That is except for the Keystone Kops movie playing out on Kapitol Hill. Having started the car headlong toward the cliff, the tea baggers have yanked off the steering wheel and they and Speaker Boner are fighting over it. The heroine, also know as the world economy, is tied up with a huge amount of rope and riding in the trunk. Meanwhile the Senate Democrats in their blue uniforms chase behind waving their Billy clubs, and President Obama wearing his large Chief’s badge stands at the edge of the precipice giving the hand signal to stop while wildly blowing his whistle to no avail. (well, for Obama it’s “wildly”)
The corporate media is starting to play up the idea that these damn fool tea baggers could really crash the economy. (the media likes a good train wreck)
The stock markets have been going down for the past week but hardly a crash so far, retail investors (people with their own money) have been bailing out for months. Fund managers have been not so quietly moving to cash and today they have begun the wholesale dumping of Treasury bonds but just the ones that will come due in August. This has driven up the interest yield 7 basis points. That sounds like a lot but is only 0.07%, still when you’re talking billions of dollars it is real money.
This bond sell off is also mostly a tempest in a tea pot since they have no problem selling them. My guess that people in the know are buying bonds at a discount planning to sell them at full price to the Federal Reserve if the Treasury really refuses to redeem them.
US Treasury bonds are still selling cheap compared to historical rates with short term debt only yielding 2% and we are doing far better than some European countries where things are clearly getting out of hand. Not that Europe is having terrible economic problems, in general their economy is good with low unemployment, but they have a banking problem. Europe got suckered by their bankers (and ours) and the people who said the Euro was never a good idea have turned out to be right.
All this mess in the EU is keeping the USD strong or we would have much more obvious problems. This doesn’t actually mitigate the crisis and it makes our problems the world’s problems. China is not happy of course and is the real wild card in all of this. “No Drama” Obama is going to need to convince China that they don’t want to rock the boat.
There has been speculation as to what the “October surprise” might be that the Republicans will use to swing the 2012 vote if they don’t think good old fashion election fraud will do it. One possibility is the Republicans will convince China to invade Taiwan which would also result in the immediate embargo of most consumer products coming into the US. This would play to the fears of the average voter and really hit them where they live with empty shelves at Walmart.
So even if Obama manages to keep us from going off the cliff this time, there are still endless opportunities for the Republicans in the next reel. Buy the extra large popcorn, it’s going to be a “dark comedy” marathon.
PS When you’re God’s chamber pot… A small storm about 40 miles in diameter parked itself over Dubuque Iowa and deposited up to 14.5 inches of rain overnight resulting in over a million dollars in damages and raised the Mississippi River by three feet. Normal annual rainfall in the area is less than 30 inches. This is the second bizarre weather event in Iowa in less than a month with a previous storm producing 135 mph straight line winds doing massive damage to buildings, trees and crops along a 15 mile wide path across four counties. Either the Gay Marriage or global warming.