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2011/09/09: Obama Jobs Plan DOA: Higher Taxes Won’t Fly with Republican House

September 9, 2011 Leave a comment

First of all let’s allow that there are many other factors buffeting the equity markets today. Greece had a failed T-bill auction, which heightens the fears that either over the weekend or some other time very soon it will actually default. There was also the downbeat communication from the ECB at yesterday’s post-rate decision press conference that it had significantly lowered its 2011-2012 growth forecast.

That was much like the recent change in the Fed’s projections. Yet, it was different for the ECB, because it had maintained upbeat expectations and raised interest rates over the earlier part of this year. It’s downside revisions for what was considered one of the few remaining much strong economic centers is that much more telling for the global economy as well as Europe. And in yesterday’s post we discussed why Monsieur Trichet’s claim that at 1.50% the ECB’s base rate was still accommodative was misguided; with political implications for Chancellor Merkel as well as a negative influence for the European economy.

Of course, Mr. Bernanke’s reiteration yesterday of the Fed’s concerns about the near-term economic weakness didn’t help either. Although, we can’t imagine what else he would’ve said without being completely disingenuous and looking foolish. And he revisited a very relevant point that set the stage for Mr. Obama’s jobs program speech yesterday evening: the current economic weakness was not created by faulty monetary policy, it is a creature of the political class, and they’re the ones who have to address it. And it seems less likely than ever that the political process in the United States is going to offer any solutions for the economic mess anytime soon… and that’s the real problem with what President Obama proposed yesterday evening.

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