I saw this headline yesterday on Bloomberg news:
Bond Market Backs Obama With Record Demand for New Debt
Investors are plowing cash into new U.S. Treasuries at a record pace, making economic growth rather than budget austerity a key issue as President Barack Obama and Mitt Romney face off in November’s presidential election.
Even as Romney and fellow Republicans assail Obama for presiding over the increase of U.S. publicly-owned debt to $10.5 trillion from $5.75 trillion in 2009 amid the worst financial crisis since the Great Depression, the bond market is showing growing investor confidence in the safety of dollar assets. <source>
I read the article all the way to the end and found no evidence whatsoever of investors “backing Obama” or his policies. This headline is one of the worst bits of media bias I have seen in a long time, and that is saying something.
I know a thing or two about economics and the bond market, and I can tell you that the fact that a particular Treasury auction goes well does not necessarily mean anything about investor confidence in a President. Over time, yes, one can deduce trends from the general level of interest rates implied by bond prices. But one auction a referendum on Obama? Absolutely not.
As I have written many times, investors do not buy American, or German, or Greek, or Italian bonds in isolation: they compare the relative levels of risk in betting on various countries. The reason U.S. Treasuries have held their value in the last few years of Obama destruction is that the rest of the world is going to hell just as fast as we are, and we are still the lone Superpower on the planet, thanks to Ronald Reagan’s (diminishing) military.
That’s right, the American fighting forces are the reason the dollar, and U.S. bond prices, have not collapsed. Our debt level and impending bankruptcy on Medicare, Medicade, Social Security, and now Obama-doesn’t-care (as Herman Cain was saying yesterday) does not deserve such low interest rates, and yet we have them because investors know that if you have to gamble on socialist bloat, you may as well gamble on the country with the biggest guns.
That’s us, at least for now.
Obama has nothing to do with it, and Bloomberg should be ashamed.