Investors Fear Government Borrowing Too Much

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A jump in government bond yields stoked fear that higher interest rates will stall the economy before it has a chance to recover. There are worries that the government is borrowing too much money.

STEVE INSKEEP, host:

NPR's business news starts with new concerns about U.S. government debt.

(Soundbite of music)

INSKEEP: Those concerns seem to be affecting interest rates. Cheap loans, of course, make it easier for people to buy homes and cars and for businesses to expand, but interest rates are suddenly rising. A spike in interest rates yesterday reflected investor fears that the government is borrowing too much money. When investors think that Treasury bonds are perfectly, absolutely, completely safe, they're willing to lend the government money at very low rates.

DAVID GREENE, host:

But confidence seems to be eroding. Investors wonder how the government is going to repay all of that debt. To make up for the increased risks, they are demanding higher interest rates, and that's the last thing President Obama wants to see. The whole point of the increased borrowing has been to bail out the auto, banking and housing sectors, but those are the very sectors that would suffer if interest rates keep heading up.

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