Posted by
rycK on Friday, May 29, 2009 8:11:22 AM
Little Timmy
Geithner Races the Interest Rate Demon around the Financial World. The Demon is
Wining.
Abstract: U.S. Treasury Secretary
Little Timothy Geithner’s plan to keep the yield on 10 year Treasury bonds low
has gone gangrene. The Chinese are watching us as they think Treasury is
printing money and monetizing the debt thus cheating the Chinese out of the
value of their bond holdings. Inflation appears to be looming and this is the
usual penalty for too much money being spread around. We are spending and
printing our way to financial oblivion and the cracks in this phony facade will
start opening soon for all to witness and our financial essence and wealth will
gush out leaving us with a worthless currency if we do not watch out what we
are doing. I believe that the far Left
want this to happen.
We have
been inspecting the antics of our elfin being
as he juggles several financial hot potatoes in the steamy atmosphere of Washington politics and the relevant
question thus becomes: which one will he drop first? I think he will drop our
currency in the latrine.
Little Timmy’s theme song:
“… [the
fed people] are very committed to making
sure they have the ability to unwind and reverse the exceptional measures they
have taken once we have achieved the necessary stability in our financial
markets and an economic recovery is back on track."—Geithner
[Emphasis is mine in all quotes.]
"I am deeply aware of the complexity and
importance of that basic task of making sure we are preserving that great asset -- which
is the deepest and most liquid markets in the world. And we will work very hard
at that." —Geithner
If we
could beg a question here: Why is the interest rate on the 10 year bond going up
when Little Timmy wants it to go down? Isn’t he the Snake Charmer who can make
the cobra rise and fall from the aperture in the wicker basket with aural spells
from his little flute?
For another analysis I choose my
favorite international analyst [Ambrose Evans-Pritchard] from the Telegraph in London:
“Yields on 10-year Treasury bonds have risen
relentlessly since March when the Fed first announced its plan to
buy $300bn (£188bn) of US government debt directly, a move that briefly forced
rates down to nearly 2.5pc, a level thought to be the Fed's implicit target.
Yields have jumped to 3.69pc –
after spiking as high as 3.74pc on Wednesday – pushing up the standard 30-year mortgage
loan to 5.08pc and lifting the borrowing cost for corporations.”-- Bond markets defy Fed as Treasury yields spike. By Ambrose Evans-Pritchard
28 May 2009
We all
know, or should know, that the 10-year Treasury bonds actually define
the instant cost of capital. This should be of interest in case
capitalism inadvertently survives Obama and his Marxian hordes who believe that
we can spend our way to prosperity. Incidentally, these bond yields eventually
also directly influence the long bonds and mortgage rates. Not to be so brash
or insolent as to mention that the fatal global crash in home prices that
precipitated this depression and that the recovery in that global wealth sector
depends largely upon new mortgage rates, we seem to be having some problem with
the control strings that our little elf uses to push and pull the treasury. Any
liberal ought to be able to push on as string or a piece of linguini.
The Chinese position:
“Mr Luo, whose English tends toward the colloquial, added: “We hate you guys. Once you start issuing $1 trillion-$2 trillion
[$1,000bn-$2,000bn] . . .we know the dollar is going to
depreciate, so we hate you guys but there is nothing much we can do.””—wild
rant by Luo Ping, a director-general at the China
Banking Regulatory Commission [Emphasis is mine in all quotes.]
Out of options?
“"The Fed is going to have to consider
doubling its purchases of Treasuries," said Ashraf Laidi, from CMC Capital Markets.”We could be
nearing the end-game for the US dollar but the Fed has little choice at this
point. We're in a vicious circle where any policy aimed at supporting the US economy must be at
the expense of the dollar."-- Ambrose Evans-Pritchard
“It is unclear why US bond yields have
spiked so violently, with spill-over effects on gilts and bunds. One camp of
investors is worried that inflation is rearing its ugly head again:
others fear a sovereign debt crisis as over-extended states loses their AAA
ratings."--
Ambrose Evans-Pritchard
Maybe this is a Buffet buffeting
effect as our Sage
of Omaha has divined that our government will “…inflate its way out of the burden of that debt,” Buffett said.
This
prompts me to think that Little Timmy Geithner has a novel plan to inflate the
dollar, pay off the debt and not raise interest rates. That would be original.
With some new and as yet unexplained maneuvers by the Fed and Treasury they
might try to satisfy all citizens, and the vigilant world, particularly in Peking, and work a miracle with the
cobra and the basket. I happen think Geithner is just lost and frustrated.
Maybe somebody can explain all
this to me as I seem to have lost my way in the complex economics of 2009.
“Dallas Fed chief Richard Fisher said his recent trip to Asia was an eye opener.
"Chinese government senior officials grilled me about whether or not we
are going to monetise the actions of our legislature."-- Ambrose Evans-Pritchard
I think
Little Timmy is now the leading candidate for the Nobel Prize in Economics if
he pulls this trick out of the magical air he seems to be living in. But, I tend to be a bit stuffy and really
want some proof that we can print money and suffer no inflation or debasement
of our currency, credit ratings or dignity during this crash into financial
oblivion.
Where do we get these
cretins? How much are these losers in Washington going to cost us?
rycK
Comments
to: ryckki@gmail.com
Has Buffy the Bozo Been Reading My
Blog? Buffett Predicts Inflation—Bernake Does Not.
http://ryckzrantz.blogtownhall.com/2009/05/05/has_buffy_the_bozo_been_reading_my_blog_buffett_predicts_inflation%E2%80%94bernake_does_not.thtml
““After a testy exchange with
Sen. Judd Gregg, who suggested that President Obama’s plans to hike federal
spending would only increase the nation’s staggering national
debt, Buffett relented by stating that, in the end, the U.S. government simply will do
what every other government has done in such circumstances. [Emphasis is mine in all quotes]
“A country that continuously
expands its debt as a percentage of GDP and raises much of the money
abroad to finance that, at some point, it’s going to inflate its way out of the burden of that debt,” Buffett said.
“Experience proves that, he points out.”