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Showing posts from November, 2012

Hanging from a cliff

The day after Obama won his second term the markets took a bit of a tumble. The Dow dipped below 13,000 for the first time in a few months. US Congressional gridlock and the ongoing crisis in Europe are mostly to blame. What is more interesting, even if it's unsurprising, is the rush to bonds- US government bonds to be exact. Indeed, the yield on ten-year treasury notes dipped as low as it has since May. Even with our ratings downgrade (which no one now cares about in the slightest) and huge debt, it is cheaper than ever for us to borrow money. We are still the safest piggy bank out there. 

With the "fiscal cliff" of expiring tax cuts and automatic spending cuts looming, the spirit of compromise is being sprayed into the air like a bottle of Glade mountain berry. Democrats are fond of saying we need a "balanced" approach to reducing the deficit. Nominally this means some tax increases along with spending cuts. Republicans are now, apparently, open to some sort…