Republicans say he will bankrupt the country... Inspite of Obama scrambling to woo top bankers and financiers to back its latest bailout plan, including the famous/infamous 'not acting in anger'maxim for the AIG bonuses, he could not escape the skeptical Americans, with the businesses from startups to global giants to drugmakers and farmers gearing up to fight the Prez's spending plan with ad campaigns and public protests...
The question: Can the markets digest this enormous amount of new paper without pushing up interest rates on longer-term securities or crowding out private sector borrowings, as investers choose the relative safety of Treasury notes over corporate bonds? If this flood of new supply hits the bond maket amid insufficient demand, bond prices will fall, driving their yields higher in order to attract buyers. The yield on 10-year Treasuries has risen from 2.1% two months ago to 3% on Mar 4, a factor that has kept fixed-mortagage rates higher than they would be otherwise.
In the current economic climate, however, the administration should be able to finance its stimulus efforts with little difficulty. That's because Treasury rates turn on two things: investors' expectations of inflation and their appetite for risk. Deflation is more of a concern right now.
By asking only the richest 2% of Americans to pay more, Mr Obama is building his vision of a more activist govt on a shaky foundation.
Then there is another school of thought which opines that it is hard to fathom how they are going to make a profound impact on reducing the deficit at a time when they don't know the extent to which govt. will need to ensure the stability of the markets and economy...
The massive spending plan in the midst of a prolonged recession.. would it actually leave the next generation with a country too inexpensive to live in ?
The question: Can the markets digest this enormous amount of new paper without pushing up interest rates on longer-term securities or crowding out private sector borrowings, as investers choose the relative safety of Treasury notes over corporate bonds? If this flood of new supply hits the bond maket amid insufficient demand, bond prices will fall, driving their yields higher in order to attract buyers. The yield on 10-year Treasuries has risen from 2.1% two months ago to 3% on Mar 4, a factor that has kept fixed-mortagage rates higher than they would be otherwise.
In the current economic climate, however, the administration should be able to finance its stimulus efforts with little difficulty. That's because Treasury rates turn on two things: investors' expectations of inflation and their appetite for risk. Deflation is more of a concern right now.
By asking only the richest 2% of Americans to pay more, Mr Obama is building his vision of a more activist govt on a shaky foundation.
Then there is another school of thought which opines that it is hard to fathom how they are going to make a profound impact on reducing the deficit at a time when they don't know the extent to which govt. will need to ensure the stability of the markets and economy...
The massive spending plan in the midst of a prolonged recession.. would it actually leave the next generation with a country too inexpensive to live in ?
