Government Spending Goes Bad

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Government Spending Goes Bad

June 9. 2009

U.S. President Obama

The U.S. bailouts are having the opposite effect. So much so, it is being noticed by the U.S. government as, "Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation."

ALL BUSINESS: Bond-market rout lifts mortgage cost

Jun 6, 8:39 AM (ET) - NEW YORK (AP) - The Federal Reserve announced a $1.2 trillion plan three months ago designed to push down mortgage rates and breathe life into the housing market.

But this and other big government spending programs are turning out to have the opposite effect. Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation.

That's the Catch-22 threatening to make an awful housing market potentially worse and keep the economy stuck in a funk. Kick-starting the economy requires higher spending, but rising rates mean fewer Americans will be able to refinance their home loans. And some potential buyers will be shut out of the market by higher monthly payments they won't be able to afford...

http://apnews.myway.com