Bonds and trouble.....plus GM and real trouble

No matter how hard you try you can't fool mother bond trader. Fuck with her real money and she will pounce on you like a cheetah on a wounded baby zebra leaving you eviscerated and your carcass left for the hyenas. So it is with Obama's liberal approved economic policy that emits an irresistible stink that the financial cheetahs of the world will find irresistible. They now salivate inside their lairs and and once alerted to an easy score they search and find their crippled prey. The ten (or is it twenty) trillion dollar effort to fool everyone is coming undone in the bond market. Our rates are set at 1%, but the market won't budge til they can get 3%. Treasury notes yielding only 2% -- as they were around the turn of the year—were attractive only relative to other assets that were collapsing under fear of an economic apocalypse. But that is passed. Now we have to have a real rate that matches the world. Multiply this out to ten or so trillion and you have a disaster. Near worthless bonds or debt could be in the offing. When Clinton ruled, Treasury Secretary Robert Rubin kept his spending in line by focusing on the bond market. The result was that Clinton ran a surplus. As of this AM our supposed .01% interest rate is 3%, which is the amount the market is saying it is really worth. In other words when we put a so-called $100,000 TBond out there it will only fetch 97K plus. The yield has been rising every day. Per Bloomberg:

For the first time since another Democrat occupied the White House, investors from Beijing to Zurich are challenging a president’s attempts to revive the economy with record deficit spending. Fifteen years after forcing Bill Clinton to abandon his own stimulus plans, the so-called bond vigilantes are punishing Barack Obama for quadrupling the budget shortfall to $1.85 trillion. By driving up yields on U.S. debt, they are also threatening to derail Federal Reserve Chairman Ben S. Bernanke’s efforts to cut borrowing costs for businesses and consumers.

Interest rates on 30-year fixed mortgages have been pushed to above 5 percent for the first time since before Bernanke announced on March 18 that the central bank would start printing money to buy financial assets. Treasuries have lost 5.1 percent in their worst annual start since Merrill Lynch & Co. began its Treasury Master Index in 1977.

Now for GM when it's out of bankruptcy. "Our" company will be the only car company that our government will buy cars from, a formula for fixing car prices and interest rates charged to car buyers, a policy designed to bust Ford or make them a government entity too. We sit on the verge of a fascist government and we are letting it happen. Below is the anthem of the Great Depression. Let's all hope it's a lousy fit.

1 comment:

Anonymous said...

Considering the speed with which the present national-socialist democrat party is driving the Country into the dirt, I suspect we will all be singing that anthem sooner rather then later.