Even taking the CBO numbers as gospel, that's over $240,000 per job! Not exactly a number to be crowing about.
After the stimulus the appetite for US government debt increased and our borrowing costs dropped to an all time low. How would you like the CBO to adjust its numbers?
Of course there is high appetite for treasuries they are seen as not having a default risk. That has no bearing on the criticism I just made.
People that buy treasuries would have bought some other asset if the supply wasn't increased so much. The CBO doesn't acknowledge that this most basic fact is true.
I just don't understand how the current activities in the bond market post stimulus invalidate the CBOs numbers.
What he is saying is that if the money used to buy $800 billion of treasuries had been used for other purposes, it would have created jobs as well. And considering that the CBO numbers have each of those stimulus provided jobs costing so much I find it hard to believe it couldn't have done as good a job at creating jobs elsewhere.
Nailed it. But I'm more than willing to go through this from a capital flow perspective and show indisputably that this has to be the case.
Interest rates aka the price of money has absolutely zero to do with understanding this issue. All the interest rate shows is the risk free rate + duration + default risk. The price of money doesn't change the available capital for particular capital expenditures. It just shows the demand for one fixed income asset class vs. another.
Mighty big "if," True Federalist. Let's see what the stimulatory investments the private sector has been making with the capital it does have...
Maybe they are building up cash positions because they are afraid they may not have access to the capital markets...
nope. Looks like the quality corporates have access to all the capital any of them would reasonably need. I am baffled by all the crowing I've been hearing for months about how we need tax breaks for "job creators" and corporates are being "crowded out." I would say the same thing to corporates and 1%ers that I would say to a three year old with a big slice of cake. Finish what you have first and then we will see if you need more.
Colgate and P&G have had no problems funding themselves with 3 year bond deals priced at 0.6%. I keep reading about corporates doing record breaking bond deals and at the same time people are saying they are getting crowded out of the bond market?! If your business can't turn a profit with financing costs of 0.6%, blame yourself.
