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To: Jon Koplik who wrote (138520)	7/12/2005 12:06:13 PM
From: Jon Koplik	Respond to of 152472

"he calculates that 10-year bond rate will go to 7 percent" ......................... EDITORIAL DESK \| April 20, 2004, Tuesday Questions of Interest By PAUL KRUGMAN (NYT) Op-Ed 812 words Late Edition - Final , Section A , Page 19 , Column 5 ABSTRACT - Paul Krugman Op-Ed column speculates on how high interest rates will rise if economy fully recovers; says International Monetary Fund is concerned, urging Federal Reserve to prepare economy for higher rates to avoid disruption in financial markets; says he calculates that 10-year bond rate will go to 7 percent and mortgage rate will be 8.5 percent

To: Jon Koplik who wrote (138520)	7/12/2005 12:08:35 PM
From: Jon Koplik	Read Replies (1) \| Respond to of 152472

Found it ! SI post : (idiot) Paul Krugman say 7% yield for U.S. 10-year notes sounds about right (to him). Message 20055042 Jon.

To: Jon Koplik who wrote (138520)	7/12/2005 12:09:03 PM
From: Whatnot	Read Replies (3) \| Respond to of 152472

Jon, if you believe that domestic budget deficit is 'at a very comfortable size in relation to GDP' then there is a large bridge I would like to sell you in New York. They are 'comfortable' only because you (we) have become inured to what the definition of a large deficit is. The current and future obligations of the United States are unspeakably huge. Does anyone remember Ronald Reagan calling for a balanced budget amendment? Does anyone remember that a balanced budget amendment was part of the Republican Party manifesto a few years ago? Of course not because the Republican Party has abandoned all fiscal restraint (government spending is again exceeding the rate of inflation) and is just selling you on the idea that is does not matter. It does and it will Regards

To: Jon Koplik who wrote (138520)	7/12/2005 5:06:33 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 152472

Krugman said in a relatively recent NYT piece that 10-year Treasuries should be at 7% now. That's based on real interest rates, not the artificially low rates resulting from distortions in the economy. The conservative news weekly, The Economist, came up with similar findings that short term real interest rates should now be a minimum of 5 percent. The Economist is one of the most respected conservative journals, and it views the current administration policies as simply out of touch with reality. Note also that The Economist endorsed Bush in the last election. The Economist credits artificially low interest rates with helping to create the bubble in real estate prices. Again, its conclusions are very similar to Krugman, who along with The Economist represents the mainstream of economic analysis today. Art