As I mentioned in my story this morning (“Monday Morning Coming Down” — and Nicole has been on the case, too) a number of big firms, many of them consumer-product companies, now have bond yields lower than those of Treasuries, meaning that the market is implicitly judging that they are a safer bet than American sovereign debt. Goodbye, Obama & Pelosi, hello, Johnson & Johnson.
I’m not quite as exercised about the health-care bill as some of my colleagues, if only because I see it from a vantage point of Derbyshirean despair, as of a piece with Bush’s Medicare expansion and the other projects upon which Leviathan battens. Obamacare is pretty bad — harrumph, harrumph, etc. – but it does not seem to me radically out of character with the direction in which American society has been heading all my life (but then I suppose that’s what you get for being born in the twilight of the Nixon administration).
What is interesting to me is that economics is threatening to accomplish what politics has not: to chasten the vanity of the political class and to straiten their ambitions:
So here’s a prediction for you: Obamacare is not going to happen, regardless of the fact that the president is going to sign it into law today, regardless of what happens in the 2010 and 2012 elections, and regardless of any speech given anywhere in Washington. The government’s ability to simply say “Make it so!” and ignore economic reality is coming up against its limit. If Nancy Pelosi thinks the Republicans are obstructionists, wait until she wants to borrow money from people who don’t want to lend it to her and don’t have to run for reelection.
I’m looking forward to finding out what happens when investors stop lending our government money.