Wall Street Bets All-In on Fed's Stupidity

This just came across the wire.

Goldman Sachs says expects 50 bps rate cut from Fed at Sept 18 meeting after weak jobs report

Of course, Treasuries have been rallying for weeks now. I don't know how this isn't already priced into a nose-bleeding 30-year Treasury that only yields 4.71% as I type this.

I am short this bond and bleeding - badly.

Who in their right mind would lend money to our government, for 30 years, at a rate of 4.71%? Even if we do go into a Japanese style, low-growth recession short term rates may stay low for what 2-5 years? What about the other 28-25 years? A 30-year instrument should not be valued by 2-5 year outlooks. Isn't that what American homebuyers are suddenly learning?

The fact that our government is about to drop short-term interest rates with gold, oil, and wheat setting all time highs is sheer lunacy. Historians will look back with bewilderment, just as we do when studying government "remedies" during the Great Depression.





There is no pressing reason for the government to drop rates. It won't help homeowners for more than a fleeting moment. It won't help the economy in the long run. Politicians are just too stupid and too spineless to do the right thing - which is nothing. Let economic forces run the economy on their own. Remember, the federal government played a starring role in the housing bubble in the first place - by dropping rates so much in the early 2000s.

This bailout is going to finally bite them in the ass.

Some boats are meant to sink.