Echoes of Chubby

It’s been 50 years since Chubby Checker did the first very successful “echo” of his surprise hit, The Twist.  It’s also 50 years since the Fed tried to “twist” the yield curve.

What made Chubby’s version a surprise hit was that the group who recorded the song in 1958 (Hank Ballard and the Midnighters) weren’t available to play it on Dick Clark’s American Bandstand, so Chubby and his group, The Fat Boys, did a live cover on Dick’s afternoon TV show.

There are more echoes in this story.  For example, the record only held number one on the billboard chart in 1960 for a week, but it got to number one for two weeks when it was re-released in 1962.  On top of that, the actual follow-on hit on Parkway records in 1961 (image above) was a bigger hit around the world than Chubby’s first round.

Which leads me to the musical question:

Can the Fed get a bigger hit in its remake of the 1961 classic yield curve operation as it does the Twist this time around? They can only hope.

The first reaction, in spite of the advance warning, is seen in the Bloomberg yield curve snapshot a buddy sent me, comparing yesterday’s Treasury curve to the curve ten minutes after the announcement:

Yup.  Yields at the long end of the curve are down, and yields at the short end of the curve are up.  We’ll see whether this lasts, and whether even more attractive terms for borrowers will get them to start making some pro-growth investments.

Sadly enough, today’s bond market and the Fed’s deliberations have become part of the toxic mix we call politics.  Even if we discount leading Presidential candidate Perry’s not-so-veiled threat against Chairman Bernanke, it’s really hard to ignore the letter the top four members of the Republican caucuses in the Senate and the House sent the Federal Open Market Committee as they began their policy discussions.  Apostate Bush speechwriter for economic issues David Frum seemed taken aback by the ugly reality of sitting members of the leadership of our government urging the Federal Reserve to stop trying to help our economy in an official letter to the Chairman.



2 Responses to Echoes of Chubby

  1. Gary Anderson says:

    Howard, here’s something that is a bit surprising to me. The Republican leadership seems to translate dissatisfaction with current administration policies into a “win” for them in 2012. I wonder if they are not deluding themselves. Neither party is yet grappling with the real issues for the bulk of America.

    • hhill51 says:

      I hear you, Gary.
      I have to wonder whether the problem is that everyone they “see,” ie their contributors, the lobbyists, and their neighbors in the DC area are so well off that they can’t fathom the reality most of us deal with. I just got my hands on “Top Secret America“, and part of the reason I wanted to read it is the shocking reality of the counties in which the (mostly invisible) new national security business is centered are now the richest in America. That means they have blown away the formerly richest counties that had the corporate elite from American business and finance.
      That post-9/11 business is so huge and so lucrative that CIA or NSA junior staffers can quit as soon as they get their clearances, and go work for private contractors and consulting firms that rent those same young professionals back to the agencies who trained them….. A regulation was passed preventing immediate moves like that, but the per-head fees are SO large that these “kids” can sit around playing freecell for a year collecting six figure salaries and it still makes economic sense for the private companies to wait out that year before charging over-the-top consulting fees. That part of America (suburban Maryland and northern Virginia) never even had a meaningful decline in housing values, the money is flowing so freely.
      We all know that even one term in Congress gets you one of the sweetest pension deals in America, but the reality of the lobbying business is that even senior staffers and junior Congressmen get high six figures or low seven figures annual compensation by joining lobbyists. They ALL do it, so they naturally have only the people they know to judge what is going on in the world.
      This giant security consulting business has now given the same kind of career path and compensation to military and to CIA wonks.

      As far as I can tell, this is how they can be righteously indignant over teachers in Wisconsin pulling down $47K a year, but only paying 10% of the health insurance cost. Obviously that is the problem, right? All these inside the Beltway mid six figure types end up looking at the world like what’s-his-name from cable TV who went on the air and said that if his take-home pay dropped from $6.5 million to $6.1 million on the salary that is half his earnings, he would seriously consider quitting his job.
      At least that’s why I think they can’t seem to understand how their policies are affecting the working masses. They are in the middle of a kind of group narcissism that defines the world as only what they see and what they hear from the people they deal with every day.
      Good question, though. I was glad to see Frum recognizing it for what it was. Diane Swonk (no screaming liberal, she) was horrified on TV today, using a comparison to Chavez or the worst of the Politburo when talking about politicians going after Bernanke and the FOMC.

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