Dear Reader,
“The bond markets are revolting.”
This is the claim of former Wall Street money man Edward Dowd.
Yet against which evils are bond markets revolting, Mr. Dowd?
Here is his answer: The fiscal deliriums of the Biden administration.
Mr. Dowd believes the present administration’s excesses have courted rack and ruin — and for strictly political advantage:
- We had 10% deficit to GDP during the Great Financial Crisis (2008 – 2009) when we actually had a crisis. We had 8% deficit to GDP during this election year. You have to ask yourself, what was the crisis?
Indeed: What was the crisis? Here Mr. Dowd answers that very question:
- The crisis was to get the Biden Administration (and Kamala) re-elected. So, they went on binge spending. They borrowed from the future to try to ensure they won.
The Tragedy of Democratic Politics
That is, the administration borrowed from the future to gratify present wants. In this instance, presidential election.
Here you have the tragedy of democratic politics.
Democratic politics elevates short-term political advantage over long-term national advantage.
Here Mr. Edward Dowd cites Democrats’ rascalities — chapter, verse, line, letter:
- They hired massive amounts of government personnel to float the economy, and they also did illegal immigration.
- We are thinking it was 10 million to 15 million illegal immigrants that came in the last four years. The majority of the illegal immigrants came in the last two years. That stimulated the economy and raised the velocity of money as those people were given money.
- All the NGO’s that facilitated the illegal immigration also got money, and that stimulated the economy. This deficit added $2 trillion, and that was unproductive assets. So, we borrowed from the future to create more government jobs and imported unprecedented amounts of illegal immigrants that don’t add to the economy.
The Revolt of the Bond Markets
That is, we were treated to a false fireworks display.
It was economic depressant parading as economic stimulant.
And the bond market — training its gimlet eye upon the scene — has penetrated the whim-wham.
Hence its revolt against government profligacy:
- That short term juice is going away, and it was not sustainable anyway. The bond markets are revolting, and that could not have gone on much longer.
There appears to be justice here.
In mid-September the bellwether 10-year Treasury note yielded 3.61%.
Today the identical 10-year Treasury note yields 4.60%.
An “Earthquake in Bond Land”
One percentage-point in two months’ time may not stagger you or flabbergast you.
It may not alert or alarm you.
Yet the 10-year Treasury note generally advances or retreats in centimeters and millimeters.
Here it has advanced inches.
Macroeconomist and market analyst Jim Rickards labels such a leap an “earthquake in bond land.”
I argued the bond market is on to the sitting administration’s false economic fireworks.
The bond market is likewise on to the sitting administration’s false advertisements.
False Advertising
Here Mr. Dowd hauls its number-torturers and data-diviners into the dock:
- We also had bureaucratic incompetence or fraud or whatever you want to call it. They were padding the non-farm payroll numbers to the tune of 1.25 million jobs…
- It’s one of the biggest misses between reality and estimates we have ever seen. It’s a seven-sigma event. It’s 1.25 million jobs. It’s already started downward revisions…
Sigma refers to standard deviation from the mean.
A seven-sigma event represents seven standard deviations from the mean.
How likely is a seven-sigma event? Generative AI informs us that:
- A 7 sigma event is extremely unlikely, considered to be practically impossible in most scenarios, with a probability so low that it would be expected to occur only once in a period many times longer than the existence of our planet, essentially making it a “once in a billion billion” type of event.
A “once in a billion billion” type of event!
Yet the administration’s statistical goons matched it.
Do I Have a Deal for You!
Do you ascribe their botchwork to chance alone? You do?
May I then interest you in some exquisite beachfront property?
This coastal Eden you will find in the great state of Kansas.
It can be yours — and at a cutthroat price. Who’s throat?
Why… mine of course.
The administration’s false advertising will undergo further exposure in the months to come:
- The 3rd quarter GDP of 3% (growth) will be revised down, and when we get… the data in February, there will be more GDP economic revisions down… The capital markets made bad decisions on this data. The Fed made bad decisions on this data, and corporations made bad decisions on this data.
- The price tag is coming due in 2025.
They’ll Blame Trump
I fear this Dowd fellow is very likely correct — the price tag is coming due in 2025.
And so President Trump will step into a fine, fine mess next month.
It is not a mess of his creation. He will step into it nonetheless.
And — depend on it — his detractors will lay it all at his stomping size-12 feet.
That is, they will assign him all blame.
They will wag their accusing fingers at his tariffs. They will wag their accusing fingers at his tax cuts. They will wag their accusing fingers at his deportations.
They are the navigators who directed R.M.S. Titanic into the ice field — who blame the inevitable collision upon the present Officer of the Watch.
They refuse to glance a mirror.
They will look away from the artificial, unsustainable, politically inspired stimulation of the prior administration… and its false advertisements of economic outperformance.
I would point them in those directions.
If the price tag is coming due in 2025… which I fear it is… there the price was set.
It was they themselves who set it.
Alas, it is the American people who must pay it.
Regards,
Brian Maher
for Freedom Financial News
