2009 May

Niall Ferguson vs Paul Krugman

Niall Ferguson on the recent rise in long term interest rates and his dispute with Paul Krugman (via the FT): Most commentators were unnerved by this development, coinciding as it did with warnings about the fiscal health of the US. For me, however, it was good news. For it settled a rather public argument between .. read more

More on the Yield Curve

Tim Duy has a long post on the yield curve and the recent rise in long term interest rates. I covered a lot of the same ground in three separate posts (see here, here and here) yesterday, but Mr. Duy puts all the pieces together in one unified post: So we are stuck with two apparently contrasting views. .. read more

Understatement of the Week

From the WSJ: With long-end Treasury yields racing higher this week and wreaking havoc on the mortgage bond market, the Federal Reserve might have to tweak its Treasury purchase program sooner rather than later. To date, the Fed has purchased a little less than half of the $300 billion it has pledged to buy in .. read more

Commodity Advance Accelerating

The rally in the commodity indices is accelerating: Like the steepening of the yield curve, this can be interpreted as either positive or negative. Rising commodity prices indicate rising demand and could be an early indicator of recovery. It could also be interpreted as an inflation indicator. More likely it is a little of both. .. read more

Unintended Consequences

The Chrysler cramdown and the GM offer to bondholders have had some unintended consequences: NEW YORK (Reuters) – Scores of companies are being punished in the bond market as the Obama administration’s policies on General Motors and Chrysler LLC create new risks for creditors, a veteran bond strategist says. As GM teeters toward a bankruptcy .. read more

On May 28th, 2009, posted in: Economy by Tags: , ,

Steep Yield Curve

The yield curve is at its steepest on record (via Bloomberg): May 27 (Bloomberg) — The difference in yields between Treasury two- and 10-year notes widened to a record on concern surging sales of U.S. debt will overwhelm the Federal Reserve’s efforts to keep borrowing costs low. The so-called yield curve steepened to 2.75 percentage .. read more

And Speaking of Higher Taxes….

Talk of adding a VAT (value added tax) to the long list of taxes American already pay is making the rounds in DC (via the WaPo): With budget deficits soaring and President Obama pushing a trillion-dollar-plus expansion of health coverage, some Washington policymakers are taking a fresh look at a money-making idea long considered politically .. read more

On May 27th, 2009, posted in: Economy by Tags: , , 3 Comment

John Taylor on US Debt

John Taylor on rising US debt (via FT): I believe the risk posed by this debt is systemic and could do more damage to the economy than the recent financial crisis. To understand the size of the risk, take a look at the numbers that Standard and Poor’s considers. The deficit in 2019 is expected by .. read more

On May 27th, 2009, posted in: Economy by Tags: ,