November 01, 2011
People who have the ability to anticipate market movements can make enormous amounts of money running hedge funds and other investment vehicles. Apparently Politico is among the small group of analysts who know what will move markets.
It told readers that:
“If the committee were to take up changes to Social Security, it could show that Congress is looking for systemic changes to the nation’s finances — something markets and credit rating agencies want to see.”
While the credit agencies, who are known for rating subprime mortgage backed securities Aaa, have been explicit in their instructions to Congress, it is not clear how Politico could determine the market’s sentiments. In recent months bonds prices have soared and interest rate on 10-year Treasury bonds fell as low as 1.7 percent. Is Politico telling us that the bond markets are unhappy about the current budget situation and that interest rates will fall even lower if Congress cuts Social Security?
If that is the claim, it would be interesting to see Politico provide the evidence that is the basis for this assertion. Alternatively, if this is just intuition on the part of the reporters/editors at Politico, it would be important to disclose this fact as well.
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