Investopedia: Here We Go Again - Markets Continue To Move On Governments

Those who believe that the best government is unobtrusive and nearly invisible have probably ground their teeth to dust by now, but as markets open again on Monday it looks like governments on each side of the Atlantic continue to call the tune in the markets. While Europe tries every trick in the book to keep Greece afloat, politicians in the U.S. seem committed to elbowing each other aside in a rush to drill more holes in the bottom of their boat. 

A Government Shutdown?  
If the politicians in Washington continue to court a government shutdown and play a massive game of chicken with each other, the general public may stop caring and the markets may just decide to install a semi-permanent "knucklehead premium" on U.S. government securities. In the meantime, though, investors should expect another spate of debate, controversy and wall-to-wall talk about whether Congress can come together and agree on another short-term funding measure to keep the government working.

Read more here:
http://stocks.investopedia.com/stock-analysis/2011/Here-We-Go-Again--Markets-Continue-To-Move-On-Governments-TLT-SHY-GLD-DB-UBS-MS-GS0926.aspx

FinancialEdge: How Safe Are U.S. Bonds?

There is a pervasive notion out there in the investing world that U.S. government debt (be they notes, bills or bonds) is one of, if not the safest instruments out there for investors. There is no such thing as a free lunch though, and investors need to take a broader view of risk when evaluating this topic. While U.S. government securities are indeed some of the safest investments available by certain measures, they are by no means a risk-free investment option.

The Faulty, but Convenient, Premise of "Risk-Free Return"
Part of what bulwarks the idea that government securities are risk-free is that financial models seem to say that they are. After all, concepts and models like modern portfolio theory, Black-Scholes, and the capital asset pricing model all require a "risk-free" rate of return in the calculations. While alternatives like German bond rates and Euribor rates have been used from time to time, U.S. government securities often fill the role as a proxy for that risk-free rate.

To read the full piece, click the link:
http://financialedge.investopedia.com/financial-edge/0811/Are-U.S.-Bonds-Really-Risk-Free.aspx