DOOM: It tastes like burning!

The Fed is expected to make some sort of announcement this morning, and the chatter is that it will be big. QE3? Something else? I’m still a skeptic about QE3, but it’s obvious that Bernanke is feeling a lot of political heat -- and not just from the Obama Administration, but from world markets. The consensus opinion is that the Fed will engage in “Operation Twist” -- rolling their huge backlog of short-term securities into longer (10-year) bonds and thereby driving down yields there. The thinking is that this will in turn prompt investors to put their money elsewhere in a restless search for better yields. However, I am skeptical about this because the evidence so far is that investors are in a very “risk off” mood, and lowering yields on longer bonds the way they have on shorter ones (all the way down to zero) will simply have bad long-term effects with few (or any) short-term gains. Monetary policy is played out; only fiscal policy can turn things around now, but nothing is likely to happen on that front until after the 2012 elections. Which may be why Bernanke is getting a tad panicky: a whole year of sideways drift in the thrall of a double-dip recession and possible financial collapse in Europe stokes his deflationary nightmares.

Thomas Sowell weighs in on the "Social Security is a Ponzi scheme" thing.

The fundamental problem of Social Security is that the irresponsible way its finances are set up, and the changing demographics of the country, mean that there is simply not going to be enough money in its trust fund to pay today’s young people what they are legally entitled to when the time comes for them to retire.

The money is just not there, some of it having been spent for unrelated purposes. Making up a growing shortfall — as baby boomers stop paying into the system as they retire and start drawing money out of the system — would mean ever-increasing burdens on taxpayers that taxpayers are unlikely to put up with.

Paul Ryan on SS: Yeah, it’s a Ponzi scheme. Maybe not criminal, but a Ponzi scheme nonetheless. (SS is the third rail of politics? Not any more.)

What comes after Europe? I’ve already gone into that: The Humongous.

What comes next is the explosion of the European project. Given what European leaders have made of that project over the past 30-odd years, it's not an altogether bad thing. But it will come at a massive cost. The riots of Athens will become those of Milan, Madrid and Marseilles. Parties of the fringe will gain greater sway. Border checkpoints will return. Currencies will be resurrected, then devalued. Countries will choose decay over reform. It's a long, likely parade of horribles.

Obama’s ignorance about basic economics is very much of a piece with the rest of his Presidency, alas. Like many powerful men through the ages, he has fallen prey to the idea that he can simply wave his hand and cause the tides of history to shift.

Economics: one of those academic fields in which repeated failure is no bar to great success.

Obama cares about jobs. Union jobs. Others? Not so much.

California’s public pension battles will be fought in city halls all over the state.

Merck is the next company to contemplate layoffs in the 10K range. They employ a lot of people in Philadelphia, so that's going to put a hell of a hurt on the local economy.

Granholm: “Let my personal failure and ineptitude act as a beacon to all those who wish to piss away taxpayer money and flout the wishes of the electorate!” Detroit is a fitting symbol for that clueless git.

Class warfare and the rule of law.

[T]hose earning less than $250,000 still have to someday find a willing buyer for the assets they wish to sell, and those assets are going to be a lot less attractive to most individuals, funds and other institutional investors — a.k.a. the market — if they’re taxed at 30-odd percent instead of 15 percent.

The Democrats are declaring war on everybody’s investments here, not just Joe Millionaire’s. Look for major institutional investors, private-equity types, and even venture capitalists — a.k.a. the financial lifeblood of a modern economy — to start seeking friendlier tax environments abroad. Nobody has to have an office on Wall Street any more.

Your stimulus dollars, hard at work on vital issues facing our nation.

End the tyranny of the Keynesians!

The British “tea party” movement seems to be gaining ground. Not a moment too soon.

The IMF, always masters at stating the obvious too late to do anyone any good, warn about a global slowdown in growth.

I don’t know why so many observers keep acting shocked that Obama refuses to move to the political center. He is a leftist ideologue in blood and bone, not a chummy moral lout like Clinton was. He will speak soothing platitudes to the public when he must, but his vanity is as great as his ineptitude. He will never admit that he is wrong, or that he must share power. He truly believes that his is the Imperial Presidency; he is outraged that he can be hindered by his political opponents. It is obvious that he does not consider the Legislative branch to be his co-equal in power, but rather a group of lackeys to be ordered about like house-servants. It offends him to be disagreed with -- so sure is he of his essential correctness, of his righteousness, that he conflates political disagreement with treachery. He will “compromise” only when forced to do so, and then only grudgingly.

posted by Monty at 08:47 AM

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