Bond Vigilantes Confront Obama as Housing Falters

[Joanne98]

Source: 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.

The 1.5-percentage-point rise in 10-year Treasury yields this year pushed interest rates on 30-year fixed mortgages 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.

“The bond-market vigilantes are up in arms over the outlook for the federal deficit,” said Edward Yardeni, who coined the term in 1984 to describe investors who protest monetary or fiscal policies they consider inflationary by selling bonds. He now heads Yardeni Research Inc. in Great Neck, New York. “Ten trillion dollars over the next 10 years is just an indication that Washington is really out of control and that there is no fiscal discipline whatsoever.”

Investor Dread

What bond investors dread is accelerating inflation after the government and Fed agreed to lend, spend or commit $12.8 trillion to thaw frozen credit markets and snap the longest U.S. economic slump since the 1930s. The central bank also pledged to buy as much as $300 billion of Treasuries and $1.25 trillion of bonds backed by home loans.


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a6eMpGVUDeeE&refer=home

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And there you have it. The bond investor parasites are going to dictate OUR economic policies. Well, can you say JUBILEE? Why don't we just declare a year of Jubilee in the US and FORGIVE all our debts?

Sounds like a great idea to me. The "investor class" needs to get JOBS and stop feeding off the productive part of society. Buying debt and sitting on your fat worthless ass is NOT producing anything but DEAD WEIGHT.

Bond investors are useless eaters.

[annabanana]

1. Jubilee!!!!

Sure sounds good to me!

[Vidar]

2. Obama villes coming up.

[Indydem]

3. What???

You can't "forgive" debt that you owe! You can only file bankruptcy. Would you like our nation to file bankruptcy and lose the ability to borrow for the span of your life and possibly your children's lives as well? Considering the interest on the national debt is only $136b and the amount we are borrowing is $700b, how would you fill the shorfall in the budget?

If investors, foreign nations, and citizens no longer desire to loan the government money, perhaps the government should start spending less. We can start by slashing "defense" spending and corporate welfare.

[Alhena]

4. Uh, we are using THEIR money to fund our economic policies

when you are relying upon someone else to give you their money, you damn well better pay attention to what they have to say. If I were a bond purchaser, I'd be concerned about our deficits and especially Bernanke printing money to buy bonds. Nobody in their right mind would be happy about spending their hard-earned money to buy US treasury bonds when Bernanke is just cranking up his printing press to buy his own.

[dkf]

5. And we provide social programs that are unavailable to the Chinese people

we are borrowing from. I find that highly ironic.

[Abq_Sarah]

6. "Bond investor parasites"?

How do you figure they are parasites? They are purchasing public debt. Without them, how on earth could we fund a 3.5 trillion dollar budget? The fed doesn't have that amount laying around, it has to be borrowed just like the other 11 trillion dollars we owe. Right now, the congress is acting like a person who earns 45K a year and is financing a billion dollar lifestyle with a no preset limit credit card. People are going to sell off US bonds if they believe they will take a loss due to our monetary policies. Bondholders have a legitimate fear regarding the security of their investments.

[bemildred]

7. Silly Rabbits, money is not real.

Some parts of the investing classes have already taken other parts of the investing classes to the cleaners, along with all of the non-investing classes. Obama is trying to fix the economy. If he fails, the bonds will be worthless, the dollar will be worthless, all of their paper assets will be worthless. Helping Obama out is their only hope.