fiscal discipline

President Obama is talking about freezing spending and raising tax on rich. It is more about politics than real fiscal restraint. The budget situation will get much worse. It is quite likely that we will have another recession before 2019, which is not in Obama's budget projections. The only way Governments will reduce deficits is being forced by the b0nd market. The bond market is too friendly right now but will get tougher. I do not see Federal reserve to continues to underwrite government debts. The 10 year yield can move up 100 bps easily in next 18 months. It will happen not only in U.S., will also happen in EU, Japan and China.