Ev Dirksen, in Congress from Illinois for forty or so years, was incorrectly quoted as saying, “A million here and a million there, and pretty soon you’re talking about real money.” But speaking of big numbers, the US deficit for May was $67.7 billion, slightly below the preliminary estimate of a $71 billion deficit. The federal government has run a deficit of $148.5 billion through the first eight months of fiscal ’07 which is 35% smaller than the deficit at the same point in 2006. Strong revenue growth, not less spending, is reducing the deficit.

According to the National Association of Home Builders (remember the source!), mortgage lenders have tightened credit guidelines so much they're squeezing about 500,000 first-time buyers out of the market. A decline of that magnitude would reduce sales of new homes by 4% and sales of existing homes by 7 percent. According to the association, about 2.5 million people will buy homes for the first time this year, down from 3 million in 2005.

Prices improved nicely yesterday after yields on 10-year notes reached a five-year high, which in turn led analysts to speculate that increased borrowing costs for businesses and households will curb growth in the U.S. economy. Will we continue to see a bounce? The 5.25% area is already acting like the support most expected. Pre-Producer Price Index this morning the 10-yr was sitting at 5.22%. The May Producer Price Index was expected +.8% with the ex-food and energy number +.2%, and it actually came out +.9% and +.2%, and the 10-yr has shot back up to 5.25% and mortgage prices have worsened slightly. Jobless Claims were unchanged, as expected.

A group of Americans were traveling by tour bus through Holland. As they stopped at a cheese farm, a young guide led them through the process of cheese making, explaining that goat's milk was used. She showed the group a lively hillside where many goats were grazing. "These" she explained "are the older goats put out to pasture when they no longer produce." She then asked, "What do you do in America with your old goats?" A spry old gentleman answered, "They send us on bus tours!"