Tag Archive | "Republicans"

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Summers Out, Wall Street Up

Faced with a grueling confirmation process that appeared likely to come up short, Lawrence Summers bowed out of the race for the Chairmanship of the Federal Reserve. With Chairman Ben Bernanke’s tenure set to expire in January, the new frontrunner for the post is Janet Yellen, considered a stimulus tapering dove by most observers.

Wall Street greeted the Summers withdrawal with enthusiasm pushing early morning markets to robust highs before settling in the wake of the Navy Yard shootings in Washington. Markets were lukewarm to Summers, thought to be a hawk or more aggressive about tapering.

In the wake of the announcement, equities climbed and the dollar slumped as CME Group’s Fed Watch projected A 55 percent probability rating that the first rate hike would be in December 2014. January 2015 had a 68 percent probability rating. Before Summers’ withdrawal, traders indicated that the first tapering would take place in October of this year.

Summers was most likely guided by an announcement after trading hours on Friday that four Democratic Senators on the Senate Banking Committee would be voting against his confirmation. When Montana Senator Jon Tester stated his opposition, the die was cast.

Obama Addresses Upcoming Debt Ceiling Talks

President Obama told the public that he will not negotiate with Congress regarding the upcoming debt ceiling increase that could expire as of October 15, 2103. Republicans in Congress have used the debt ceiling to extract a heavy price in the past but with an election year coming up, the President appeared unlikely to give in to Republican demands.

If the extension is not passed and if the President does not bend, the government will be shut down. If the public perceives Republicans are to blame, the precedent of the mid-90’s would favor Democrats in the 2014 elections.

The current debt ceiling limit is $16.7 trillion. Republicans continue to want to include revisions to Obamacare as part of an extension.

On Monday, Obama said; “Let’s stop the threats. Let’s stop the political posturing. Let’s keep our government open. Let’s pay our bills on time. Let’s pass a budget. I will not negotiate over whether or not America keeps its word and meets its obligations. I will not negotiate over the full faith and credit of the United States.”

Currency Markets Move

The dollar index slipped 0.2 percent against six major currencies to 81.273.

The dollar lost 0.2 percent against the yen to 99.12 after rallying from the low of the day 98.48. The dollar hit its lowest level against the yen since September 6, 2013.

The euro climbed to $1.3336 after reaching a three week high of $1.3385 earlier in the session.

The strongest currency against the USD was the South African rand which jumped 1.8 percent against the greenback.

Speculation prevailed that the first round of easing under a Yellen leadership would be $10 billion per month.

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Republicans Reeling, Boehner Surrenders

Republicans Reeling, Boehner Surrenders

House Majority Speaker, John Boehner, supposedly the most powerful Republican politician in the country, met his match Thursday in an embarrassing non-vote that once again demonstrates the ineptitude of the conflicted GOP. Boehner did not absorb the humiliating lack of support for his Plan B solution well. To put an end to the Republicans self-destruction mode, Boehner dismissed the House for the Christmas Holiday burying his head in the sand and leaving a concerned middle class wondering “who are those guys?”

Boehner turned the reins over to the Senate and President Obama and left middle class taxpayers hanging out to dry. The conservative Tea Party refused to support Boehner in his hour of need, making very clear that there are at least three political factions working against each other in Congress. While it is easy to criticize the politics, the middle class will pay their dues for not ousting Republicans from the House and Senate in the 2012 elections. The price will be a self-inflicted recession.

It is painfully clear that the majority of Republicans are more interested in standing behind Grover Norquist and the wealthiest 0.005 percent of the voting public than they are about preserving the nation’s credit rating or preventing a recession that could make the 2008 recession pale.

If there was ever doubt about the mechanics of Washington, they should be eliminated now. The international community appears a smoothly operating engine compared to the dysfunction that threatens to take the country apart. On the heels of the tragedy in Newtownn, Ct. Americans are struggling for identity socially, economically and financially. The morale of the country is low and the state of mind for middle class America, the apparent conscience of the country, is distraught. Soon to be bombarded by irresponsible tax increases, massive layoffs and more irresponsible politics, American consumers will hit the crisis mode when the bills for holiday shopping arrive. The middle class can soon look forward to working half the year to pay new taxes and new healthcare levies.

It’s a disaster. A disaster caused by political subsidies, self-interest and the absence of moderate politicians.

Senate Republican Leader, Mitch McConnell had the audacity to call the failure of his party to embrace a real problem, the President’s fault. In another self-serving, stumbling statement from the aged Republican, the Republican leader continued the rhetoric that has accomplished nothing in three years.

The Republican Party is broken and the sooner Americans fight back, the better. This is an inexcusable breach of the public’s trust. Last Monday, Boehner and Obama came to a sweeping tentative agreement. When Boehner returned to the dark corners of the House offices, the deal fell apart rapidly.

Boehner has no control He has fallen from the most powerful Republican in Washington to the depths of an impotent fraud, like the party he represents. Wake up America! This is a disgrace and if you do not pick up the phone and ruin Christmas and New Year’s for your representative, you have no one but yourself to blame.


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Fiscal Cliff Stalemate

Please forgive my political ignorance, but why do we not have a solution to the fiscal cliff? Just about every CEO in the country is pushing for a balanced resolution. The President returned to the White House with a clear mandate to raise taxes for 2 percent of the country. This concept is approved by more than 60 percent of the population, a larger percentage of the population than voted for the President.

John Boehner knows a compromise is needed and that failure will turn from the majority party in the house to the minority in the two-year House elections. Senate Minority Leader Mitch McConnell begrudgingly admits the Republican stance is too conservative. In fact, Boehner’s and McConnell’s jobs are reportedly on the line. The Tea Party is on trial and will render itself extinct if Republicans do not free up the economy.

For some reason, a group of Tea Party and Norquist Pledge supporters are still placing the welfare of the country ahead of their commitment to the people. I believe in the two party system but we should realize that there are three parties in Washington. The least effective lobby is the centrist Republicans. It will take these Republicans to pass the existing legislation that the Senate has passed and Republicans in the House refuse to bring to a vote.

Over the weekend, talk show television has been filled with discussion about the President’s proposed solution to the Fiscal cliff. Mainly, increasing the taxes on the country’s wealthiest 2 percent, about $400 billion in budget cuts, a request for $50 billion in job stimulus funding and that the debt ceiling limit not require congressional approval.

This is a framework that taxpayers at all levels understand and approve. It leaves social security, Medicaid and Medicare untouched, which is a legitimate problem for Republicans. McConnell threw in a few suggestions for these programs that make sense. He suggests raising the benefit age for social security and Medicare. McConnell also suggests higher Medicare and social security payments by the wealthy. And, he talks about cleansing the Medicaid and Medicare systems. These are valid points and while Obama won the Presidential election, he did admit that these programs need reform.

So, why can an agreement not be put in place immediately? Why do politicians feel it is necessary to drag things out to the last minute? Do we have to suffer this political theater at every turn? Is Washington so sheltered that they do not understand the problem or do our elected officials lack the courage to do what is right for the country? For the majority of House Republicans, embracing a balanced solution means reneging on the Norquist Pledge.

On Meet The Press, Senator Claire McCaskell asked, “who is Grover Norquist?” How could a person who is not an elected official have a death grip on the Republican Party and the nation. For two years, the 112th Congress, the least effective Congress in the history of the Republic, has held the American people hostage to their whimsical pledges.  It is time to own up to a failed agenda and get this country moving. The way our Congress acts is an embarrassment to democracy and the world. Who, in their right mind, would invest in a country that is who economy is handcuffed buy government?

Like it or not, President Barack Obama was re-elected. He is not going to be swayed from his campaign promise or from Boehner, whose credibility is already a hindrance, misleading and conflicting statements. The fact is Boehner cannot deliver his party to a meaningful compromise. Mrs. Boehner, Cantor, Mitchell and Ryan may well be burying their political aspirations because of cliff negotiations fail, they will be held accountable for the upcoming recession.

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Inflation Enters The Mix

In a week that featured seven polite Republicans, Michelle Backmann seems to fare better every day.  Mitt Romney is still the frontrunner and several of the Republicans may have self-destructed while others may throw their hat in the ring.  The debate was calm and no feathers were ruffled.

While the Republicans had the country’s eye in the New Hampshire Primary Debate, not one hint of specific remedies for the economy or job problem was presented.  When all was said and done, the Debate was little more than a bash Obama meeting.  These high profile Republicans are terrified of making a definitive statement, which leaves voters nervous that we may soon be returning to Bush era deregulation and economic woes.

The Republican debate was followed by a speech by Federal Reserve Chairman Ben Bernanke on Tuesday.  Treasury and the Fed have maintained that budget cuts are definitely needed and that these cuts will be painful for everyone.  Bernanke asserted that there is urgency to the current debt ceiling talks that should not be linked to a wave of initial budget cuts. 

Bernanke’s greatest fear is that Congress will hesitate to the point that credit agencies and investors will lose faith in the country’s commitment to meet its obligations.  The mild mannered Bernanke urged Congress to come together on raising the debt ceiling and put the budget talks aside for the time being. 

Republicans are using the debt ceiling issue as leverage for the no increased tax mandate and deep cuts to social programs.  Democrats want social programs protected and feel tax increases must be on the table.

Consumer Prices Jump

A disturbing report from the Labor Department indicated that the Consumer Price Index had risen to its highest levels in three years in May.  The cost of food and energy rose by 0.3 percent.  These increases followed a 0.2 percent rise in April. 

Analysts had projected another rise of 0.2 percent in May. The fear is that this trend may represent fuel from the double dip recovery.  Adding to this possibility was a report from the New York Federal Reserve’s Empire State index, which showed that manufacturing was down for the first time since November 2010. 

While manufacturing, especially in the auto industry, has fluctuated, many manufacturers site the delay in receiving Japanese imports as a contributing factor.  Production in the country’s mining industry rose by 0.1 percent and overall manufacturing outside the auto industry rose by 0.4 percent in May halting an April slide.

Gasoline prices fell 0.2 percent after a steep 3.3 percent rise in April.  The cost of a new vehicle rose by 1.1 percent in May.  The Federal Reserve has projected that the CPI would rise by 1.5 percent in 2011 and 1.9 percent in 2012.  This is in sharp contrast to economists who now project consumer prices to rise to 3.1 percent in 2011.

These trends put the Federal Reserve, who is halting stimulus injections at the end of the month, under pressure.  Without this money, inflation could rise substantially.

Greece Turns Violent

In Greece there is a call for new Presidential elections and thousands of Greeks stormed the streets in front of parliament to protest the new round of austerity cuts.  As The European Union balked at plans to save the sagging country’s finances, Greeks responded violently to the concept of private investors acquiring the country’s assets.

Greeks banks fell by about 7 percent overnight.  The situation was exacerbated by the credit ratings agency, Moody’s, downgrade of several the top banking institutions in France.  The downgrade is attributed to the bank’s exposure to Greek bonds. 

The U.S. equity markets and dollar also feel in reaction to the EU’s inability to put a rescue package together.  The biggest damage may have been felt by the Euro Zone’s peripheral countries, Portugal, Spain and Ireland, where prices for bonds plunged.

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S&P Baits The Hook

Standard and Poor’s, one of the world’s leading credit rating agencies, declared the country’s AAA rating is in jeopardy.  Ironically, Standard and Poor’s, along with other credit agencies, was chastised during the recession for the inaction that led to the recession.  This time around, the agency sent a stern warning to the federal government and to the U.S. Treasury that the time has come to seriously address the nation’s debt crisis.

The political rhetoric has exhausted the taxpayers and turned the Congress into an ineffective body where special interest groups are protected and taxpayers foot the bill.  As President Obama said on Monday, his budget plan is designed to cut costs but maintain necessary programs, even if revisions are necessary.  Obama advocates strict and enforceable budget cuts plus increased taxes for wealthier Americans.

As the debate has been framed, Republicans want entitlement programs restructured and funding for many other programs, like Planned Parenthood, cut entirely.  On the surface, the Republican plan puts great pressure on the elderly and the poor.  Chairman of the House Budget Committee, Paul Ryan, presented his budget early last week.  The budget was passed by the House at the end of the week.  Ryan and the Republicans are opposed to any tax increases to the wealthy or to corporations.

Standard and Poor’s announcement may have shocked taxpayers but certainly makes a statement about how the rating agency sees the workings in Washington.  There appears a loss of confidence in the political parties’ ability to constructively deal with the deficit.

Even as the time to extend the debt ceiling approaches, Republicans seek conditions that the Democrats cannot and will not approve.  What is evident is that the politicians from both sides do not realize how unsettling and redundant their bickering has become. 

Raising the debt ceiling should be passed because the United States of America should not default on its credit promises.  The U.S. is under economic assault.  The increase of the debt ceiling is really stand-alone legislation that should be passed immediately, if not sooner

Geithner Takes Center Stage

Secretary of the Treasury, Timothy Geithner quickly took to the offense, assuring global markets that the 2012 budget was advancing and there would be significant deficit reduction.  The Secretary indicated that both parties agreed that more than $4 trillion should be pared from the budget within the next decade. 

On Monday, equity markets dipped about 2% before rebounding.  Oil prices continued to rise.  Helping the dollar was the floundering euro, which is now faced with bailing out Portugal with Spain looming on the wings.

Meanwhile, the Gang of Six, three Republicans and three Democrats, are due to release their long-awaited budget proposal.  This budget may gain bi-partisan approval.  It is believed the Gang of Six budget uses many of the recommendations from the Bowles-Simpson deficit reduction committee.

In an interview with CNBC, Geithner made some interesting comments.  “Actually, I think things are better than they’ve been. I you want to think about the prospects for improving our long-term fiscal position… If you’re looking very carefully at what’s happening in Washington, you see people on both sides — Democrats and Republicans — agreeing with the President that we have to put in place some reforms now to bring down our long-term deficits.”

As Geithner watches the Congressional bantering, he must get out front and assure foreign and domestic investors that the U.S. will not default on its borrowing.  The Secretary repeatedly stressed on Morning talk shows that there was no chance the U.S. would default on its debt. 

Despite Geithner’s assurances, taxpayers have little reason to believe that neither party has the political will to make the austerity cuts and tax increases necessary to right the ship.  At some point, taxpayers are going to react to the zaniness of their public officials.  What Standard and Poor’s is telling us is that it is time to put heads together and increase the debt ceiling and implement tax increases along with deep spending cuts.

When certain the deficit touches certain grades, the higher taxes can be cut at each watermark.  Hey Washington, wake up!  Cool heads are needed to restore our credibility around the world. After all, this is the greatest society ever created.  It is time to put deep differences aside and meet in the middle.

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