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NEW YORK (AP) — Treasury prices dropped Thursday as credit ratings agency Standard & Poor's raised questions about the ability of governments to stimulate the economy with public spending.
That's going to do wonders for the housing market and the unemployment situation no doubt. NOT!
You know that crazy theory I had about real yields falling? You know, to spur the economy and justify my stagflationary name? It was kind of based on a functional monetary helicopter. I'm not sure we have one of those at the moment. Do you realize it's been over a year since I wrote the following?
March 17, 2008
Deflation
My short-term deflationary mood (as seen in the upper left corner of my blog and in my most recent post about the possibility of a commodity crash) is kicking in it seems. I'm still stagflationary long-term.
Oil was $105.74 a barrel that day and supposedly heading higher. It did head higher, temporarily.
Using hindsight, it is fortunate that I never did define what my version of the short-term is/was. In the grand scheme of things, Japan has been in an deflationary environment for the short-term I suppose. If one merely thinks of the long-term as being the age of the planet that is! Sigh.
I'm still stagflationary long-term though. Perhaps I shouldn't be, but my gut is still very much willing to hoard basic necessities. Further, my nose is too. Something smells off.
That being said, the following is well worth a read. I mostly agreed with Bob Hoye's conclusions long before the crisis hit. Had I fully agreed with him, I'd have done even better though. I'm not going to bother quoting him. It's all a worthy/scary read (from the heckling the Fed to the heckling of Mankiw, he covers it all).
May 19, 2009
Great Depressions Are So Methodical - Bob Hoye
Source Data:
FRB: Selected Interest Rates
Bloomberg: Government Bonds
6 comments:
Stag,
Yesterday, Great Britain was put on negative credit watch by one of the major rating agencies.
The downgrade would have been a big nothing burger for me, except for the fact that the British pound rallied against the dollar. That might be a cause for CONcern.
The era (error) of least worst is upon us. And somehow I don't think you need to be the best or the brightest to successfully implement a "competitive" devaluation.
mab,
"And somehow I don't think you need to be the best or the brightest to successfully implement a "competitive" devaluation."
It's a game that all central bankers can win. There's no need to even be the fastest.
From 2007...
http://news.bbc.co.uk/2/hi/business/6982749.stm
"Zimbabwe has devalued its currency as part of its battle to tackle its deepening economic crisis."
Nothing beats making the currency worthless.
"Unemployment stands at about 80% and there are mass shortages of fuel and foodstuffs."
Yeah, but think how bad it would have been with a stable currency?
"Critics have blamed President Mugabe's policies, especially the seizure of farms, for ordinary Zimbabweans' hardship."
Couldn't happen here though.
"Obama Seizes Individually Owned Business"
http://canadafreepress.com/index.php/article/11287
The next story of a Chrysler dealership being stolen from its rightful owner is that of George C. Joseph--the sole owner of Sunshine Dodge-Isuzu in Melbourne, FL. Joseph writes: “On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as “new,” nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.”
Stag,
Maybe the fed isn't trying to destroy the dollar so much as they are trying to destroy all market price signals. Once price signals are utterly destroyed we will have a total casino eCONomy. Long term, everyone will be a loser - except the house.
The business investment decision process will be as follows:
Should we expand production this year? Yeah, let's do it, I'm feeling lucky!
mab,
"Should we expand production this year? Yeah, let's do it, I'm feeling lucky!"
Hmm... gambling and production? YES! I LOVE IT!
Baby Needs New Shoe production!
I'm telling you, "Baby Needs New Shoe" is going to be a huge broadway hit! Much bigger than Cats!
I think we've just stumbled upon Americas next growth engine! It boggles my mind just how many hundreds of workers we could employ, assuming we can get the needed funding from the insolvent banking system that is.
On the off chance we can't, I do have a backup idea though.
Baby Needs New Chinese Shoe production!
It's actually a Chinese Shoe production about Chinese shoe production!
I've never been more optimistic!
Oh yeah, I'm feeling the dark sarcastic gallows humor this morning. No doubt about it.
flin,
Stop spamming me.
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