Good article describing the behavior of the bond market:
"IT'S the economy, stupid." When James Carville coined the slogan, he meant that his client, Bill Clinton, would be well served by thumping for a stronger economy. Mr. Clinton did, and he won. But now, it turns out, there are an awful lot of people out there who favor a weak economy.
Favor a weak economy? Who would do that? Enter that mysterious and slightly sinister entity, The Bond Market, the pre-eminent force in the economy today. More than any other group, the bond market's members determine how many Americans will have jobs, whether the jobholders will earn enough to afford a house or a car, or whether a factory might have to lay off workers.
In sum, the American economy is governed by the bond market -- a loose confederation of wealthy Americans, bankers, financiers, money managers, rich foreigners, executives of life insurance companies, presidents of universities and nonprofit foundations, pensioners and people who once kept their money in passbook savings accounts (or under the bed) and now buy shares in mutual funds. While some would recoil at being called enemies of economic growth, the fact is that the confederation has ruled in recent months that the economy should lose strength, not gain it. The Message: Smaller”
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