Treasury bonds yields hit another low today, dropping to 1.917 percent for ten-year bonds.
You might even say markets are begging the government to borrow money to stimulate the economy. The folks who’ve been warning us about near-term deficits for the last few years have been screaming about bond vigilantes and inflation, and they’ve been all wrong.
The Wall Street Journal’s Dennis Berman says these bond rates are the lowest long-term government yield in 800 years, according to A History of Interest Rates.
That would be the 14th century.
— China looks like its in its Gilded Age. Or at least one state-owned drug company is. Check out the pictures of the headquarters of Harbin Pharmaceuticals.
Patrick Chovanec, who’s a professor in China:
The gold-encrusted hallways, marble foyers, and imposing granite frontage are not from Versailles, or the Vatican, or even Caesar’s Palace in Las Vegas. They are from the newly completed corporate headquarters of state-owned Harbin Pharmaceutical, in northeast China. No word on exactly how much the literally palatial offices cost to construct, but the mind boggles…
Personally, it reminds me of the prophetic words attributed to Louis XV, a resident of the original Versailles: ”après nous, le déluge” — or to paraphrase, “when this is over, all hell’s gonna break loose.”
(via Edward Harrison)
— Paul Krugman gives two cheers to Obama’s new stimulus plan: Better than nothing but not nearly enough:
O.K., about the Obama plan: It calls for about $200 billion in new spending — much of it on things we need in any case, like school repair, transportation networks, and avoiding teacher layoffs — and $240 billion in tax cuts. That may sound like a lot, but it actually isn’t. The lingering effects of the housing bust and the overhang of household debt from the bubble years are creating a roughly $1 trillion per year hole in the U.S. economy, and this plan — which wouldn’t deliver all its benefits in the first year — would fill only part of that hole. And it’s unclear, in particular, how effective the tax cuts would be at boosting spending.
Still, the plan would be a lot better than nothing, and some of its measures, which are specifically aimed at providing incentives for hiring, might produce relatively a large employment bang for the buck. As I said, it’s much bolder and better than I expected. President Obama’s hair may not be on fire, but it’s definitely smoking; clearly and gratifyingly, he does grasp how desperate the jobs situation is.
But it’s more political positioning than anything, because the GOP will surely fight most of it:
In early 2009, as the new Obama administration tried to come to grips with the crisis it inherited, you heard two main lines from critics on the right. First, they argued that we should rely on monetary policy rather than fiscal policy — that is, that the job of fighting unemployment should be left to the Fed. Second, they argued that fiscal actions should take the form of tax cuts rather than temporary spending.
Now, however, leading Republicans are against tax cuts — at least if they benefit working Americans rather than rich people and corporations.
And they’re against monetary policy, too.