer Ivan G. Seidenberg has such ambitious plans. I look forward to that day in the far, far future when I have a fiber-optic connection to my home ("Verizon's gutsy bet," Cover Story, Aug. 4). And while Wi-Fi in my neighborhood would be neat in the year 2015, I'd settle for a digital subscriber line in the year 2003.

Michael E. McGown

Dripping Springs, Tex.

I applaud Verizon for its vision. When it succeeds, I will buy its service and quit the services of the other gutless telecoms that are holding back, waiting to see if Verizon will be successful. Verizon understands that to beat the competition, you have to be in the forefront of technology.

G.C. Sozio

Los Angeles The supersizing of the American diet with fat-, sugar-, and salt-laden food attests to the marketing success of our food, beverage, and restaurant industries in eking out growth in a slow-growth sector ("The heat in Kraft's kitchen," The Corporation, Aug. 4). All this is not without cost, as the epidemic of obesity sweeps the country.

Our younger generations, nurtured on the unhealthy food choices allowed in school and at home, are becoming the chronically sick workers in our economy, pushing health-care costs beyond globally competitive levels, contributing no doubt to the jobless recovery. As public and private health costs continue their double-digit growth, well in excess of economic growth, pressure is mounting to redefine our dietary practices. Thoughtful investors are already discounting the ultimate consequences for companies like Kraft.

Lee Allen

Boston Gary S. Becker recommends decriminalizing drugs in "How to level the playing field for young black men" (Economic Viewpoint, Aug. 4). If drugs were decriminalized, then more professional drug-distribution systems would be created. This might eliminate the chance for young black males to receive "better pay," since willingness to break the law would no longer be the main competitive edge as a job candidate. Second, how do cheaper drugs that are easier to obtain help the young black male increase his chances of becoming a responsible father?

Brian N. Balestri

Bloomington, Minn.

Drug dealing is not simply a business transaction: It exploits people. Drug addiction destroys the lives of individuals and their families, compromises the public's safety, and reduces business productivity. Drug addiction can take away a person's purpose and good judgment. If the "dad at home" is a drug dealer or a drug user, I fear for the black son's future.

Isabel Burk

New City, N.Y.

I was blessed with four black children (including one male) and had the awesome challenge of supporting them during an extensive portion of their upbringing -- alone. I can assure you that a drug addict/dealer would not have been a preferred enhancement, nor a substitute for the inconvenience of my working as many as four jobs, seven days -- and some nights -- of the week. My experience is not unique; neither is the fact that all four of my children have at least a master's degree. Black American single female heads of household are too common. But drug addicts do not a role model or head of household make. There is much that Becker is in the dark about regarding living as a black person in America -- male and female.

H. Vivian Halliburton

Country Club Hills, Ill.

The cost of the "war" on drugs in dollars and lives has exceeded any return we could ever expect to achieve. I will vote for the first Presidential candidate who finally admits that we have lost the war on drugs and it is time to legalize, regulate, and tax narcotics. Just putting a fraction of the resources required to incarcerate drug offenders into rehabilitation would benefit all society. Not to mention the innocent lives that would be saved when gangs quit the senseless slaughter they engage in to defend their territory.

Rick Schmidt

Portland, Ore.

Every citizen has choices to make about what type of life to lead. Yes, some people have more difficult obstacles to overcome than others. But it's the choices we make as individuals that determine our lives. As an African American male who has made the right choices to survive, get an education, and provide for my family (while working in several low-wage jobs and despite growing up for a time in a broken home), I am offended that Mr. Becker thinks the only way to help black males is to make legal a blatantly illegal activity that has devastated black communities for decades.

Kevin L. McCormick

Lake Orion, Mich. It's unfortunate that "Is the third shift pulling its weight?" (UpFront, July 28) wasn't given more prominence, considering the astounding losses incurred by fatigued workers. Extrapolating the data to health care is even more worrying. In addition to financial costs, what is the cost in lives harmed or lost by fatigued physicians? This is an all-too-real concern, considering that newly implemented work rules for resident physicians still expect them to work the first, second, third, and most of the next first shift without a break.

Haig Tcheurekdjian, M.D.

Cleveland


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