Krugman: Bonds on the Run

[cigaretteman]

While we obsess over domestic politics — not that there’s anything wrong with that, since a lot depends on whether the next leader of the world’s most powerful nation is a racist xenophobe, a sinister theocrat, an empty suit, or all of the above — something scary is going on in financial markets, where bond prices in particular are indicating near-panic.

I know, Paul Samuelson famously quipped that the stock market had predicted nine of the last five recessions; the wisdom of crowds is often overrated. Still, bond markets are a bit less flighty than stocks, and also more closely tied to the economic outlook. (A weak economy has mixed effects on stocks — low profits but also low interest rates — while it has an unambiguous effect on bonds.) What plunging rates tell us is that markets are expecting very weak economies and possibly deflation for years to come, if not full-blown crisis.

Among other things, such a world would be a very bad place into which to elect a member of a party that has spent the past 7 years inveighing against both fiscal and monetary stimulus, and has learned nothing from the utter failure of its predictions to come true.
http://krugman.blogs.nytimes.com/2016/02/09/bonds-on-the-run/

 

[cigaretteman]

Just to save others the trouble!

 

[22*43*51]

I don't know if it is that big of a mystery.

I would invest more into bonds if the Fed would increase interest rates.

Right now Bonds are yielding lower than your average bank savings account.

 

[Noble Hawk]

It is sad that there are so many people that believe monetary policy is anything more than treading water. Simple fact is that it simply prolongs death while doing absolutely nothing to prevent it. If anything it makes the impending death more gruesome than it would normally have been.

 

[HawktimusPrime]

While we obsess over domestic politics — not that there’s anything wrong with that, since a lot depends on whether the next leader of the world’s most powerful nation is a racist xenophobe, a sinister theocrat, an empty suit, or all of the above — something scary is going on in financial markets, where bond prices in particular are indicating near-panic.

I know, Paul Samuelson famously quipped that the stock market had predicted nine of the last five recessions; the wisdom of crowds is often overrated. Still, bond markets are a bit less flighty than stocks, and also more closely tied to the economic outlook. (A weak economy has mixed effects on stocks — low profits but also low interest rates — while it has an unambiguous effect on bonds.) What plunging rates tell us is that markets are expecting very weak economies and possibly deflation for years to come, if not full-blown crisis.

Among other things, such a world would be a very bad place into which to elect a member of a party that has spent the past 7 years inveighing against both fiscal and monetary stimulus, and has learned nothing from the utter failure of its predictions to come true.
http://krugman.blogs.nytimes.com/2016/02/09/bonds-on-the-run/

This is the same guy that tried to convince everyone that the Housing Market Crisis wasn't going to happen.

 

[22*43*51]

This is the same guy that tried to convince everyone that the Housing Market Crisis wasn't going to happen.

Actually he begged for the housing bubble.