Tuesday, December 7, 2010

Free Lunches Do Exist!

Welcome to America:  The land of the free lunch.  It's a land where no one ever sees tax increases.  Are you unemployed?  Don't worry the government will send you a check so that you can pay your bills. 

Are you worried about investing your money in stocks?  Don't worry, in America stocks only go UP!  Just buy them and forget about them.  In fact, this is the only country in the world where insolvent stocks thrive.

You see, here in America you get bailed out if you are insolvent by the government so their stock prices just rise.  Just remember, don't worry, Uncle Sam has your back.

Are you worried that America might build up massive deficits as a result of such spending policies?  Forget about it!   We don't worry about deficits around here.  We just spend spend spend.  The government buys our treasuries so they can never rise to a level where we can't afford to service our debts.

You may ask yourself:  "God, does it get any better than this?".  The answer is..NO!  In fact, it's so awesome here that you can legally have unprotected sex.

If you have the opportunity to come to America you gotta TAKE IT!

OK, Sarcasm off before I barf.

The Bottom Line

The easy money game is still in full bloom after last nights deal to extend the tax cuts and extend unemployment benefits.  The total cost of this program over 2 years is estimated to be about $1 trillion and bond market didn't like it one bit this morning.  Here is the 10 year:

Gold initially loved the news but has pulled back since the open.  Do I even need to explain how stocks reacted?  You know what happens when they get more fast money.

I have things to do this morning so I gotta roll.  I'll leave with this interesting exchange between Steve Forbes and Rick Santelli regarding the absence of the bond vigilantes.

You can tell that Rick is very frustrated with the Fed's bond purchasing program because it's preventing the normal bond market forces from doing it's job.

Translation:  The bond market would be taking rates much higher as a result of our insane spending policies if it wasn't for the Fed buying everything in sight:

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