Now I have seen everything!
So we are in shutdown mode. The infants (read Congressmen) throwing temper tantrums have really crossed the line in their brinkmanship games, again!
Let's take a stroll down memory lane. In August 2011, we had a somewhat similar debate about raising of the debt ceiling. Both parties dug in their heels, but we crossed over the threshold of reaching an agreement. As a consequence several things happened: The United States lost its cherished AAA rating and was downgraded.
We did not learn a thing. Next, as a compromise after the fact, we generated the sequester. We all know how well that has gone. Again we learned nothing from that result as well.
So we are at it again. This time we are fighting over the funding of America (the budget) with the intent of scoring political victories over pet projects such as defunding Obamacare. I am quite sure that none of the two warring factions give a damn about the citizens of America. I am quite sure we did not go to the polling booth voting for our candidates so that they can carry out their party agenda in Washington. We naively believed that they were going to serve the people and take the country out of the doldrums, putting us back on the path to prosperity.
Suddenly no one is talking about jobs and job creation. Both parties have willingly allowed over a million people to lose their jobs. While they play Russian roulette with the economy and our lives, they sit back and earn a salary (Congressmen continue to get paid whether government employees get paid or not).
To make matters worse, the markets are once again not reflecting the gravity of the situation. A few weeks ago, when the Federal Reserve did not taper its quantitative easing, the markets were surprised. Like imbeciles, they are carried away by the talking heads on TV who were so sure that the Fed would taper. Throwing away common sense, the media just swallows the party line. As I had predicted all along, the Fed did not taper because the economy is just not on a strong footing yet. The fledgling housing market was tanking due to the sharp rise in the interest rates, but no one cared.
At least now the markets seem to acknowledge that maybe we are not yet ready for tapering. They are still clambering for a start to tapering in October or December. It is more filling of the airwaves to appear intelligent rather than to have a clue.
So with the government shutdown, no matter how long we remain shut (a few days to a few weeks), it will have a negative effect on an anemic recovery. The prospect of tapering will continue to fade further away.
The dollar should be tanking, but it is not. Stock markets should be falling, but they are not. Gold should be soaring due to the tremendous uncertainty in the market. Instead it fell $40 Tuesday. Interest rates should be falling, but the 10-year note was up 1.5 percent Tuesday.
This insanity is unnerving, as all fundamentals of trading are thrown out of the window and idiots who trade on unprocessed facts and sentiments, but have access to Billions to trade with, are leading the markets.
We are in trouble as a nation when I keep hearing rhetoric like, "We are the richest nation in the world," "The United States will never default," "It does not matter, the stock and bond markets are going up."
Reminds me of the old joke: A man jumped off the Empire State building. As he is falling and passes the 82nd floor, he looks around and says "So far so good." (No actual person was hurt in the narration of this joke).
If this new antic does not crush the dollar, what will?
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