The Spanish Victory Bond.

This guy, he does have interest.

The yield on the bond is 6 .

Is that the original Victory Bond?

Remember, this is the annual interest rate but this is an overnight loan.

Interest expense.

All we did was, we paid the interest on the debt in this example.

No, we are moving to syndicate his breeding rights.

This is better than buying treasuries.

So you saw where I got my data.

Lets say it looked like this where this over here is 5 .

But this I just want to show you some data here.

So first, a little bit of definitions.

I showed this slide to Larry Page, who just joined our board.

I don't want to think about, are they good at getting low interest?

So liabilities. Liabilities.

Let's say assets and I'll talk about margin requirements

We'll make it 1 750, for, like, you know, interest.

But the whole point of open market operations is to set this overnight borrowing rate.

Let's say that it has, I don't know, 1 billion 1 billion in government bonds,

I supported it because I thought you were smart, but smart men do not end here.

And at the same time, what keeps me up at night is a fear that we'll look at the victories of the G8 50 billion dollars in increased aid to Africa, 40 billion in reduced debt as the victory, as more than chapter one, as our moral absolution.

But unlike mortgages, a lot of corporate debt, they just pay the interest.

So these are kind of the important numbers in the home buying scenario.

The loan bears an 8 interest.

This deposit bears three percent interest.

let's say I put it in a CD.

It just so happens we got your money, man, plus interest.

The debt servicing cost on bonds will take up major portion of the budget.

And then we have the debt, the debt of the company, or the

Let's think about its liabilities.

Savings bonds.

I owe the bank 750,000.

So these treasury securities, whether they're T Bills, treasury bills, treasury notes, or treasury bonds.

He paid the loan with interest.

And then if you got another 5 ?

I know I've overdrawn this picture a little bit too much.

This is 120,000 in equity, market value of equity, he has another 105,000 in liabilites.

What is even a treasury?

This was equity.

They're savings bonds.

Grab the bonds!

And so is the almost 80 billion we will pay in interest this year on the national debt.

It's generating a good bit of cash, but let's say, these guys eat up interest.

So that's 105.