Democrats are the New Republicans

Imagine, if you are under the age of 40, that once, not really so long ago, one of the two major American political parties espoused the following ideals, and the other party did not believe in these ideals strongly at all.

• Free Enterprise -- That companies should operate in a market under the law without subsidies from government....  Without, for instance, subsidies for oil exploration.  ("According to...the Congressional Budget Office, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry." -- NYT)
• Market Solution for Health Care -- Health Care should be extended via a market solution: a regulated marketplace of private insurers and providers, a mandate, and subsidies for the poorest families (Nixon).
• Naive Free Trade -- Extend free trade everywhere possible, regardless of factors like currency manipulation.

So, which party was that?

The Republican Party.

Today, one party pays lip service to these ideals at times, but the other party truly believes in these ideals.

More of the true believers are Democrats.

I'd go further.

Today, it is the Democratic Party that believes in the Horatio Alger story, the upward mobility, the land of opportunity.

These are strong ideals, and the Democrats, having the real belief, should embrace the first two of these ideals, and Horatio Alger, more forcefully, publicly, rhetorically.

Free Trade, on the other hand has a complexity that is crucial:  Free Trade isn't actual unless the currencies freely float (click link to understand why).

...

I was surprised as I began to finish this post and looked up when Elizabeth Warren was a Republican because her party affinity history, wiki nutshell version, is just like my own:

"Warren voted as a Republican for many years saying, "I was a Republican because I thought that those were the people who best supported markets." She states that in 1995 she began to vote Democratic because she no longer believed that to be true, but she says that she has voted for both parties because she believed that neither party should dominate."

People, Elizabeth Warren has evolved some, but not that much.  It's the Republican party that has changed so drastically.

Debt Doomsday: The Wrongest Prediction of Our Time?

Well, it's happened. The oft-trumpeted Day of Doom, when China sells US Treasury Bonds, has arrived.

Actually....

(Reuters) - China and Japan led an exodus from U.S. Treasuries in June after the first signals the U.S. central bank was preparing to wind back its stimulus, with data showing they accounted for almost all of a record $40.8 billion of net foreign selling of Treasuries. 

The sales were part of $66.9 billion of net sales by foreigners of long-term U.S. securities in June, a fifth straight month of outflows and the largest since August 2007, U.S. Treasury Department data showed on Thursday. 

China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, and Japan trimmed its holdings for a third straight month to $1.0834 trillion. Combined, they accounted for about $40 billion in net Treasury outflows.

As of now, after 5 months of foreign selling of US Treasuries, that 10-yr Treasury yield is....around 2.6% at the moment I'm writing this.

So...where's the panic?  Weren't we supposed to see people jumping from buildings?

Or at least weren't we suppose to see a debt interest catastrophe, with the interest rate climbing and climbing, and the nation's finances in trouble?

Do you realize how low 2.6% is?  It is still far below normal levels.  Normal would be more like 4% to 5%.

Interest rates will go up and down.  They could be up or down this week, or month.  It tells us nothing, unless they rise above normal levels of about 5%.

If 10-yr rates are 3%, that is low.  If they are 3.5%, that is low.  If they are 2.6%, they are very low.

Now, as this endlessly predicted time of doom hasn't amounted to much, we will now hear acknowledgement of the complete falsehood of the popular hypothesis that we are profoundly dependent on China to finance our debt....?

But the non-crisis of debt is no surprise for those that read this blog a couple of years back.

As I wrote in June 2011:

But this [interest rate catastrophe theory] is wrong, illusory, for a pragmatic reason. 

Why? 

Because the worldwide savings glut, which makes US treasury interest rates on our national debt so low, isn't going away, not for decades.

I'd love to see an objective process on the part of those making the interest-rate-disaster prediction, admitting the data is showing their assertion/hypothesis was wrong.

Will that happen?

Perhaps not.  But in the meantime, we live in the world I described.

The world where there are a lot more big savers than big spenders.