Evan Newmark writes a blog for WSJ.com.
He is concise, funny, irreverent, knowledgeable and opinionated.
He is a must read. From today's blog:
"For the first half of this weekend I was riding high on a wave of Reagan-era optimism...
By early Sunday, however, I was back down in the dumps. As I watched White House advisor David Plouffe on the Sunday TV talk shows serve up predictable Obama “win the future” and “tax the rich” platitudes, it felt like morning in America…circa 1978.
If America was on the brink of fiscal Armageddon, why was the White House even trotting out Plouffe, an Obama election consultant, instead of Jack Lew, its numbers guy and head of the OMB?
Why? You know why.
It turns out that last week’s big shutdown showdown wasn’t about cutting the deficit at all. It was about opinion polls dictating government policy. It was about getting Obama re-elected....
Which means that over the next two years there are only two things that can keep our nation from going bust: what your neighbor says and what the U.S. bond market does.
Unfortunately, your neighbor probably isn’t going to be of much immediate help. Go next door and talk with him.
According to all the polling, he still believes America can magically keep all its middle-class entitlements. What’s more, he’ll vote against any politician who tells him otherwise.
Of course, your neighbor is 100% wrong. But how is he to know that?
...No one easily gives up something they’ve been promised. That’s human nature – and as talented as Paul Ryan is – he can’t change that.
This is why only the bond market can really save America. The bond market speaks louder and more aggressively than even New York Senator Chuck Schumer. It sets America’s borrowing rates for both the government and your neighbor. Poorer credit means higher interest rates. Just see how your neighbor reacts when his adjustable-rate mortgage spikes to 7%.
This is why the winding down of the Federal Reserve’s QEII policy set for June can’t come a moment too soon.
By buying back hundreds of billions of dollars in U.S. Treasurys since October, the Fed has been keeping rates artificially low, making America appear more solvent than it actually is.
In effect, the Fed has been withholding the bad news from you, your neighbor and the politicians.
This will soon change."
http://blogs.wsj.com/deals/2011/04/11/mean-street-whip-me-bond-market/
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