The May Unemployment Numbers are Here, and Worse Than Predicted

It's more than a question of the fact the stimulus doesn't seem to be working - it should be downright alarming what's happening in the credit markets. Because of the spending, world governments and investors are seriously questioning the US dollar's place as the world reserve currency and it's already lost its lustre by many as a "safe haven" currency (as judged by yields - higher yields means that fewer people want to hold your bonds).

Interest rates have jumped up especially on longer term Treasuries - and because things like mortgage rates are based on this, this means not only is deficit spending going to be more expensive (and there's a lot of that being projected) but that mortgages for everyone and the cost of debt for businesses could soar. 10 year treasury bonds had a yield of 3.83 up from a low of 2.07 percent per Forbes: http://www.forbes.com/2009/06/05/treasury-bernanke-economy-b.... This will mean it will be more difficult for businesses to expand and for people to start spending because they're going to be spending more on just meeting their interest costs.

The unemployment numbers are also worse than the "more-adverse" scenario in the bank stress tests.

http://www.calculatedriskblog.com/2009/06/unemployment-compa...

"Stimulus Effect: Shit Sandwich"