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You are here: Home / Economics / Free Markets Solve Everything / Here Come The Bond Vigilantes

Here Come The Bond Vigilantes

by John Cole|  April 18, 201110:48 am| 79 Comments

This post is in: Free Markets Solve Everything, Assholes

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The guys whose insight was so keen it led directly to the crash of the last two years and who have decades old track record of being wrong about everything have decided to wreak havoc on the markets this morning:

Shares on Wall Street opened sharply lower and Treasury prices fell on Monday after the Standard & Poor’s rating firm lowered the outlook for the United States to negative, saying that there was a risk that lawmakers might not reach agreement on how to address the country’s fiscal issues.

“More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,” a credit analyst with Standard & Poor’s, Nikola G. Swann, said. At the same time, the firm affirmed the government’s AAA rating.

Both President Obama and Republican lawmakers have suggested plans to cut the federal deficit by at least $4 trillion over the next 10 to 12 years, but by different methods. And Mr. Obama plans to take his message on the road this week, traveling to the West Coast to promote his plan, which combines spending cuts and revenue increases.

The Republican blueprint written by Representative Paul D. Ryan, the Wisconsin Republican who leads the Budget Committee, includes cutting non-military spending, and a politically charged proposal to fundamentally reconfigure Medicare.

While the S.&P. said the proposals were a good starting point for negotiations, “we see the path to agreement as challenging because the gap between the parties remains wide.”

“We believe there is a significant risk that Congressional negotiations could result in no agreement on a medium-term fiscal strategy until after the fall 2012 Congressional and presidential elections,” the statement said.

If I were cynical, I would suggest this is all part of the grand plan to sustain the wealth transfer of the last few decades. Now that most everything has been looted, it’s time for austerity for the have-nots. Pensions need to be slashed! Social Security is too expensive!

But don’t you screw with the tax cuts or the military. And don’t you dare ask S&P who pays their bills. They are just offering 1st Amendment protected speech!

It’s all a big game, and you don’t get to suit up and play.

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Reader Interactions

79Comments

  1. 1.

    wormtown

    April 18, 2011 at 10:52 am

    amen!

  2. 2.

    Hermione Granger-Weasley

    April 18, 2011 at 10:53 am

    Its just applied freemarket theory.
    You get a buncha juicers whining about how awful shit like this is, but they still can’t renounce the freemarket god.

  3. 3.

    joe from Lowell

    April 18, 2011 at 10:54 am

    By making Treasury bonds have to offer higher interest rates, this action will serve to increase the national debt that they’re allegedly so concerned about.

  4. 4.

    Joseph Nobles

    April 18, 2011 at 10:56 am

    A clean debt ceiling raise would be a welcome first step to resolving this uncertainty.

  5. 5.

    4tehlulz

    April 18, 2011 at 10:57 am

    @Joseph Nobles: HAHAHA 10bux says the teabaggers go all in after this.

  6. 6.

    Villago Delenda Est

    April 18, 2011 at 11:00 am

    @4tehlulz:

    The teatards, being natural serfs who love their lords in the most obsequious manner they can muster, of course will fall for this shit. They always do.

  7. 7.

    Josie

    April 18, 2011 at 11:00 am

    @Hermione Granger-Weasley:
    Its just applied freemarket theory.

    I’ve read this from you many times. Exactly what is your solution? A different theory? Regulation? What? Give us something besides repetitive slogans if you understand it so well.

    Edit: Sorry I screwed up the block quote. I don’t understand computers any better than I do economics.

  8. 8.

    WereBear

    April 18, 2011 at 11:01 am

    Read it, and weep:

    Some truths about the tax code

  9. 9.

    General Stuck

    April 18, 2011 at 11:02 am

    We can all thank the baby jeevus and idiot voters for putting the wingnuts back in charge of the House, and giving them a veto to the Obama/dem agenda, and making it safe again for the money grubbing speculators to speculate on how to rob us blind. again.

    I personally set the limit at 4 dollar a gallon gasoline, whereupon I will reup as Comrade in the peoples republic cadres, and un mothball my Che knickers and baseball bat.

  10. 10.

    Dustin

    April 18, 2011 at 11:02 am

    So who the died and made the ratings agencies kingmaker in this dispute? This entire problem was caused by their BS pay-for-play ratings over the last few decades, essential commodities speculators, and unregulated bankers. They can all go to hell as far as I’m concerned. History has a lesson on how these leaches get handled in the long run and I plan to throw a big-ass party the day it starts.

  11. 11.

    Maude

    April 18, 2011 at 11:03 am

    I was thinking this morning that it was easier to be poor in the US during the 1980’s than now. For the middle class, it is difficult and for the rich, easier.
    The deliberate moves to take from the lower incomes and give the upper incomes is stiking if you look back over 30 to 40 years. The laws have tightened ont he lower incomes and loosened on the uppers.
    With the Republicans, they will do anything to make Obama fail.

  12. 12.

    Tom Levenson

    April 18, 2011 at 11:03 am

    Not clear the actual bond guys are buying this:

    Treasuries are off their best levels of the morning, but continue to hold their modest gains. Light selling has pushed the 10-yr yield back up to 3.385% with the inability to quickly recapture 3.40% leading to that level becoming resistance.

    (From the Yahoo Finance bond ticker this a.m.

    Which kind of proves John right: this is intended for politician/rube consumption. The real money appears unmoved.

  13. 13.

    roshan

    April 18, 2011 at 11:04 am

    Man, these folks have real balls when it comes to conning a whole nation. The one percent is doing all the string pulling it can to get Ryan’s proposal a fair shake and a chance to become a reality.

  14. 14.

    Cat

    April 18, 2011 at 11:04 am

    @4tehlulz: Which is why people are unthinkingly worried.

    The Dems are pragmatic and reasonable and will probably support a debt ceiling raising with riders to cut spending like they did with the Budget resolution.

    The Repubs are are mostly compliant with wealthy people’s needs so they may posture for a bit but they have to raise the debt ceiling or it will wreak havoc on the wealthy’s interests.

    This is just a bunch of chicken little stuff.

  15. 15.

    David in NY

    April 18, 2011 at 11:05 am

    Remember what Carville said during Clinton’s early years? If he could die and be reincarnated, he wanted to come back as the bond market.

  16. 16.

    Just Some Fuckhead

    April 18, 2011 at 11:05 am

    The national debt is only $46,000 for every man, woman and child in the country. Let’s just skip Christmas this year and pay it off. Imagine all the new wars we’ll be able to afford.

  17. 17.

    David in NY

    April 18, 2011 at 11:06 am

    It’s like they are shocked, shocked!!, I say, that the United States budget is not balanced.

  18. 18.

    Omnes Omnibus

    April 18, 2011 at 11:07 am

    @Hermione Granger-Weasley: If you want to make statements like this, you should name names. It is not as though BJ is a haven for free market ideologues. If you cannot point who you are talking about and what they said, you pretty much have the credibility of Joe McCarthy with his State Department list.

  19. 19.

    Hypnos

    April 18, 2011 at 11:07 am

    Hey America, could you please get your act toghether and not blow up the world’s economy again, please?

    — the rest of the world

    PS Also can we disband the rating agencies now? Their entire workforce could go and join Al Qaeda and that would still be orders of magnitude less damanging than their continuing work.

  20. 20.

    gizmo

    April 18, 2011 at 11:09 am

    When does the trickle-down begin?

  21. 21.

    Hypnos

    April 18, 2011 at 11:10 am

    Or maybe we can arrange a simultaneous dollar-euro blow up as far right parties gain the balance of power in places like Finland and refuse to endorse the Portugal bail-out.

    That would be fun.

  22. 22.

    Bob Loblaw

    April 18, 2011 at 11:10 am

    @Josie:

    Hermione_chan doesn’t have solutions. Or context. Or coherence.

    She does have many, many catchphrases.

  23. 23.

    piratedan

    April 18, 2011 at 11:13 am

    the dots, will anyone other than bloggers connect them…..

  24. 24.

    Hermione Granger-Weasley

    April 18, 2011 at 11:15 am

    @Josie: Yup. Welcome to the 21st century.
    Read the comments from here down.

    rather than keep linking back, Cole COULD give me, sukabi an’ Mandramus a one time FP post to explain Modern Economics.
    Or just Mandramus and sukabi if im too controversial for the Hall Monitor Nation.
    ;)
    The basic premise of evolutionary economics (based on a lotta Game Theory, one of my favorite things) Is that the market no longer needs spurs as much as it needs a bridle.

  25. 25.

    Punchy

    April 18, 2011 at 11:15 am

    My wingnut dad says who cares if the US owes money, b/c nobody in the world will be able to come in here and collect. Big military, etc. Clearly he is not an economist, but he gets this shit from 3+ hours of Rush and Boortz. So likely the other rubes hear the same thing. So its surprising that they’re now soooooooo concerned with the debt.

    Methinks this concern evaporates the nanosecond a R pres takes over.

  26. 26.

    Kristine

    April 18, 2011 at 11:15 am

    I wondered if the downgrade was a purpose pitch, especially given that the bonds themselves were not expected to be downgraded (if I recall the Google Finance article correctly). Something designed to scare without really hurting the string-pullers.

  27. 27.

    ppcli

    April 18, 2011 at 11:17 am

    While the S.&P. said the proposals were a good starting point for negotiation

    The Ryan plan was based on the fantasy that massive tax cuts would raise huge baskets of revenue. I can now better understand the kind of crack reality-based analysis that led S.&P. to award its highest ratings to worthless junk.

  28. 28.

    Yutsano

    April 18, 2011 at 11:19 am

    @Punchy:

    Methinks this concern evaporates the nanosecond a R pres takes over.

    My dear man, are you suggesting that the concern trolling is completely unserious and only related to there being a darkie Democrat in the White House? Are you trying to inspire fainting spells?

  29. 29.

    Dennis SGMM

    April 18, 2011 at 11:20 am

    @General Stuck:

    If you lived here in sunny (Not today) Southern California you’d have been wearing those Che knickers for some time. Gas prices went north of $4.00 a few weeks ago. Mid grade is now $4.12 with premium going for $4.30. We own two small cars, each holds roughly twelve gallons. The tab for filling them if we run down to a quarter of a tank is nearly forty bucks.

    The prices I cited were as of last Tuesday. They’ve been going up roughly every six days so it’s likely that they’re higher now. Factor in the annual Summer price jump and the Winter re-formulation price jump and we’ll be lucky not to be paying $5.00/gallon by Christmas. “Merry Christmas! Your present is a tank of gas.”

  30. 30.

    Hermione Granger-Weasley

    April 18, 2011 at 11:22 am

    @Bob Loblaw: like evolutionary economics? Free market is a catch phrase.
    You too.
    Give me an example of of a free market solution that worked.
    EDK couldn’t, Corner Stone couldn’t.
    Your touching magical thinking about the free market fairies is never borne out in practice, as far as I can empirically tell.

  31. 31.

    Josie

    April 18, 2011 at 11:22 am

    @Hermione Granger-Weasley: Thank you for the link. I read in that paragraph that social justice solutions include “safety nets, redistribution (in islam we call that zahat, catholics call it tithing), childhood nutrition and pre-natal nutrition programs, etc.” Are there other examples of social justice solutions? These sound like programs that I support fully and that Obama does also. Unfortunately, these are programs that will be hurt by the budget cuts, unless he uses his “scalpel” carefully.

  32. 32.

    cyd

    April 18, 2011 at 11:23 am

    This is a power play. The ratings agencies are fighting off the legal liability provisions of Dodd-Frank; this move tells Uncle Sam that they can f*ck him up if he doesn’t want to play ball.

  33. 33.

    danimal

    April 18, 2011 at 11:26 am

    @gizmo: It’s raining yellow rain! Yippee!

    Count me in with the cynics on this one. I’m sure it’s coincidence that Boehner’s meeting with the money boys and suddenly the bond ratings tank. May be a good time to buy, though.

  34. 34.

    The Moar You Know

    April 18, 2011 at 11:26 am

    Huh. Nobody got it.

    This is a warning, you only get one. You come after these guys, they downgrade all the Treasuries and force a bankruptcy of the United States.

    “Nice country you’ve got there. Damn shame if something were to happen to it.”

    EDIT: cyd got it.

    You should have already realized that this was the new incarnation of the Mob, but if you didn’t, you have no excuse now.

  35. 35.

    Dennis SGMM

    April 18, 2011 at 11:29 am

    @cyd:
    “Nice little economy ya’got there. It’d be a shame if something happened to it.”

    Say what you will about John Dillinger, he at least had the decency to hold a gun on people when he robbed them.

  36. 36.

    Bob Loblaw

    April 18, 2011 at 11:30 am

    @Hermione Granger-Weasley:

    I’m more interested in finding out how the dreaded humanitarian imperialist Obama of three weeks ago somehow became the lord of social justice? That must have been one hell of an epiphany.

    You have a lot of epiphanies.

    That’s my polite way of calling you a fucking moron.

  37. 37.

    Hermione Granger-Weasley

    April 18, 2011 at 11:30 am

    @Josie: there are myriads of social justice solutions. Free school lunch programs. Pell grants. The Obama/Biden early graduation program. Anything that deals with civil rights and civil welfare.
    ACORN, lol. Stimulus, shovel ready programs.
    The thing that is important here is to recognize that freemarket policies worked pretty well under the White Patriarchy Social Cohesion Model of social compact. Side-effecting and trickle-down created jobs, local churches were the engines of social welfare and of moral ethic.
    But the WPSCM was destroyed when blacks and women got the vote.

  38. 38.

    Judas Escargot

    April 18, 2011 at 11:32 am

    PIMCO tried to push the bond market over a month ago, by announcing they were pulling out of Treasuries: Between pensions and mortgages, the bond market is just about the last pot of reasonably stable money the middle class has left.

    And they want it.

    Call it the Bond Harvest, if you like.

  39. 39.

    Montysano

    April 18, 2011 at 11:32 am

    I finally got around to watching Inside Job last night. The facts were familiar to me; what I wasn’t ready for was the absolute contempt that the Galtians have for anyone who dares to question them. There’s a scene where Brooksley Born is testifying to Congress about the dangers of an unregulated derivatives market. Larry Summers is sitting next to her, giving her a stink-eye that is reminiscent of a Mafia don looking at a stool pigeon.

    @Villago Delenda Est:

    The teatards, being natural serfs who love their lords in the most obsequious manner they can muster, of course will fall for this shit. They always do.

    Oh so true, but anecdotally, some of the wingnuts that I work with are starting to have some “WTF!?!?” moments.

  40. 40.

    Hermione Granger-Weasley

    April 18, 2011 at 11:33 am

    @Bob Loblaw: Advocacy for humanitarian imperialism and domestic social justice policies is not incompatible.
    Obama possibly believes humanitarian imperialism, eg the ‘right to protect’ is a kind of global social justice for homo sapiens sapiens.

  41. 41.

    Hermione Granger-Weasley

    April 18, 2011 at 11:38 am

    @Omnes Omnibus: you didn’t read this link?
    ;)

  42. 42.

    Josie

    April 18, 2011 at 11:40 am

    @Hermione Granger-Weasley: Okay, these are all programs that are in force even in Texas, but they have not solved the problem of the debt, the trade deficit or unemployment. How do you keep these kinds of programs going but still solve the money issues?

  43. 43.

    Josie

    April 18, 2011 at 11:43 am

    @Bob Loblaw: You should reconsider leaping to conclusions about people and demonizing them with crude epithets. Doing that says more about you than about them.

  44. 44.

    "Serious" Superluminar

    April 18, 2011 at 11:44 am

    if im too controversial for the Hall Monitor Nation.

    No, you’re just an idiot. Not many people here actually support free market theory, but just keep on blabbing those catchphrases anyway, I’m sure in your head they mean something.

  45. 45.

    Omnes Omnibus

    April 18, 2011 at 11:44 am

    @Hermione Granger-Weasley: Since you linked to it after my comment, I don’t really think I can be blamed. In addition, you still are not saying these phantom free marketers are. EDK, who has said he is in favor of regulated markets and has started to use the term “market based” to avoid confusion in the future? Is that it? Anyone else?

  46. 46.

    PurpleGirl

    April 18, 2011 at 11:47 am

    JC: If I were cynical,…

    Yes, JC, be cynical, be very cynical. It’s easy in this situation and the elites are trying to steal every thing they haven’t already stolen from the people who really do the productive work.

  47. 47.

    Chad N Freude

    April 18, 2011 at 11:47 am

    @Punchy: Your dad is right, but he’s overlooking the fact that the phone calls from the collection agencies will bring down the nation’s communications infrastructure.

  48. 48.

    Omnes Omnibus

    April 18, 2011 at 11:48 am

    @Josie: Hermione has been around this blog in various personae for quite a while. Few are leaping to conclusions about her.

  49. 49.

    PurpleGirl

    April 18, 2011 at 11:50 am

    @joe from Lowell: Yup, you’re right.

  50. 50.

    Bob Loblaw

    April 18, 2011 at 11:51 am

    @Josie:

    I’ll take that risk, thanks.

    Let me know how that next world shattering epiphany plays out for ya, matoko. Wallah, cudlip, bubba, argle bargle, bwana, scribbledy blibbledy blue…

  51. 51.

    Chad N Freude

    April 18, 2011 at 11:52 am

    @Josie:

    You should reconsider leaping to conclusions about people and demonizing them with crude epithets.

    Clearly, you are unaware of all Balloon-Juice traditions.

  52. 52.

    Mandramas

    April 18, 2011 at 11:53 am

    @Bob Loblaw: Technically, you can be a “dreaded humanitarian imperialist” and “the lord of social justice”. You only need to play rough with foreign nations and soft with your own citizens.

  53. 53.

    bobbo

    April 18, 2011 at 11:54 am

    Stocks are down, yes, but is S&P’s rating the reason? Methinks rich people are selling off a little stock to pay their taxes – Apr 18 is annual tax day and also 1st quarterly tax day.

  54. 54.

    Josie

    April 18, 2011 at 11:55 am

    @Omnes Omnibus: I know, I know. I’m just extra crabby today for reasons totally unrelated to BJ. Sorry, Bob.
    I’ll just shut up now.

  55. 55.

    "Serious" Superluminar

    April 18, 2011 at 11:57 am

    “Hi Honey, how was school today?”
    “It was ok mom, are we still going to Disneyland this weekend? That would be soooo cool!”
    “Even better! We’re going to a new theme park – Distributed Jesusland! Your babysitter’s taking us! What a treat!”
    “You mean that girl who used to dress up as some weird Japanese cartoon character, and now goes around with the Harry Potter gear on?”
    “Uh…yeah, yeah.. that one, Hon.”
    “But she’s so lame mom!”
    “Now what have we told you? Some people are just ‘special’ or ‘gifted’. It is wrong to judge them so badly…”
    “But mom she’s just going to take us to see that totally ass-sucking Forest of the Free Market again! I don’t wanna go!”
    “Now, now, she might have some interesting stories to tell about her ex-boyfriend Eric…”
    “Lame! I’ve heard them like 5000 time already!”

  56. 56.

    "Serious" Superluminar

    April 18, 2011 at 11:57 am

    “Hi Honey, how was school today?”
    “It was ok mom, are we still going to Disneyland this weekend? That would be soooo cool!”
    “Even better! We’re going to a new theme park – Distributed Jesusland! Your babysitter’s taking us! What a treat!”
    “You mean that girl who used to dress up as some weird Japanese cartoon character, and now goes around with the Harry Potter gear on?”
    “Uh…yeah, yeah.. that one, Hon.”
    “But she’s so lame mom!”
    “Now what have we told you? Some people are just ‘special’ or ‘gifted’. It is wrong to judge them so badly…”
    “But mom she’s just going to take us to see that totally ass-sucking Forest of the Free Market again! I don’t wanna go!”
    “Now, now, she might have some interesting stories to tell about her ex-boyfriend Eric…”
    “Lame! I’ve heard them like 5000 time already!”

  57. 57.

    Doug Kahn

    April 18, 2011 at 12:00 pm

    It’ll be easy to check on the truth of this later, but I think this morning’s drop is just day traders (and all of their allies here and abroad) using news to whipsaw the market for a small profit. The market fluctuates.

  58. 58.

    mcd410x

    April 18, 2011 at 12:04 pm

    We already know Standard and Poor’s will do anything to make a dollar. Including massive fraud.

  59. 59.

    Paris

    April 18, 2011 at 12:09 pm

    We believe there is a …risk that … negotiations could result in no agreement on a medium-term fiscal strategy until after the fall 2012 … elections

    That’s how democracy works, bitches.

  60. 60.

    Church Lady

    April 18, 2011 at 12:30 pm

    Unless and until I hear Obama say a word about making the hedge fund daddies pay a tax rate on their income at the rate every other profession has to pay it’s income, he needs to STFU on raising taxes on the “rich”. This includes his dear buddy Warren “I only pay capital gains tax on 99.99 percent of my annual income” Buffet. But then Goldman Sachs might not be Obama’s biggest campaign contributor in this next election.

    It cracks me up when Obama talks about “millionaires and billionaires” when he’s trying to sell raising taxes, but really wants to reach down to the people making 1/5 to 1/4 of a million dollars in income. Fuck him.

  61. 61.

    Hermione Granger-Weasley

    April 18, 2011 at 12:42 pm

    @Omnes Omnibus: market based is the same thing as free market. Both are applications of Freemarket theory coded as policies.
    And for the semanticians in the Balloon Juice Hall Monitor Nation, the THEORETICAL Free Market is a well-defined construct that has not existed and probably cannot exist in any known society.
    Freemarket policies, freemarket solutions, market-based policies, market-based applications are ALL the same thing—ALL applications of Freemarket THEORY made into practice, the only difference being the amount of regulation leveled on the market..
    The opposite of market-based or freemarket solutions (same thing) which at best rely on the action (invisible hand) of the market to deliver social justice as a trickle-down or side-effect, are social justice solutions, which DO attempt to directly deliver social justice with safety nets, redistribution (in islam we call that zahat, catholics call it tithing), childhood nutrion and pre-natal nutrition programs, etc.
    When President Obama actually used the words “social compact” in his speech that was revelation. He gets it. He may pay lip service to the “free market” for the bubba consumption, but we are starting to get there.
    People like EDK and the bubbas and I wager most of the Balloon Juice Hall Monitor Nation actually think there is no alternative to blind market-worship of the freemarket god.
    There are many alternatives, for example evolutionary economics.

  62. 62.

    dave

    April 18, 2011 at 12:43 pm

    s&p and ratings agencies need to be investigated

  63. 63.

    Hermione Granger-Weasley

    April 18, 2011 at 12:49 pm

    @Josie: But freemarket policies can solve none of those problems, and in fact CREATED them.
    Direct jobs creation, workforce re-education, raising minimum wage, universal healthcare, are all social justice solutions.
    Letting the bush tax cuts on the rich expire would solve 75% of the deficit.
    that is redistribution.
    How do freemarket policies create jobs? Trickle down and side-effecting, not by direct creation. Inefficient.

  64. 64.

    Hermione Granger-Weasley

    April 18, 2011 at 12:52 pm

    @”Serious” Superluminar
    you might be interested in the history of Distributed Jesusland.
    I invented it to mock Jim Manzi’s post here at Sully’s.

  65. 65.

    JonF

    April 18, 2011 at 1:13 pm

    I guess Obama should have just paid off Moody’s/S&P like the mortgage industry did.

  66. 66.

    tomvox1

    April 18, 2011 at 1:16 pm

    If the Supreme Court of the United States can throw an election for the Republicans surely it is no great leap to believe that private ratings agencies (by definition run by wealthy individuals) would collude to enable Republican deficit fear mongering and tacitly support their pain prescription with interestingly timed “downgrades.”

    Galtian overlords unite to preserve our 35% top bracket!

    Keep on it, John. It cannot be repeated enough: Why is anyone listening to these people after they’ve gotten virtually everything completely wrong over the last 20+ years?

  67. 67.

    Omnes Omnibus

    April 18, 2011 at 1:18 pm

    @Hermione Granger-Weasley: Okay, you are an idiot.

  68. 68.

    AnonGuest84

    April 18, 2011 at 1:25 pm

    This might be ‘greek’ to a lot of us, but from the Financial Times’ Robin Harding:

    Fed to signal end of monetary easing: An end to global monetary policy easing is on the horizon, with the US Federal Reserve set to signal it will cease asset purchases at the end of June….Even the more dovish officials at the Fed see little case for further asset purchases because the risks that led them to launch QE2 last autumn have abated. Core inflation, excluding volatile food and energy prices, is still below the Fed’s goal of “2 per cent or a bit below” but it now appears to be rising rather than falling. In recent testimony to Congress, Ben Bernanke, Fed chairman, noted evidence of “a self-sustaining recovery in consumer and business spending”. He added that “downside risks to the recovery have receded and the risk of deflation has become negligible”….However, the broad consensus that further asset purchases are not necessary does not mean that a majority of FOMC members are in any hurry to raise interest rates. “As long as core inflation year-over-year is 1.5 per cent or lower, I am extremely doubtful that we’ll need an adjustment to monetary policy,” Charles Evans, president of the Chicago Fed, told reporters after a recent speech. According to some of the standard policy rules favoured by the Fed, unemployment is still higher and inflation is still lower than levels that would prompt a tightening…. Some FOMC doves remain concerned about risks to growth, especially the cost to consumers from high oil prices . By contrast, FOMC hawks who favour earlier tightening believe the Fed should act against higher headline inflation

    Shorter version: Government is thinking of taking away the teat that Wall Street has been suckling on since Spring ’09.
    This morning is just a big hissy fit by the Masters of The Universe.

  69. 69.

    Midnight Marauder

    April 18, 2011 at 1:37 pm

    @Church Lady:

    Unless and until I hear Obama say a word about making the hedge fund daddies pay a tax rate on their income at the rate every other profession has to pay it’s income, he needs to STFU on raising taxes on the “rich”. This includes his dear buddy Warren “I only pay capital gains tax on 99.99 percent of my annual income” Buffet. But then Goldman Sachs might not be Obama’s biggest campaign contributor in this next election.
    __
    It cracks me up when Obama talks about “millionaires and billionaires” when he’s trying to sell raising taxes, but really wants to reach down to the people making 1/5 to 1/4 of a million dollars in income. Fuck him.

    You are a clown.

    I thought this was one of the better moments during President Obama’s town hall with CNBC’s John Harwood. He gets asked by hedge-fund manager Anthony Scaramucci what we can do about the anti-Wall Street sentiment out there and what to do about health-care costs and taxation on businesses that are wanting to hire right now.
    __
    […]
    __
    OBAMA: Well I don’t know where that comes from. That’s my point… I guess. It is a two way street. If you’re making a billion dollars a year after a very bad financial crisis where 8 million people lost their jobs and small businesses can’t get loans, then I think that you shouldn’t be feeling put upon. The question should be how can we work with you to continue to grow the economy.
    __
    A big source of frustration, this quote that you just said, this was me acting like Hitler going into Poland had to do with a proposal to change a rule called carried interest which basically allows hedge fund managers to get taxed at 15% on their income.
    __
    Now everybody else is getting taxed at… you know, a lot more. The secretary at the hedge fund is probably being taxed at twenty five, twenty eight, right? And these folks are making… getting taxed at fifteen. Now there are complicated economic arguments as to why this isn’t really income, this is more like capital gains and so forth, which is a fair argument to have. I have no problem having that argument with hedge fund managers, many of whom I know and went to school with and I respect their business acumen, but the notion that somehow me saying maybe you should be taxed more like your secretary when you’re pulling home a billion dollars or a hundred million dollars a year, I don’t think is me being extremist or being anti-business.

    You know when that was? September 20, 2010.

    You clown.

  70. 70.

    Wolfdaughter

    April 18, 2011 at 1:48 pm

    @Hermione Granger-Weasley:

    For heaven’s sake, girl, you have the NERVE to do your own version of Econ 101 to people who have much more life experience and learning than you do! And to claim AGAIN, with NO proof, that almost all BJers are free marketeers!

    READ what other people have to say. Someone else has already pointed out that you’d have a hard time making the case that most of us worship the free market.

    I hope that life and experience will pull you out of your blinkered, prejudiced existence.

  71. 71.

    Hermione Granger-Weasley

    April 18, 2011 at 2:09 pm

    @Wolfdaughter: im an empiricist. All I see here are variants on freemarket theory. Can you give me a link to something else?
    Do you know what I think the problem is?
    There are no real libertarians left in America. They are all socially liberal and fiscally conservative. A true libertarian would be fiscally liberal, and that would mean endorsing social justice solutions like redistribution and civil welfare.
    Welfare and redistribution are dirty words in America.
    Its like Mandramas said….all Americas believe they will be rich.

    And its not Econ 101. Its Freemarket Theory 101 and Social Justice Theory 101 and most people here dont seem to have any understanding of that.

  72. 72.

    Hermione Granger-Weasley

    April 18, 2011 at 2:12 pm

    @Omnes Omnibus: that is your opinion, and does not comprise a refutation of anything i said.

  73. 73.

    MattR

    April 18, 2011 at 3:20 pm

    @Hermione Granger-Weasley:

    All I see here are variants on freemarket theory.

    Unfotunately your blinders don’t let you see that the social justice that you are so keen on is just another variant of free market theory.

    You have basically decided that X number of alterations to the free market are required to make it a social justice system, but you throw everything with less than X alterations into the same “free market” bucket without any consideration for whether the number of alterations is zero or X-1.

  74. 74.

    MattR

    April 18, 2011 at 3:40 pm

    @MattR: Let me ammend that slightly to read:

    Unfotunately your blinders don’t let you see that oftentimes the social justice that you are so keen on is just another variant of free market theory.

    Something like providing school lunches to kids is not a market based solution. But larger scale issues still rely on the market as the primary mechanism of distributing goods with tweaks to make it more just for society. (Of course I don’t consider free school lunches to be a solution to anything. Just a stopgap measure to ameliorate the symptoms of the real problem – poverty)

  75. 75.

    Hermione Granger-Weasley

    April 18, 2011 at 4:01 pm

    @MattR: you are not hearing me.
    It is all a variation of FREE MARKET THEORY. In practice, the market is either more or less free. When EDK said, for example, “lightly regulated” markets that is a variant of Free Market Theory.

    Social justice theory relies on redistribution, and on gifted civil welfare.

    Evolutionary economics is SOMETHING different from either of the above.
    EE Theory doesn’t rely on regulation to shape the market as more or less free…it relies on game theoretic applications to channel market energies.
    EE exploits the market.

  76. 76.

    MattR

    April 18, 2011 at 4:06 pm

    @Hermione Granger-Weasley: It channels market energies but it is not market based? Well then, what is it?

  77. 77.

    mclaren

    April 18, 2011 at 8:03 pm

    Shares on Wall Street opened sharply lower and Treasury prices fell on Monday after the Standard & Poor’s rating firm lowered the outlook for the United States to negative…

    Since those dimwit incompetent criminal sociopath motherfuckers at Standard & Poor’s rated all those worthless garbage mortgage-backed securities as AAA prior to the giant subprime mortgage collapse, this is excellent news.

    Any sensible economist will look at S&P’s ratings and correctly conclude that since S&P is made up of halfwit inept fools who always get it wrong, the fact that S&P has now downgraded their outlook for the United States is a tremendously encouraging sign.

  78. 78.

    Church Lady

    April 18, 2011 at 11:51 pm

    @Midnight Marauder: Strangely enough, that wasn’t in the budget he presented in February. When exactly is it that he would like to actually tax his buddies at a higher rate? Could it perhaps be after November, 2012?

Comments are closed.

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    April 19, 2011 at 3:52 pm

    […] Balloon Juice: If I were cynical, I would suggest this is all part of the grand plan to sustain the wealth transfer of the last few decades. Now that most everything has been looted, it’s time for austerity for the have-nots. […]

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