.comment-link {margin-left:.6em;}
Visit Freedom's Zone Donate To Project Valour

Thursday, July 12, 2012

Yesterday's 10 Year US Treasury Auction

Resulted in a very low 1.459 yield and an epic bid/cover ratio of 3.61. For the 10 year, that's huge demand. Just huge.

30 year mortgage at 3.56%, with 15 year at 2.86%

I forgot - low reported SA claims seem to be a function of seasonal adjustments, so today's initial claims report should be consumed with half a shaker of salt. Unless, of course, you live in NYC, where salt and sugary drinks are illegal or something.

Final note: See Snarky Mark's excellent non-revolving debt PER CAPITA chart.A lot of that is college debt. This is consumer non-CC debt that's not secured by real estate. If you want to think of this as if every one-year old in the country is walking around with a $5,500 auto loan, that's pretty close. The parents need to pay the interest on that debt from their incomes, which cuts spending money, which cuts circulating money, which will produce deflation unless either the population expands a lot or production expands a lot.

Japan fell into decades of the deflationary zone precisely because of the strategy they followed in response to the demise of the property bubble, which shoved yields down and forced the population to go into Saving-ueber-alles mode. Now Japan seems to be entering the implosion zone, when spending still doesn't increase but society has to start drawing down the savings.That would be quite doable except that the government has racked up a very large public debt and it will be left to a numerically smaller younger generation to pay for it, or for it to be paid for by continuous trade surpluses. Which might be doable considering Japan's economic history, except for the energy problem. The industrial miracle of Japan was dependent on nuclear power.

I truly question whether the Fed is now accomplishing anything at all with its attempts to stimulate. They have pushed yields so low that they have created a massive need to save, which would logically send us to the Japanese Twilight zone. Our demographics would have forced some of that anyway - why reinforce the trend?

Comments:
There is over 3 TRILLION dollars in consumer credit card and student loan debt, which you ironically us the analogy of one car debt per person, when car debts are not even included among the 3 trillion dollar debt!

I guess we have a two car garage debt in this country.

Amazingly enough, unsecured consumer debt can be converted to secured debt, so it never really was unsecured debt at all. This is one of the biggest consumer scams/lies of all times.

Besides the KNOWN credit card debt of around one trillion dollars, there is ANOTHER trillion dollars of credit card debt that has been converted from unsecured to secured debt via the court system and is NOT COUNTED as credit card debt anymore!

This 3 trillion dollars of consumer debt IS GROUND ZERO as to why the economy can't get going.

Unfortunately, the media champions "debt forgiveness" from the democrat progressive lunatics, and "get another job" from the neo con republicans on how to fix this problem, both solutions are completely stupid and won't work.

Interest rate reductions on all debt for all those who pay down their debts every month is THE SOLUTION that would begin to heal the economy almost instantly.

Thanks for mentioning the debt albatross hanging around consumer's necks, very few media people bring it up because they are all in the pockets of the rich elite whether they know it or not.
 
MOM,

I forgot - low reported SA claims seem to be a function of seasonal adjustments, so today's initial claims report should be consumed with half a shaker of salt.

Indeed. I went with The Price Is Right Cliffhanger Theme.

See Snarky Mark's excellent non-revolving debt PER CAPITA chart.A lot of that is college debt.

And when they get out of college, just think of all the real estate they will almost be buying! Sigh.

I truly question whether the Fed is now accomplishing anything at all with its attempts to stimulate. They have pushed yields so low that they have created a massive need to save, which would logically send us to the Japanese Twilight zone.

Yes!! As a saver...

1. The lower rates go the more money I must save to compensate.

2. The lower rates go the more stuff I am likely to hoard. Saving and hoarding are the same.

Surely I cannot be alone. What would the price of oil be right now if there were no hoarders? How does a higher oil price help our economy?

The Fed has mastered the intended consequences. Seems completely clueless as to the unintended consequences though.
 
So perhaps the correct move by the FRB would be to raise the FFR at the next opportunity. Too close to the election for fingerpointing by either candidate, and the timing is the only point to escape the liquidity trap.
 
I truly question whether the Fed is now accomplishing anything at all with its attempts to stimulate.

Depends on what you think their goal is. If one were to assume that the goal is to allow the Federal government to grow its share of the economy, they're accomplishing quite a bit. Rates are low and demand for "safe" "investments" is high, so government debt grows to the sky.
 
hi i liked the post its very intersting to all students for 50 % discount
 
hi i liked the post its very interesting to all students for 50 % discount student discount thank for share me
 
Post a Comment

Links to this post:

Create a Link



<< Home

This page is powered by Blogger. Isn't yours?