Economics Update

From Wingnut Economist Arthur Laffer and the contemptible Wall Street Journal OP/ED page, but there has been a huge growth in the money supply under "Helicopter" Ben Bernanke.

Well, we are seeing some more signs of increasing rates, with the 10-year Treasury hitting 4%, the highest level since October of last year.

It could mean that fewer investors are fleeing to the safety of treasuries, or it could mean that the monetary expansion is finally hitting interest rates (see pic).

My money is on the former, but that doesn't stop rising mortgage rates from pushing down the volume of home loan applications.

In international trade, the US trade deficit rose, not because of additional imports, but because of fewer exports. International trade remains at rather low levels.

We have some good news from the Federal Reserve, in a 2^nd derivative kind of way, with their so-called Beige Book showing that the pace of the decline is slacking off somewhat.

We also have some good news from the UK, with UK industrial output rising for the first time since February of last year, up 0.3%, though it is still down 12.3% year over year.

Gordon Brown's aggressive approach to the downturn may be showing some fruit.

We actually had a lot of action in the currency market today, with both Russia and Brazil making large buys of IMF bonds, so as to diversify away from US Treasuries.

For Russia, that may just be grandstanding, but for Brazil, it's a significant move.

In any case, it drove the dollar down for most of the day, though it finished up at the end of trading.

In energy, oil rose on falling stockpiles, and wholesale gasoline futures rose about $2/gal for the first time since October.