Bond Market Vigilantes to Supplement Job Market Compatriots
Bill Clinton's legislative agenda famously ran up against the forces dubbed the "bond market vigilantes." I posited that Barack Obama's agenda would run up against another potent force - a force that politicians consistently, and erroneously, think they can influence - that I dubbed the "job market vigilantes" (Here is the latest on the theme). Heretofore the job market vigilantes have done yeoman's work in building up a wall against the socialist regulatory assault coming from Washington DC and have kept Obama's agenda at bay. But it is not enough. With an administration, abetted by a hard left Congress, hell-bent on using an economic panic to reorder the US economy drastically and irreparably in favor of the state over private firms and individuals, we need more than the job market vigilantes. We need them and we need the return of the bond market vigilantes. Fortunately it looks like they are stirring, as witnessed by a few not so stellar treasury auctions of late. While this administration is showing no signs of retreating from its agenda in the face of overwhelming disapproval, disapprobation even, a strong showing by the bond market vigilantes ought to substantially drive up the cost of continuing our profligate fiscal policy. A 200 basis point whacking will drastically change the CBO scoring of spending proposals coming out of the Great Sausage Factory and highlight to the American public the direct effects of runaway spending. Frankly, if the global economy weren't in such tenuous shape, I believe the vigilantes would already be here in full force, but the fagility and fear that currently persist keeps them relatively muted. In time though, they will arrive...and loudly. It can't come soon enough.