Calm seas ahead

Recession sentiment still quite low:

Steve Conover does a great job of cutting through economic scatology. In his latest post, he takes on the inverted yield curve phobia:

Although inversion has historically signaled recession, other indicators are pointing toward sustained growth. In short, I’m still not in the interest-rate forecasting business. However, it is good to see the bellwether 10-year T-note holding reasonably steady, below 5%.

In his previous one, Steve quotes Alan Reynolds to fisk fiscal theorists (perhaps the most popular representative of this camp is Robert Rubin. I respect Rubin for his Wall Street talents, not his macroeconomics):

Fiscal theorists feel no obligation to accept any evidence as refutation of their theories, because fiscal theories can always be created or revised to explain anything that might happen. If the economy slumps, that is because budget deficits crowd out investment. If the economy booms, that is because budget deficits stimulate demand. If the dollar goes up, that is because budget deficits attract foreign investment. If the dollar goes down, that is because budget deficits create fears of inflation. If inflation goes up, that is because budget deficits are inflationary. If inflation goes down, that is because budget deficits are not large enough. The fiscalist answer is always the same; only the questions change.