The U.S. Treasury auction of long-term bonds on Thursday was “terrible”, in the words of one Wall Street economist, with the rate on the 30 year bond jumping from 4.1 to 4.3 percent. This is just the first sign that the debt-based Obama economic stimulus plan is about to become a major drag on the recovery, just as expected.
The economic news is not all bad. We are seeing signs the rate of contraction is abating quickly, promising a bottom to the recession sometime this summer as many forecasters have expected. But therein lies another piece of the interest rate puzzle, and the trouble ahead.
There are two critical consequences to the economy stabilizing. The first is that the massive liquidity injected into credit markets by the Federal Reserve and central banks around the world transforms from economic medicine to inflationary heroin. Central banks are going to face a difficult task of extracting the excess liquidity before inflation soars and without causing another recession. Doubt about the fight against soaring inflation means higher inflation premiums in interest rates.
The second dangerous consequence is that President Obama is on course to double the national debt in just four years….
Maybe Obama’s *shabby, Nixonian treatment* [*link is below – elves] of Chrysler’s secured bond holders, along with his insane deficit spending spree, have left buyers leery of our nation’s long-term future. I would agree. We are in a very deep hole, and the administration is calling for the heavy-duty earthmoving equipment.
http://www.samizdata.net/blog/archives/2009/05/does_obamas_bul.html
Gah…sorry, I should have previewed that post first. Help, Elvenkind!!!
[[i]glad to help! -elfgirl. Remember, currently embedded links don’t work. Just cut and paste the url.[/i]]
We should just nationalized the banks, the way they did in Asia.
Dear John (comment #3),
It’s too late to nationalize the banks. The bankers have already privatized this administration.
[blockquote]We should just nationalized the banks, the way they did in Asia. [/blockquote]
And this is different from the current situation…how? Any bank taking TARP cash is, for all intents and purposes, in a state of servitude. Why nationalize and be politically liable when the implosion comes?
When the government goes to the market to borrow money, it competes with private borrowers, and they simply cannot compete with the government ( who can, after all, print money). The result ? Interest rates go up, up, up. And inflation goes nuts.
The only thing I want to say, over and over, as we head into the abyss being brought about by this spend – spend – spend administration is: “Don’t complain to me! I didn’t vote for him!!”
The way to stop this Fascist coup is to lop off its head and the way to do that is to abolish the Fed and re-institute a hard (backed) currency. Without the Fed’s ability to print any amount of money it wants anytime it wants and do with it what it wants, this Fascist coup by the international financial elites could not have happened. The Fed was created by an act of Congress and an act by Congress can kill it. It can be done if the people will finally stand up and forcefully let Washington know that they’ve had enough and any Congressman and all Senators running who don’t support this will be voted out of office in 2010. If the American people will show their anger and frustration in this way and flood their representatives with this demand and mean it, it will happen if not before 2010 then soon after. Simply put, it’s time to fight back!