Friday, March 30, 2012

More ridiculous debt rollover fears. This time from Santelli.


Just caught Rick Santelli talking about the U.S. needing to rollover $6 trillion in maturing debt in 2017. (He must have read Caroline Baum's article.)

If Rick checked the Treasury's website (https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=w&fname=12032800.txt) he would have found out that the U.S. rolled over $32 trillion of debt THIS FISCAL YEAR ALONE without so much as a hiccup. And, by the way, interest rates have been coming down all along the yield curve, the Fed funds rate remained at zero, the dollar went up, stocks rallied, the economy grew, etc, etc, etc. In short, no disaster, no crisis, even though the amount rolled over was more than 5 times the amount that Rick is apparently worried about.

How does CNBC's chief bond guy not know this?????


15 comments:

MikeB said...

OT, but a bloggers forum in KC missing the locals....
http://www.growthology.org/growthology/2012/03/economics-bloggers-forum-2012.html
-Michael Boudreau

Mike Norman said...

Looks like they specifically excluded them. They all know the UMKC guys.

Tom Hickey said...

"How does CNBC's chief bond guy not know this?????"

Confirmation bias. It's one of the strongest and most prevalent cognitive-affective biases. One only sees what on agrees with an amplifies it. Everything else is filtered out or downplayed.

MikeB said...

I turned on the live feed about 20 minutes ago and don't see any friendlies in the crowd.

Interesting to see someone like Tyler Cowen say we should look at a happiness measure rather than an income measure. Oh and if you look at income, we are less unequal on a global scale - change the frame. They are so good at that.

Tom Hickey said...

BTW, cognitive-affective biases are one of the chief reasons that people lose money in markets. See Behavioral Finance and Wealth Management: How to Build Optimal Portfolios That Account for Investor Biases (Wiley Finance, 2nd. ed. 2012) by
Michael Pompian. One needs to be aware of one's biases and control them.

Strange that someone in Santelli's position about this.

Salsabob said...

Santelli's been so wrong for so long, you'd think no one would listen to this guy. His not-so-veiled screech of hyperinflation just around the corner must of lost a lot of money by his followers. He's the spiritual head of the T-baggers; need anyone say more?

Mike Norman said...

I think I just heard Santelli say that if he won the Mega Millions jackpot he'd give a big chunk of the money to the government to pay down the deficit.!@#$%^&*

I can't f*cking believe this!!!!!!!!!!!!

Matt Franko said...

Mike,

Perhaps ironic wrt Santelli's pledge, I dont think the states could even run a game like this (lottery in USDs) without the Fed govt deficit spending in the first place and ticket purchasers buying tickets using the associated net savings of USD balances....

They just cant think this through...

Tom Hickey said...

"I think I just heard Santelli say that if he won the Mega Millions jackpot he'd give a big chunk of the money to the government to pay down the deficit.!@#$%^&*{

That qualifies him as a moron. Tell him that if actually wants to make a difference, he should donate the funds to his state and local governments, which are currency users, rather than to the currency issuer, which has no use for it.

paul said...

"…Tell him that if actually wants to make a difference, he should donate the funds to his state and local governments…"

Tom I think this is actually a very good idea - might help get people to understand the difference between a currency user and issuer.

…and I'm shocked, shocked I tell you to see the word "moron" come off your fingertips. Maybe it's because you have been calmly trying to debate ideas over at a competing blog recently and found it much like debating a stone.

Matt Franko said...

paul,

Some time I'd like to post up that 'closed system' diagram you have linked to in one of your 'discussions' I came across...

At this point I dont understand some of the equations you have included across the different boundaries though....

I think this is the one I am thinking of:

http://img.skitch.com/20120326-cp85h22qei6ehj6spkdrq5h48i.png

If you could can you engage here?

Resp,

paul said...

@Matt

Yeah that one's a work-in-progress that I posted I think to try to make a point with Ramanan. He mostly ignored it.

The variable definitions are a little confusing so that can be improved on. It was mainly an attempt to demonstrate how simple the relationship is.

Feedback is always welcome.

Ryan Harris said...

Mike, Is there anyway to find out what comprised the 32 trillion? Surely that must include interdepartmental IOUs and such and not only Notes, Bills and Bonds. That amount is HUGE equivalent to half of the world GDP.

Mike Norman said...

Ryan,

The breakdown is all there on Table IIIA of the link I provided.

John Hubbard said...

It is possible he is incompetent, and cognitive bias may very well be a part of that.

One alternative perspective that is different, though not necessarily contradictory, is that CNBC is a for-profit venture that gets money based on viewership and thus has an incentive to parade whatever people and viewpoints result in prolonged and repeat viewing. Under this model, whether a statement is factual is really beside the point as long as it accomplishes their goal if increased viewing, and they are not breaking some law as a product of lying outright. I can imagine they may have almost no concern for such "difficult" truths as these, that many people would dismiss at first hearing even if CNBC had the courage to utter them. They must simply think: "Why make something difficult that can just be kept easy?"