Filed under: Federal Reserve, bonds, depression
March 2, 2009 • 11:26 pm 0
“Entire financial system is bankrupt” Dr. Doom Nouriel Roubini
February 10, 2009 • 8:45 pm 0
Bond market calls Fed’s bluff as global economy falls apart
By Ambrose Evans-Pritchard
The yield on 10-year US Treasury bonds – the world’s benchmark cost of capital – has jumped from 2pc to 3pc since Christmas despite efforts to talk the rate down.
This level will asphyxiate the US economy if allowed to persist, as Fed chair Ben Bernanke must know. The US is already in deflation. Core prices – stripping out energy – fell at an annual rate of 2pc in the fourth quarter. Wages are following. IBM, Chrysler, General Motors, and YRC, have all begun to cut pay.
The “real” cost of capital is rising as the slump deepens. This is textbook debt deflation. It was not supposed to happen. The Bernanke doctrine assumes that the Fed can bring down the whole structure of interest costs, first by slashing the Fed Funds rate to zero, and then by making a “credible threat” to buy Treasuries outright with printed money.
Filed under: Global Economy, bonds, depression
January 13, 2009 • 4:51 pm 0
The bond bubble is an accident waiting to happen
The bond vigilantes slumber. As the greatest sovereign bond bubble of all time rolls into 2009, investors are clinging to an implausible assumption that China and Japan will provide enough capital to keep the happy game going for ever.
Filed under: Global Economy, bonds, depression
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