The first article under this title was published in June and was regarding President Obama’s agreement with the GOP extending a mandate for employers until 2015 under the Affordable Care Act aka ObamaCare. This article is completely different but discusses the same subject matter; that being lack of leadership.
On June 19th the FOMC conducted their meeting to determine the Federal Funds Rate going forward. As expected the Fed did not raise the FFR but immediately after the decision was announced, the Fed conducted a press conference with the main topic being tapering. After this press conference, the Asian markets opened and dropped immediately. Europe opened the next day and dropped immediately as did the US markets.
This set off a worldwide selloff in the equities and futures markets. In fact the Dow fell about 700 points until the markets stabilized and began to gain ground. Until this past Friday, we in the United States thought this matter was over as we had the next FOMC meeting last Wednesday and it didn’t set off a selloff until Friday when the monthly Jobs report was released and apparently that set off a new round of selling which we are currently experiencing. Once again, as in June the markets are listening to every FOMC Member to determine a clue as to when tapering will begin. Last Wednesday we thought it would happen in 2014 and now we’re hearing that it may happen this calendar year.
The Fed apparently believes in democracy as they allow their members to speak their minds freely. Obviously they do not subscribe to the Corporate America method that mandates that all must speak from the same hymn book, so to speak. Prior to the June meeting, it was announced by President Obama that Ben Bernanke will “probably” be stepping down in 2014 when his term is over. Ben Bernanke never made this announcement but apparently Obama wants to make a change. The top candidates? Current Vice-Chairman Janet Yellen and Larry Summers. Larry Summers? Isn’t this the same Larry Summers who virtually destroyed the Glass-Seagull Act under President Clinton? And wasn’t the repeal of that act a major reason as is why we had a financial crisis in 2008? That Larry Summers? Yes, the same one.
Now Obama is hamming up immigration and the housing market as he did so on Tuesday. This is something that Bush did 10 years ago. Ham up immigration and beef up the housing market which in turn caused a real estate bubble that sooner or later was going to collapse and did in 2008. Obama is now suggesting that Fannie Mae and Freddie Mac should be privatized. I wonder where this President has been for the last 5 years. Does he really think that the US is out of the woods when it comes to housing? He passed Hamp and Harp, two programs that were designed to help underwater homeowners. But guess what? The banks for the most part ignore it and the process for getting one of these loans is so stringent that most applicants either can’t qualify or don’t bother. Ironically enough guess which government agency guarantees the loan? The same Fannie and Freddie that Obama is suggesting should be privatized.
If you’re a currency trader and you use bonds as a correlated asset to trade a currency, haven’t you wondered why the bond market appears to be so erratic as of late? Some of my own followers are telling me that they don’t think the bond market has any credibility due to all the tapering talk. This is because no one can seem to figure out if the Fed will taper and when. This is because there is no clear direction and ironically enough the one thing markets don’t like is uncertainty.
I must say that as an American I’m getting a bit annoyed with this leadership or lack thereof. This President is becoming a pseudo Republican as he keeps giving the GOP what they want and isn’t getting much in return. Shortly, either at the end of this month or September we will have another issue to deal with, that being the debt ceiling and budget going forward into 2014. Something must be approved by September 30th or come October 1st, the government will shut down, if only partially. We’re already dealing a sequester that is hindering US economic growth and lending uncertainty with business leaders and the markets in general. We may wind up with another 2011 on our hands. This “CEO” is either very naïve or quite frankly incompetent; but rest assured of one thing: we the people will pay for that incompetence.
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