Bond traders are having a time figuring out the plays these days as typical benchmark indicators have become meaningless. Excess reserves held by banks at the Fed are now bigger than the Fed Fund Market. The Fed's own one percent target rate now exceeds the overnight rate, which is less than half of one percent. Money is sitting in piles with no intention of moving.
Like a car pileup in a thick fog, each sector of the economy keeps on plowing into the next as logjams emerge. Real cars at Port of Long Beach are not moving from the offloading lots and stand at a record along with numerous other items looking to be exported.
The question is not whether the US can handle and ultimately solve the crisis now before it. Rather, it is to what degree market adjustments need to ratchet to before values of all kinds are reflected in a volatility judged as normal.
Saving the top of the economy is always the path of choice and least resistance. Preserving wealth and those of influence becomes a reasoning too obvious since wealth is always at the seat of power. If we are in the first of many battles in a war to save institutional businesses and assets at the expense of the greater common wealth, we may face a prolonged economic lethargy supporting a population guided by corporate leaders weaned on supervising service industries where less people do more work producing little of real value.
