Notwithstanding the somewhat questionable "green shoots" in the economy, the reality is that the bad news just keeps getting worse. Russia announced today that it will be cutting its holdings in U.S. Treasuries.

Russia on Wednesday pledged to cut the share of U.S. treasuries in its $400 billion reserves, driving the dollar lower on global markets, although it said the move would be gradual and only replace bonds as they expire...

Russian officials earlier said they were concerned about U.S. inflation.

This is not good. Recall that in March both China and Russia were arguing for a new global reserve currency to replace the dollar. That happened about a week after the Federal Reserve announced it would start printing money to pay for our ballooning federal deficit. Clearly China and Russia were not excited about the prospect of newly printed money devaluing the dollar and reducing the real value of their investments.

The call to replace the dollar was at least temporarily defused at the G-8 meetings a couple of weeks later. However, a few weeks later it was reported that China had already drastically reduced its purchase of U.S. bonds:

China's foreign reserves grew in the first quarter of this year at the slowest pace in nearly eight years, edging up $7.7 billion (Rs38,423 crore), compared with a record increase of $153.9 billion in the same quarter last year.

So China was slowing its buying of U.S. Treasurys--either because it didn't have the money to invest (because of the economic slowdown) or because it was concerned about the value of the dollar.

Now we have Russia indicating that it won't be buying as many Treasuries either.

Increasingly we have fewer and fewer sources of foreign money being invested in U.S. Treasuries precisely when the U.S. Government is ramping up the amount of money it needs to borrow by selling them. This is why the Federal Reserve has had to resort to printing money to pay for President Obama's astronomical spending. There isn't enough money in the world for the U.S. to borrow. So it's just printing more money.

Printing money to pay for deficit spending--also called "monetizing the debt"--entails a whole host of potential risks. And those risks grow ever more likely as fewer and fewer foreigners choose to loan our government money by buying U.S. Treasuries. Russia's announcement takes us further down that road.

Interestingly, Russia chose to make this announcement the same day that the U.S. Treasury was scheduled to hold a 10-year bond auction. The 10-year bond (which strongly influences mortgage rates) was already going to be under pressure with the auction, but is under even more pressure with this news. It remains to be seen what that will do to demand at today's auction, but it's not going to help.

Already 10-year bond yields are up 0.05% and mortgage rates have jumped from 5.750% to 5.875% this morning. That effectively means that mortgage rates have jumped a full percentage point in the last two weeks. It's increasingly looking like these rising rates--a direct result of Obama's massive spending--is going to choke any near-term recovery of the housing market. And without a recovery in housing it is probable that any "green shoots" will whither on the vine, and a full economic recovery will be delayed.

It's increasingly becoming apparent that Obama's massive deficit spending that was intended to stimulate the economy will ultimately have precisely the opposite effect.

Not that we conservatives haven't been warning about that for months.

Update 2:30pm: Indeed it didn't help. The 10-year bond touched 4.000% today before closing at 3.94%--still up 0.09%. It seems likely that mortgage rates will be above 6.000% by the end of this week and will keep heading up. And, not surprisingly, there are increasing concerns being expressed about the recovery.