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To: Tom Smith who wrote (289004)	6/15/2004 11:24:08 AM
From: zonder	Respond to of 436258

Big money bond holders want aggressive action and a real rate near neutral policy (1) Anybody in his right mind (and with a bit of education in macroeconomics) wants a neutral rate policy. T-bills have yielded an average of 230 bp above the CPI rate over the past 23 years. Currently, they yield 100 bp BELOW the CPI rate. You think that is healthy? (2) Bond holders DO NOT want higher interest rates - higher rates will trash the value of the bonds they are holding. So I don't really understand what you are talking about in this post (and we haven't even come to what you mean by Bush being vindictive, denial of a blow job, etc :-) But rest assured that the interest rates will rise. No spinmaistering from the Bush administration can hold interest rates at these negative (real) levels for much longer. Look at the bond market - it has already started factoring in the interest rate rises. T-bill rates are already up 50 bp from their lows and that without the Fed raising rates. 2-yr treasury yields are up 170 bp from their June 13 lows.