Friday, May 29, 2009


Gravity can't be denied, niether can the markets. Economies run on markets and the law of markets is supply and demand. Governments and government officials have since the dawn of history tried to manipulate the market, often by fiat and fraud, but it doesn't work. Elected and appointed officials in a democratic republic like ours are no different. They think they can spend into affluence.... They can, but only by taking what belongs to others and enriching themselves and their friends.

The 'Stimulus' will not work, its not even supposed to stimulate anything but the bank accounts of the left. Spending, debt, taxation and currency manipulation will merely lead to disaster. US bonds are in trouble because those who buy bonds are not stupid, and they will not put up with manipulation for long, nor will they regard unsound currency as a wise investment.

Bond Vigilantes

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 1.4-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.”

Washington is taking us for a ride with our own money, and the only one's to benefit will be them.

"We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle." - Winston Churchill