Excerpt from transcript
PAUL SOLMAN (Newshour): Put this in perspective. What has happened to the interest rate on the 10-year U.S. IOU, the U.S. bond in the last, I don't know, week?
ABDULLAH KARATASH, Natixis: The yield has come down significantly. Contrary to what a lot of pundits were saying, that, you know, the U.S. is living beyond its means and people will no longer lend the U.S. government money, that rate has come down even further.
PAUL SOLMAN: We have been hearing the public warnings for months. Debt ceiling dithering was making investors in U.S. bonds impatient. These so-called bond vigilantes were about to demand higher rates to lend us money. But contrary to the warnings, the interest cost to the U.S. government has actually dropped.
So, you mean that, while there was all this terror about the bond vigilantes demanding a higher interest rate in order to lend us money, the interest rate kept going down?
ABDULLAH KARATASH: A lot of that was completely removed from the reality of what actually happened in the market. The market essentially said -- excuse me my French -- but you're full of it.
PAUL SOLMAN: In fact, ever since rating agencies Standard & Poor's first signaled it might downgrade U.S. debt back in the spring, interest rates have been doing anything but follow the script.
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