Over the Weeend: How Is This Good News?

Over the weekend, we learned that Congress had passed a budget. It avoids a government shut-down and increases our national debt as well as our fiscal deficit. Good news?

We also learned that corporations are borrowing aggressively "again." 

The bond market is booming again, a sign of investors’ faith in the resilience of the U.S. economy.

At least that's the claim.

Further "analysis" provided:

Many analysts say they expect bond sales to continue at a vigorous pace through the end of the year, reflecting steady economic growth, pent-up investor demand following a late-summer slowdown in bond issuance, and efforts by corporate treasurers to lock in low interest rates before a possible Federal Reserve interest-rate increase in December.

Good news?

By the way, the headline for this article in the Wall Street Journal:

U.S. Bond Market Takes Flight, an Upbeat Sign for Economy

Let's put this under the scrutiny of our reason and common sense and see where it takes us.

Looking at the aggregate debt piling up in not only the U.S., but just about the entire world, it's hard to characterize all this as good news. A few stats:

• Aggregate public and private debt as a percent of GDP for Japan stands at 650%+; UK around 500%, U.S. approaching 400%. Rather than "good news" we might characterize this as "staggering," no?

• Global governmental debt has increased by $59 trillion since 2007, now at over $225 trillion. Doesn't that strike you as unsustainable?

• Previous borrowing by corporations have been plowed into share buybacks. There's nothing here that tells us corporations will do anything different with their new borrowings. Do share buybacks demonstrate "faith in the resilience of the U.S. economy"? Or do they simply prop up the price of the company's stock, and in aggregate the stock market averages as a whole?

Even the comments under this puff-pastry piece express deep skepticsm with the conclusion of the Journal's author. It doesn't look like anyone's buying this bit of Pollyanna reporting. This quick and dirty application of reason and common sense suggests you don't either.