As many of you know I always wondered about how the supposedly brilliant “bond vigilantes” have missed the biggest gorilla in the room – Bernanke. Well, they did and it bugs them BIG TIME. It wasn’t supposed to be that way, but that’s what happened. So rather than being a little introspective, they blame a guy who had access to certain tools and, gasp(!), decided to use them. Now they’ve reached a point of such ideological fervor that they would rather bet against their positions, just to make a statement.
Why are the bond vigilantes purposely driving down the market value of their stock-in-trade, anyway? Part of the reason is ideological. They hate Bernanke as an interloper, and Obama for the same reason, so they are reluctant to believe that the economy is actually recovering under the leadership of those two faculty-lounge geeks.
The vigilantes are like the hedge fund guys who share the same ideological hates and have been (wrongly) shorting the stock market for several years. Now both the bond vigilantes and the hedgies see a chance to “get theirs” back — notice how the friends of hedge funds have quickly used the bond rate spikes to renew their cable TV calls for a deep stock price “correction” that will bail out the hedge funds and give them a chance to get back into the market on the cheap.