Government Bubble Burst

Wall Street Journal Header

Treasury bond investors have been taking a historic beating.

Stung by historic losses in recent years, long-term bond investors are showing a diminishing desire to lend to the U.S. government. Or maybe it’s just that the government is trying to borrow too damn much. Even in the congressional chamber controlled by Republicans, the leadership debate revolves around how many spending expansions the next speaker will jam into another debt-fueled bill. Interest-rate math hasn’t yet intruded into politics even though it has already meted out severe punishment in the markets. Investors are now demanding more compensation in return for financing Washington’s historic fiscal recklessness. The Journal reports:

The benchmark 10-year U.S. Treasury yield topped 4.9% intraday Wednesday for the first time since July 2007.

The Journal’s Sam Goldfarb notes:

In recent months, the Treasury Department has both increased its borrowing forecasts and boosted the size of its longer-term debt auctions by more than investors had been expecting.

During the unprecedented monetary adventures following the mortgage crisis of 2008, the U.S. and other governments around the world drove interest rates down to near zero. They managed this feat in part by having their own central banks buy up government debt issued at such rock-bottom rates—and also by using regulation to encourage large institutions to buy this paper.

Some overseas locales even embraced the insanity of negative interest rates, in which bond investors had to pay government borrowers for the privilege of loaning them money. In 2016 James Grant of the indispensable Grant’s Interest Rate Observer noted that such a situation had not previously occurred in all of recorded history.

At the time, your humble correspondent called it the “5,000-Year Government Debt Bubble” but now vindication is not much fun when pondering the dangers of the current moment. The massive debt piles accumulated while governments were artificially holding interest rates at or below rock bottom are quickly becoming much harder to bear.

By James Freeman

Read Full Article

Wall Street Journal
Wall Street Journalhttps://www.wsj.com/
The Wall Street Journal was founded in July 1889. Ever since, the Journal has led the way in chronicling the rise of industries in America and around the world.

Columns

DOGE and Musk Recover Deleted Computer Files

Elon Musk and his “Geek Squad” discovered an entire terabyte of data was deleted from government servers from the office of the “Institute of Peace”.

A Simple Question

What is a woman? Anyone with an IQ above room temperature can answer the question. Everyone, that is, except Democrats.

Democrats Tesla Takedown is a Proven Astro Turf Movement

Elon Musk and other journalistic leaders like Joe Rogan have been asking the critical question, “Who is behind the organization of these Tesla protests?”

Can Ramaphosa and Trump Come to Terms?

Whether South Africa can quell the hostility emanating from Washington, without compromising on its national priorities, is a formidable test for a country

Maddened Europe

Viable prospects for peaceful settlement of conflict between Moscow and Kyiv exist, but Europe obsesses over threat of incursion onto European territory.

News

How Trump’s ‘Liberation Day’ Tariffs Are Set to Reshape Global Trade

President Donald Trump is set to announce reciprocal tariffs for all nations starting April 2, the date he has dubbed “Liberation Day.”

4 Takeaways From April 1 Elections in Florida, Wisconsin

Voters in FL and WI went to the polls to decide races that could significantly impact the composition of the U.S. House of Reps and the Trump agenda.

Crawford Defeats Musk-Backed Rival to Preserve Liberal Majority on Wisconsin Supreme Court

Judge Susan Crawford, backed by in-state Democrats and supported by millions in out-of-state donations, won most expensive Supreme Court seat in state history.

Victory! Federal Court Orders Parental Notice Laws Restored to Protect Minors Seeking Abortion, in a case almost 40 years in the making.

Teaming up with public officials, the Bopp Law Firm and Nevada Right to Life, PJI took a stand in federal court to restore protections for young girls, the preborn and parents.

Trump Says Agency Heads Will Work With DOGE After Elon Musk Leaves

President Donald Trump said adviser Elon Musk will eventually have to depart from the DOGE and go back to running his companies.

FTC Chairman Raises Concerns Over Sale of 23andMe DNA Data

FTC said it was worried about the safety of the personal data of Americans who were previously customers of genetic testing company 23andMe.

Judge Dismisses COVID Lawsuit Against Former New York Gov. Cuomo

Judge dismissed class-action lawsuit against former Gov. Andrew Cuomo that blamed his admin for COVID-19 deaths in nursing homes across NY.

Tesla Firebombing Suspect Hit With Federal Charges

The U.S. Dept of Justice has filed federal charges against a suspect in connection with a firebombing attack on a Tesla dealership in Loveland, Colorado.
spot_img

Related Articles

Popular Categories

MAGA Business Central