I find it extremely odd and really unexplainable that the 10 year treasury yield has been ticking up in the face of QE. It has been dogma that the Fed can heavily influence short term rates but not the longer ones.....it could be that the ticking up is not significant, from 2.6 or so to 2.9.
Nothing to worry about, yet. But definitely something to keep a sharp eye on because gold will respond negatively to higher rates and ZIRP simply cannot be maintained forever without dire Japan-style consequences.
Ireland, Greece, eh, not impressed. Small economies. California, Illinois, Michigan, etc., those are biggies.
What were the Germans, French and Brits thinking when they allowed wastrels like Greece, etc., into the Eu? Their currencies were never remotely stable so now the big fish have to keep the little fish alive just so the Euro can remain stable? Makes no sense to me. This is the Achilles heel of the EU.
For lots of reasons, the world, but not the US, needs a strong USD. A conundrum of magnificently ironic proportions. But only one country can print/devalue the USD.
The currency thing is a nightmare for all concerned. I really liked Grant's gold op-ed piece. The argument that there is too little gold in the world is manure. Measure it in micrograms, if necessary.
China feels the brunt of inflation a lot more than others, IMO, because food is such a large part of household budgets. Let the yuan rise, and exports go down, ergo unemployment goes higher. No doubt some hungry people, not a good thing for a country without food stamps. I fully expect the Chinese to raise rates, though they are clearly not in a rush to do so. They have to figure out a way to tame inflation to contain social consequences. |
