Archive for 2010

DISPARATE treatment.

GRAND ROUNDS IS UP — in a special post-healthcare reform edition.

MEGAN MCARDLE: Why is the Term Risk on Long Term US Debt So High? “It’s impossible to say which prevails, but it’s not unreasonable to assume that there’s at least some default risk pricing in. Our entitlement problem is about to open a gaping hole in the budget, and so far our solution is . . . to enact more entitlements. Unless our politicians start outlining some credible plans for getting our demography-driven disaster under control, bond markets would be perfectly rational to demand a discount that reflects a possible future fiscal crisis.”

UPDATE: A hedge-fund reader emails:

The credit-risk issues with US debt are literally yesterday’s news. Of course there’s a rational fear the Keynesian madmen in Washington will shaft our creditors by outright welshing or inflating away the debt.

The real story going forward will be the hit to the economy from crushing taxes imposed “to be fiscally responsible”. Naturally the
taxes will drive capital overseas and activity underground, further hollowing-out the economy and making the govt’s finances even worse.

How THAT game plays out is the real question going forward.

Indeed.

LOW INTEREST RATES ARE SQUEEZING SENIORS. “Today’s historically low interest rates may be feeding banks’ profitability, but they are financially starving our seniors.” They saved their money instead of going into ruinous debt, so they must be punished.

MICKEY KAUS: “Consumers of government services are in for a bad time during budget crises. Not only do government agencies cut back on hours and personnel (often a time-honored ploy to trigger citizen demands for rescinding the cuts) but the personnel that remain on the job have an incentive to provide lousy service, lest citizen/taxpayers conclude that their new, smaller budget is perfectly adequate.”

USA TODAY: Obama Disapproval Hits 50%. But here’s the key bit: “Nearly two-thirds of Americans say the health care overhaul signed into law last week costs too much and expands the government’s role in health care too far.” I notice that, once again, Gallup seems to be catching up with what Rasmussen was telling us a while back.