The big news today was the arrest of Illinois governor Blagojevich for corruption and wire tapping charges. The governor was allegedly looking to sell Obama’s vacated Senate seat for his own personal benefit. And the evidence is apparently quite damaging. I have a video of him just yesterday mocking the investigation in a ludicrous way. This will be a major story for days to come.
On the financial scene, I see the biggest news as being the fact that the yield on 3-month treasurys have now gone negative. This is an absolute first. This means the U.S. government is being paid by investors to borrow. Given the fact that the U.S. government is about to go on a borrowing binge of historic proportions, it sees a bit odd that yields are below zero. It seems to me that the liquidity being produced by central banks is finding its way into the U.S. government bond market, NOT into loans which will restart the global economy. This is another demonstration as to why low interest rates cannot solve what ails us. It also demonstrates for the first time that the zero bound is not a hard constraint. Does this mean the liquidity trap is a fiction?
Below are a few links to web stories you might enjoy. Other news stories can be found at our newsfeed. The newsfeed is also available via RSS. Note the first articles on the Blagovich controversy.
FiveThirtyEight.com: Politics Done Right: Illinois: What Happens Next
The Washington Monthly – Chutzpah
FT.com / Global Economy – World’s hungry ‘close to one billion’
Yahoo to sack 1,500: reports – National Post
Bloomberg.com: El Paso to Raise $500 Million in High-Yield Bond Sale (The Yields here are truly eye-popping. This shows how distorted our credit markets have become given the negative yield on treasurys)
Bernanke: Don’t count on Fed – David Rogers – Politico.com
MarketBeat : All Hail the New Bull Market! (We were into bull market territory until the governor from Illinois screwed it up.)
Lifestyles of the Not-So-Rich-Anymore | The Big Picture
RiseSmart is Job Hunting for Lazy, Laid-off Execs (I am still partial to TheLadders. It’s a great site)
Economist’s View: Liquidity Discount versus Time Preference
naked capitalism: Dizard: “Put the credit default swaps market out of its misery”
naked capitalism: Why is “Nationalization” A Dirty Word in America?
PJB: Can This Marriage Last? ::: Patrick J. Buchanan – Official Website
Brad Setser: Follow the Money » Blog Archive » Good bye, petrodollars …
Paul Volcker is back, and he warns of tough times ahead – Los Angeles Times