The Economy Guy

All the markets moved sideways today.  

It’s the trends that count today.  The trend for the Dollar was up – it strengthened.  The trend for oil, gasoline and gold were down – they all fell.

Bond interest rates went up again today, and this is the most significant trend in America today.  BEWARE of this trend.

In the news today…..

The head of China’s second largest bank has said he would like to see the US sell bonds denominated in Yuan (the Chinese currency).  This suggestion would be a major step in eliminating the US Dollar as being the world’s reserve currency.  While there is no answer from the US, I bet this subject came up during Geithner’s trip to China.  

Think about this for a second.  If the Chinese bought bonds in their own currency, and they were written (i.e. Guaranteed) by the US, then the Chinese would eliminate the risk it currently has on the currency fluctuations between the US Dollar and the Yuan, and it could manage the interest rate risk of the bond, as it is in its own currency, and not the Dollar.

This is a clever way for the Chinese to eliminate risk.

It is a dumb way for the US to act.  The risk would move from the Chinese to the Americans.  Why would the US Government ever consider doing something this dumb?  Because they fear that the Chinese wouldn’t borrow money from us otherwise!!!!  Let’s hope the US Government doesn’t sell us out by doing something like this.

Tonight’s Dinner Conversation…..

President Obama announced today he is going to rush and spend the Stimulus Money and produce (or save) 600,000 jobs in the next 90 days.  Why has he taken so long to get the Stimulus Money being spent??  Well, he said that he wanted to insure that there wasn’t going to be a large amount of fraud in the spending of the money.

Oh my goodness, where do I start??

1. Did you ever hear Obama say he was purposely slowing down the Stimulus Money in the first place?  I didn’t.
2. Do you remember the “fear tactics” used by Obama to pass the Stimulus Bill in the first place??  He MUST have it passed, or the 4 horsemen would descend on America, and destroy its economy.
3. We were purposely deceived by Obama in the first place.  The Stimulus Bill was nothing more than a power grab by spending money where Obama’s party wanted it spent.  It wasn’t going to stimulate anything because it was spread out over so many years.
4. We were lied to today.  The Stimulus Money wasn’t spent right away (remember all those shovel ready projects???) because we are talking about BIG GOVERNMENT spending money, and it can’t find it’s way to the toilet without a week’s advance planning, and the proper forms being filled in.
5. Why did Obama ignore the TRUTH???  The truth is that we’ve lost over 2 million jobs on HIS watch.  And, he’s going to create 600,000 jobs?  He will lose more than 600,000 jobs during that 90 days period.   Is he afraid of the truth??
6. Yes, he is afraid.  Today’s announcement was a knee jerk reaction to the recent Rasmussen pole showing the more Americans trust Republicans with economic decision than those who trust the Democrats – 45% to 39%.
7. While this isn’t a ringing endorsement of the Republicans – remember that President Bush spent like a drunken sailor – it can be read as a major decline in the popularity of the Democrats.  
8. Obama is worried that he will lose support in Congress in the next election, and he must plug that gap.  That’s why he had his Cabinet meeting today, and why he made this important announcement.
9. I would guess that Obama found out how poorly he is doing in the polls, and how poorly his is doing spending money, and he just got mad at his Cabinet for being what they truly are – bureaucrats.  Too bad, it’s HIS cabinet.
10. Oh, by the way, did I forget to mention that FED Chair Bernanke has failed in his $1.3TRILLION effort to save the housing market by keeping interest rates low, and keeping mortgage rates low, so people would buy all those houses???
11. Yes, he failed.  Mortgages rates are on the rise.  They are being forced up by the increase in the 10 Year Treasury Note interest rates.  The bond rates are going up because the FED Chairman said he was going to spent $1.3TRILLION – CATCH 22.
12. MARKETS ALWAYS TRUMP POLITICS.

So the question for tonight is: “Do you think President Obama should get all the credit for all the jobs he is creating, and he should get none of the blame for all of the jobs that he’s lost?”

Here are the last numbers for today:
Dow Jones 30 Industrial – 8764 (up 1 points)
10 Year Treasury Bond – 3.89% (up 0.03%)
Euro – $1.3908
Gold – $953 (down $10)
Oil – $68.09 (down $0.35)
Gasoline $1.80 (down $0.01)