Bond Vigilantes vs Socialism

It seems economic accountability is no longer the province of some western governments, nor the electorates that vote for them.

In this ever more topsy turvy world, in which financially illiterate and sentimental electorates have little inkling of what sustains economic security, that role has passed passively to the gatekeepers of concentrated capital - the bond funds.

Obama and his democratic congress have fired a succession of socialist policies, the cost of which, has been intentionally veiled under a blanket of puerile accounting backend frontend trickery....the latest being Obamacare.

This has ramped up the war, and the bond vigilantes are out to play hardball. First volley is Bill Gross, head of the largest bond fund in the universe. Yesterday he responded by proclaiming the era of liberal provision of funds to government coffers by the bond market, is drawing to a close. and his funds will progressively shift investment directly into the private sector.

This is seriously big stuff. It means managers of capital are intent on being the censor of deluded socialist policy, preventing them from printing evermore money.

To role out evermore socialist inspired benefits, Obama required evermore private and foreign capital to buy US treasury notes and bonds.....if not, then the US Fed would have to buy them, and further indebt future US tax payers.

The war is on.....and I expect Obama will lose. His background as a community organizer is no background for vendor financing a nation wanting much for little.

Read about it here and here.
Very interesting. Thanks for sharing those links Mr. Wolfe.

When Old Mother Hubbard discovered the cupbopard was bare she didn't have the pleasure of ordering her poor old dog a bone online and paying by Visa :p ......nor of printing currency ad infinitum.

The medical care issue is but one of the unfunded liabilities that the US has. I'm not sure as to the accuracy of this:

Then again there are others that consider these laibilities to be a myth:

Not sure how informed that is. Who trusts the US fed govt to stand behind the assets and liabilities when the currnecy is a derivative of debt. A promisary note as it were.........yeah right :rolleyes:

What will occur when the next tranche of mortgage re-sets come home to roost this year and next and those with non recourse loans (most of the loan books likely) decide to exercise their option to post back the keys (known so cutely as "jingle mail") to the lenders and walk away from their homes that are upside down in equity position? Gotta love that country non-recourse accountability or responsibility....just walk away BOB :cool:

The interest bill for this printing will of course be borne by future generations of tax payers and may lead to the creation of a "war of necessity" :( to get the manufacturing and service workforce back in high numbers and productivity.....that'll be good for GDP.
Hi P.... Bill is always forthcoming quoting obscure pieces of literature.

I wish I could agree with him that his vigilantism is just as much about crushing the excesses of capitalism....but he is a little late in being taken seriously about that.

The reason I take all this stuff seriously, is that....even if Australia does ok exporting stuff to the Chindia/Japan/Korea, our banks still need the capital/credit of developed nations to feed our property prices, well at least for 25% of our house values. If those funds decrease, then don't know what they'll be replaced with. Domestic savings have been increasing, but is it enough..... I doubt it.

Anyway, while we are in the market, we're still keeping a bit of serviceability free for whatever eventuates.

Might see you in June/July... my shout this time.
The reason that there are large numbers of people without healthcare in the US is that it's seriously expensive. It can easily be a couple of thousand dollars per month, and there are generally a number of exclusions.

Per capita spending on health is far, far higher in the US than other developed countries, but outcomes aren't necessarily any better. There's a tendency to over-treat patients, both to increase profits and also to head off potential lawsuits by making sure that all bases are covered.

The Obama healthcare plan strikes me as being the worst of all possible worlds. There's nothing in it that would seem to reduce the costs, yet it's making it a legal requirement for everyone to have cover.