I predicted this would happen, which is like predicting the vase will fall off the shelf after the cat pushes it. So — surprise! — the bond markets aren’t happy with our new Democratic overlords. The New York Times (!) reports:
As the Obama administration racks up an unprecedented spending bill for bank bailouts, Detroit rescues, health care overhauls and stimulus plans, the bond market is starting to push up the cost of trillions of dollars in borrowing for the government.
Last week, the yield on 10-year Treasury notes rose to its highest level since November, briefly touching 3.17 percent, a sign that investors are demanding larger returns on the masses of United States debt being issued to finance an economic recovery.
AdvertisementWhile that is still low by historical standards — it averaged about 5.7 percent in the late 1990s, as deficits turned to surpluses under President Bill Clinton — investors are starting to wonder whether the United States is headed for a new era of rising market interest rates as the government borrows, borrows and borrows some more.
Yes, we’re in the middle of a credit crisis, and President Obama’s policies are crowding out private borrowers — and, further out, making it more expensive for you to take out a mortgage or a car loan.
For someone who claims to be the smartest guy in most any room, you’d think Obama would at least have more sense than the morons in Congress.
Obama and company are following the same economic principles that made Zimbabwe the international economic powerhouse it is today.
Brains and judgment are independent. Obama is smart, no question, but he lacks sound economic judgment, which is why he believes that the best path from debt is to borrow.
Further, the frustrating think about free markets for REALLY SMART people is that free markets simply cannot be predicted or controlled. Every economic model fails, every stock picking model fails, hell, every model fails. Every. Single. One. And yet smart people — and here’s where their lack of judgment comes in — keep thinking that when they turn the eco tiller, the ship will respond in a predictable way. NO. IT. WON’T.
The invisible hand is real. If you’re Obama, it’s gong to slap you. If you accept that you cannot manage the catallaxy and you are willing to work hard and create value, it will most likely push you forward.
Screw it, maybe I’m being too generous. Maybe Obama is just arrogant.
Jeff
http://www.cerebellumblues.com
The writing on the wall is here.
Bonds are attracting less and less buyers as the Chinese are unloading T-bills and buying, no scratch that, loading on commodities, especially metals, copper in particular (one might almost think that they contemplating issuing new Gold/Silver backed currency with copper coinage or something).
The debt nonetheless is already here. What is Timmy to do? Well print more money or tax more…. or since you are “uniquely qualified” with 100% ascertainment from certain someone, how about both?
“investors are starting to wonder whether the United States is headed for a new era of rising market interest rates as the government borrows, borrows and borrows some more.”
Gee, ya think?
The real kicker is that Dear Leader is screwing over his daughters.
China joins the “Tea Party” “… up until last month they were the number one provider of currency to the United States and now they’re gone.”
China is loading up on assets other than US Treasuries because they are better investments. Inflation is coming, so China is listening to the goldbugs and others who seem like the smartest guys in the room for this 10% of recorded history (and weren’t all that dumb the other 90% of the time, just a bit odd.) The dollar will soon be less valuable, which makes me happy to have my student loans in dollars rather than copper coils and real estate. But there aren’t any other silver linings I can think of.
But don’t think that China holds all the high cards. They’re screwed unless the US economy kicks back into action. They’ve got employment issues, newly-aggrieved entitlement classes, and major building projects that make Hoover Dam look like a birdbath. They’re prolonging the inevitable just as much as we have been: our unsustainable lifestyles have competition. And that doesn’t bode well for us, them, or our futures.