The most disgusting and corrupt spending orgy in our country’s history may, mercifully, come to an abrupt end this week. Tomorrow and Thursday the Obama administration will try to sell $65 Billion dollars of Treasury Bonds to the world – mostly to the Chinese.
In anticipation of this, last week Obama sent Geithener to beg the Chines to buy our paper. I have no idea how successful the mission was but we do know that in a Q&A session with students, Obama’s emissary, Geithner met with laughter at and ridicule. Now, you can wonder why would the Chinese bite the hand that literally feeds them, , but as our manufacturing capacity is so diminished they can do just that with a a great deal of impunity. Anyway that’s another post for another time, let s go back to the Treasuy auction of $65 Billion of IOUs. Just ask yourself this question:
Would you lend Obama $65Billion for up to 30 years?
Well, fine you might have no choice but to do it and take the least of many evils, but you won’t do it cheap. Congratulations. the rest of the world is thinking just like you. This week already, U.S. Treasury yields rose to seven-month highs on views that the Federal Reserve might raise interest rates sooner than expected. You heard right, “raise interest rates”
So, on the one had unemployment is skyrocketing way higher than the 8% Obama threatened us with and Obama gets on TV and tells us that the recession is deeper than he thought it would be and on the other hand interest rates are making highs and probably going higher.
If that’s not a recipe for disaster I don’t know what is. Obama might just get his long hoped for wish for a major crisis yet but I am not so sure that he can still blame it on George “W”! Higher interest rates in an environment of 9.5% unemployment, declining GDP, and higher taxes will push us into a depression faster than Obama can polish off his Bellinis.
We were one of the few blogs to point out that the Chinese gave Obama his first “free market lesson”. Now we are the first to point out that this week’s treasury auction may be the first indicator of an upcoming depression or at least stagflation.
This like all economic “crisis” is of course not inevitable. Some of the things that Obama could do to immediately remedy this would be to announce permanent tax rate cuts or even a flat tax, a suspension of corporate taxes for a few months, immediately allowing or even mandating that we drill for oil and gas in the the continental US and offshore , cap all non military spending to the levels of four years ago and strictly enforce immigration laws. Doing that would probably save the country. What do you think will that happen?
PS
Its also possible that, since he is now officially a God, Obama could just wish it all away
Update 1)
The 10 year auction went off, and there was sufficient demand but we had to pay trough the nose! Here is CNBC.com trying desperately to put a rosy spin on it
The main downside was that the high yield at the auction was above market expectations. This “tail,” as it is known in the market, showed investors wanted the government to pay a premium to get the bonds sold and tipped the balance for a negative interpretation of the sale.
Don’t you just love how they phrase it “investors wanted the government to pay a premium.” This is how that line should read in the real world,”China wanted us to pay them higher interest rates for the money that they are lending us”
OK so this was the easy one and it went ugly, lets see what happens tomorrow, maybe the market will save us from ourselves and from Obama.