Paul Krugman economics: Deny, deny, deny!

Treasurys rebound after 30-year bond auction
Treasury Department sold $13 billion in 30-year bonds at 3.248%

By Saumya Vaishampayan, MarketWatch - The Wall Street Journal

"NEW YORK (MarketWatch) — Treasurys rebounded on Thursday after the Treasury Department sold $13 billion in 30-year debt at a yield of 3.248%, the highest in a year.

"Yields on the benchmark 10-year Treasury note 10_YEAR +0.25% were steady at 2.02%, compared with 2.05% in morning trade. Yields move inversely to prices and one basis point is one one-hundredth of a percentage point.

"There is “decent value” in U.S. bonds, which are trading fairly cheaply in comparison to European bonds, said Tom di Galoma, managing director at Navigate Advisors LLC.

"Yields on the 30-year bond 30_YEAR +0.31% were flat at 3.22% while yields on the 10-year German bund BX:TMBMKDE-10Y -0.37% fell 1 basis point to 1.47%.

“Generally, there seems to be a real good appetite for long paper at these levels,” said Navigate’s di Galoma.

"Bidders offered to buy 2.43 times the amount of debt sold, versus an average of 2.66 times at the last six sales, according to data compiled by Nomura, which rated the auction a C+.

"Indirect bidders, such as foreign central banks, bought 42%, compared with 36.4% in recent sales. Direct bidders, a group that includes domestic money managers, purchased just 4.87%, verses an average of 15.1%.

"Treasurys fell earlier in the day after a better-than-expected weekly jobless-claims number.

"Jobless claims drop

"Further signs the U.S. economic recovery is picking up steam as jobless claims fell to their lowest level in five years. Photo: Getty Images

"Initial jobless claims for the week ended March 9 dropped 10,000 to a seasonally adjusted 332,000, according to data released Thursday. The lowest reading in the past five years — in mid-January — was impacted by unusual seasonal factors and layoffs after the holidays.

"Thursday’s jobless claims number is the latest to point to a recovery in the labor market. Nonfarm-payrolls data released Friday showed the economy added more jobs than expected in February as the unemployment rate fell to its lowest level since December 2008. Investors watch the labor-market outlook closely as the Federal Reserve has associated the future of its bond-buying program to an unemployment rate of 6.5%.

“Any time you get some small improvement in the labor market that reduces slightly the chance that the Fed will continue to buy Treasurys, which is negative for the market,” said Gary Pollack, head of fixed-income trading at Deutsche Bank AG’s private-wealth-management unit in New York.

"Any change to the Fed’s purchases, however, would require several months of steady improvement in the labor market, he said. The Fed’s monthly asset purchases consist of $85 billion in Treasury and mortgage debt.

"Yields on the five-year note 5_YEAR -0.23% rose 2 basis points to 0.899%.

"U.S. stocks gained on Thursday as the Standard & Poor’s 500 Index SPX +0.43% flirted with its record close of 1,565.15 from 2007 and the Dow Jones Industrial Average DJIA +0.45% extended gains into a 10th consecutive session.

"The Federal Open Market Committee is scheduled to meet next week. "

http://www.marketwatch.com/story/treasurys-fall-as-jobless-claims-surprise-2013-03-14

 

Man, you quoted me. I was arguing with ricter, although it was somewhat off topic. Also, don't take this the wrong way, but I'm not concerned about your level of respect for me. I told that little story only to kill off the personal bs that happens in every conversation.

I have seen a post from you, a ways back, that I almost completely agreed with. I think you were outlining the role of govt or something. But we're not that close on the issues since you are arguing throughout this thread with Tsing, on behalf of Keynesian hacks everywhere. The notion that the govt is supposed to run a surplus during economic expansion, as if the only time they spend money is bailing out the economy during recession, is hilarious. Pure fantasy. Even if it were possible it still doesn't fit in a capitalist economy, and it isn't the role of OUR govt.

 

I was going to reply to your article, Ricter, but I'm not sure what point you're trying to make. Can you post some of your own text to make it a little clearer? Are you talking about yields? Demand? Jobless rate? Galaxies?

 

You have a much better understanding of what Keynes was advocating than does Tsing, who does not understand Keynesian economics at all.

Tsing thinks we were following Keynes during the Reagan- Bush years, when in fact we were following supply side economics, which is nearly the exact opposite of what Keynes advocated. (Tsing confuses deficit spending in general with what Keynes advocated. So any time the government is operating with big deficits he thinks they are following Keynes -- now that's something that really IS hilarious.)

To apply Keynesian economics one has to use some combination of fiscal restraint and revenue increases during expansionary phases. Not so much that you cut of economic growth, but enough that you keep it from "going viral" --to use a web expression.

Modest fiscal restraint combined with modest revenue increases in boom times will do two things. It will produce small surpluses and decrease the severity of the unavoidable economic retraction phases; thus making them more tractable. Then during recession the government must borrow and increase spending to compensate for de-leveraging in the private sector. We are currently in that phase. The borrowing and spending is appropriate, perhaps there has not been quite enough job stimulus, considering the depth of the recent recession. If you look back at 2008-9, you will recognize that the economy was following a path very similar to what was experienced in 1929-30. It is only because of the brilliance of Bernanke that we have avoided what would have been deflation and depression, just like that experienced in the U.S.A. during the 1930'3.

The current government deficits are not at all too high considering the size of the U.S. economy and the depth of the financial crisis. Keep in mind that Government debt is only a third of private debt. We are speaking here of one of the world's largest economies. It is to be expected that the numbers will be on the order of ten to the twelfth.

Bernanke, a student of the great depression, has a deep understanding of Keynesian economics and he is following Keynes. Greenspan and the economists advising Reagan and Bush, particularly Reagan, were folks like Milton Friedman, and Wendy Gramm. These economists were about as far from Keynesian as you're going to find!

 

The fact that someone like yourself is claiming I do not understand Keynes makes me feel better. If a complete jackwagon comes up to you telling you that you're a fool, you tend to feel better.

Please show me the post where I said what we were doing in the Reagan-Bush years was what Keynes advocated. I will patiently wait for it, and when you aren't able to, I will ask you until you can. That sound ok? Don't put words in my mouth because you are unable to win an argument.

No shit, Sherlock. Here is a post from me back in June of last year where I specifically state that

So shove your incorrect commentary where the sun don't shine.

Again, nothing to do with QE or how it supposedly brings recovery about.

So Bernanke decides he can follow Keynes and spend like mad to stimulate the recovery (according to you) even though his predecessors did not follow Keynes's beliefs and build a surplus? So how can Bernanke say it is correct to do this when there is no surplus to spend?

 

Right here, young man.

[Italics mine]

 

Thank you for proving my point. I specifically state that they weren't aligned with Keynes's "save during boom times" aspect, but they still followed the "debt/spending = growth" philosophy.

Maybe it's time to replace those reading glasses that only see what you want them to see.

I also notice how you refuse to answer my other questions yet again (shocking).

 

I mentioned the disconnect between Keynesian philosophy and it's advocates earlier .

Liberals cannot get past 2 or 3 questions deep in their discussions with knowledgeable persons before they either have to lie their butts off, offer up personal attacks or do the baffle 'em with bullshit 2 step.
It's always the same ANYTIME we engage loser lefties with honest discussion.

Of course the problem with our media is they always stop the cameras after the big liberal lie is posed as factual, maybe even have the moderator affirm the lie before cutting to commercial.

 

It's gotta be in the hard wiring of the brain. It's almost like a "how dare you" mindset kicks in when the "Manifesto" is questioned.

 

It's because of their inferiority complex. They know their ideas are inferior and cannot stand the light of straight forward evaluation.

It's also why liberal talk radio is such a losing proposition.
1) no guest debaters or interviews of the opposition are allowable
2) actively screen out knowledgeable callers