Bond market to Obama: Wake up
Commentary: Government borrowing a threat to long-term rates
By Lou Barnes, Thursday, July 2, 2009.
White House Photo 1/29/09 by Pete SouzaNews of a 467,000-job loss in June, one-third worse than forecast, is hurting stocks but no help to long rates: the 10-year is stuck at 3.5 percent, mortgages just under 5.5 percent.
"Green shooters" say the payroll weakness was magnified by temporary auto-plant closings, and they point to signs of bottom in auto sales and housing prices, and see optimism in the June ISM-manufacturing survey crawling uphill.
Overall car and truck sales did have their least-bad month since last September, but still dropped 28 percent from last June. At an annual rate of sales near 10 million, temporary closings will become permanent, with GM's and Chrysler's survival in doubt. Even if payroll-loss forecasts had been correct near 325,000, the figure would have been worse than the bottom of the 2001-2002 recession. Some inventory pipeline-filling is underway, with May factory orders up 1.2 percent, but the ISM's 44.8 is still five points into contraction.
New data support the Agent Orangers' L-shaped non-recovery. The gradual rise in consumer confidence sagged in June, to 49.3 from 54.9 in May. Case-Shiller home prices did mark a bottom, but -18.1 percent year-over-year versus -18.7 percent is thin cheer. Applications for purchase mortgages fell at the end of June, and refis are down 80 percent.
The credit panic has stopped. However, the public-policy panic is still underway, in a new stage: fibrillation at disappointing data, flinching from contingencies.
After the extraordinary measures taken last winter, it was appropriate to give them several months to work. The Fed has been the hero in its dozens of interventions to stop runs on money markets and commercial paper, to secure bank funding, and in the most expansive monetary policy ever, including outright purchase of $800 billion worth of Treasurys and mortgage-backed securities so far this year. The authorities have failed to restore credit, still garroted by a banking system allowed to shrink. The stimulus has been a flop, if not a waste, as a deeply anxious public has been saving most of the money.
If Fed Chairman Ben Bernanke could today erase the term "green shoot" from the English language, he would. Another month of "L" data like this, and government will spring back into action. May the Saints preserve us. ...CONTINUED
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Submitted by Donald S. Teel on July 2, 2009 - 1:21pm.
Only one comment, regarding your article title, Lou. Change it as follows:
"Earth to Obama: Wake up!"
Regards,
Donald Teel - Founder
www.ePartnerUSA.com
REALonomics
www.REALonomics.net
928.777.8100
Submitted by David Curry on July 2, 2009 - 1:28pm.
The sad part of this article is that Obama isn't going to wake up. Thanks to our blind blue state friends, he feels he has a mandate to completely remake the private sector, and he's unfortunately just beginning. The free market has been rebelling against his policies since the middle of 2008, and he seems completely convinced of the need to snuff the life out of the resistance. Check out my blog to learn what you need to know about the miserable intrusion into the real estate market that Obama is planning by virtue of the Waxman-Markey bill.
David Curry
Geneva Lakefront Realty
49 West Geneva Street
Williams Bay, WI 53191
262-245-9000
www.genevalakefrontrealty.com/blog
Submitted by Abe Ulug on July 2, 2009 - 3:15pm.
Lou, good article. Point well made.
Abe Ulug
Submitted by Sal Antsipenka on July 2, 2009 - 7:17pm.
Here is the answer for you, folks: MADE IN USA!
By the way, let go of Obama, my critical friends.
You had 8 years to make life wonderful, the result is one of the worst crises of our time, over 4,000 people killed, over 30,000 badly wounded and that is just in our country, billions lost, nothing solved and it turned out pious critics like their secretaries too. Take a break! Plain and simple.
Sal Antsipenka
Century 21 Mike Miller Realty
Naples, Florida
http://www.naplesrealestateseller.com
International RealEstate Buyer Leads
http://www.realestatefair.net
Submitted by David Curry on July 2, 2009 - 7:26pm.
I'd take billions lost over trillions lost any day.
David Curry
Geneva Lakefront Realty
49 West Geneva Street
Williams Bay, WI 53191
262-245-9000
www.genevalakefrontrealty.com
Submitted by John Rakoci on July 2, 2009 - 8:47pm.
Read just a portion of the waste in stimulus! Some of the most rediculous projects ever dreampt of are funded millions we do not have. Art walk in NY, rodent control in HI, and $11 million to connect 2 MSFT buildings with a bridge- like Gates or MSFT can not afford it. Adding 30 jobs to pave highways in NM at a cost of $185,000 per job. There are hundreds of examples. obama promised passing the stimulus bill would cap unemployment at 8%. It is 9.5% now and expected to hit 10%+ in the next few months. Cap & Trade will add a huge 'tax' on consumers fuel bills and all merchandise purchased. The questions now are does he think the US citizen is an idiot, is he an idiot, or is he a liar. I'd rule out the 1st question.
Submitted by Jon Astaris on July 2, 2009 - 10:03pm.
"Barack Obama...and his people have done extraordinarily well in foreign policy."
Well, let's see: N. Korea testing nukes and thumbing nose. The Iranian thugocracy bullies its own nation, and Obama has nothing to say for days about it - then promptly demands return of the commie thug in Honduras. The Russian thugs are ready to invade Georgia. Iraq is already shaking with bombings and mayhem while Iran has all its ducks lined up for its divide et impera campaign. The BRICs wont rest until the IMF threatens the dollar with a new standard. McCrystal is the man for Afghanistan, but will the Obamanauts let him do what it takes? Not a chance. Zero. To say nothing about the unending chain of gaffes and amateurism from Gitmo to the pathetic bow before ibn Saud to the reset button in Russia to the guffaw of the Chinese students at Geithner's "we believe in a strong dollar" remark to the "we hate you we hate you we hate you" of the Chinese finance guy.
Barnes qualifies this as an extraordinarily well done job. He's either jesting or he;s jesting.
Submitted by Rich Johnson on July 3, 2009 - 3:47pm.
I totally agree with the comments of Sal Antsipenka. It took years for us to get in this economic free fall that we have found ourselves in. A freefall, the likes of which, no one has ever seen before & one that certainly no rule book has been written to give us guidance over. It does however provide fodder for all the Monday morning armchair quarterbacks who are puffing out their chests and telling the world how things should have been done.
Rich Johnson
360-319-3267
http://www.johnsonteamrealestate.com
http://www.johnsonteamrealestate.com/blog/
Submitted by Jeff Manson on July 4, 2009 - 9:03am.
Obama knows exactly what he is doing. Taking advantage of a bad economy to push his socialist/communist agenda and going to make our economy even worse in the long.
Great way to increase your voter base. Get more and more people dependent on the government.
Any one that thinks what he is doing is better for our country should take a history class or two.
We fought for our independence a couple hundred years ago and now it is slowly being taken from us :-(
Jeff Manson
American Dream Realty Hawaii
Hawaiis real estate services