Interest Rate Roundup

Friday, May 29, 2009

Is anyone in Washington listening?

Folks, the market is shouting - SCREAMING -- that we are on a troublesome economic path. The tinkerers in Washington and Treasury are driving the dollar into the crapper. They're putting Treasuries into the shredder. The mortgage markets just dislocated in a huge way. And gold is flying toward $1,000 an ounce.

Oh and don't forget $66 oil, surging gas prices, rising soybeans, rising wheat, rising corn. Meanwhile, TIPS spreads are blowing out to the upside. At the 10-year maturity, they have gone from 4.3 basis points in November to 183 -- that's a 4,250% move if my math is right. I'm certainly not going as far as Marc Faber and predicting Zimbabwe-like inflation. But if Bernanke and Geithner don't show some sign of "getting" what the market is saying, we could end up with a real crisis.

To paraphrase Rick Santelli's CNBC rant from a while back, is anyone in Washington listening?


  • If they're not listening to Nobel laureates like Paul Krugman it seems pretty unlikely they’d listen to tea-baggers like Rick Santelli or gold bugs like Faber, they just seem captured by the financial sector and everything seems focused on saving that subsystem in the belief it will save the larger economic system: But that assumption is undemonstrated, as much an article of faith in its way as tax cuts increasing revenues and boosting GDP to trickle-down on everyone; the echo of that tinkle-tinkle will still be there when I hear the thump of 70 pounds of 100 dollar bills hitting the wheelbarrow on my way to buy bread (before they raise the price to 73 pounds).

    By Anonymous RW, at May 30, 2009 at 9:12 AM  

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