Fed’s volte face sends the dollar tumbling
The euro rocketed to a two-month high of $1.29 and sterling jumped two cents to almost $1.54 after the Fed confessed that the US economy may not recover for five or six years. Far from winding down emergency stimulus, the bank may need a fresh blast of bond purchases or quantitative easing.
Usually the dollar serves as a safe haven whenever the world takes fright, and there was plenty of sobering news from China and other quarters on Thursday. Not this time. The US itself has become the problem.
“The worm is turning,” said David Bloom, currency chief at HSBC. “We’re in a world of rotating sovereign crises. The market seems to become obsessed with one idea at a time, then violently swings towards another. People thought the euro would break-up. Now we’re moving into a new phase because we’re hearing alarm bells of a US double dip.”
Lost in Taxation The IRS’s vast new ObamaCare powers.
If it seems as if the tax code was conceived by graphic artist M.C. Escher, wait until you meet the new and not improved Internal Revenue Service created by ObamaCare. What, you’re not already on a first-name basis with your local IRS agent?
National Taxpayer Advocate Nina Olson, who operates inside the IRS, highlighted the agency’s new mission in her annual report to Congress last week. Look out below. She notes that the IRS is already “greatly taxed”—pun intended?—”by the additional role it is playing in delivering social benefits and programs to the American public,” like tax credits for first-time homebuyers or purchasing electric cars. Yet with ObamaCare, the agency is now responsible for “the most extensive social benefit program the IRS has been asked to implement in recent history.” And without “sufficient funding” it won’t be able to discharge these new duties.
Roads to Ruin: Towns Rip Up the Pavement
SPIRITWOOD, N.D.—A hulking yellow machine inched along Old Highway 10 here recently in a summer scene that seemed as normal as the nearby corn swaying in the breeze. But instead of laying a blanket of steaming blacktop, the machine was grinding the asphalt road into bits.
“When [counties] had lots of money, they paved a lot of the roads and tried to make life easier for the people who lived out here,” said Stutsman County Highway Superintendant Mike Zimmerman, sifting the dusty black rubble through his fingers. “Now, it’s catching up to them.”
Fed Gets More Power, Responsibility
After fending off most challenges to its independence and winning new powers to oversee big financial firms, the Federal Reserve has emerged from a bruising debate on the overhaul of U.S. financial rules as perhaps the pre-eminent regulator in the sector. But that could only bring it added blame if things go wrong again.
Just a few months ago, amid populist anger at the Fed for failing to prevent the financial crisis of 2008 and bailing out Wall Street, Congress was talking of stripping the central bank of its supervisory oversight of banks or forcing it to submit to congressional audit of its interest-rate decisions.
Instead, the new law gives the Fed more power and a better tool box to help prevent financial crises. It will become the primary regulator for large, complex financial firms of all kinds, such as American International Group, the insurer which built a massive derivatives portfolio that regulators didn’t see until it was too late.
National Guard’s “Homeland Response Force” to Patrol Missouri, Nine Other States
Homeland Response Forces are descending upon Missouri and nine other states, where National Guard units will be the face of Federal power in the regions in the event of a terrorist attack or disaster.
The Sedalia Democrat reports that, along with Missouri, the state where the report was written, Massachusetts, New York, Pennsylvania, Georgia, Texas, Utah and California will also host the National Guard Homeland Response Forces in the name of fighting terrorism. A unit will be placed within each of the regions established by FEMA, effectively implementing Federal powers at the state level premptively.
The U.S. Department of Defense announced Monday that Missouri will be one of 10 states to host National Guard Homeland Response Force units to help coordinate federal response to a terrorist attack.
According to the DoD announcement, the move came about following the 2010 Quadrennial Defense Review — a congressionally mandated report put together every four years that highlights changes and challenges in national defense strategy. The 2010 report calls for improved coordination with civilian officials and providing resources for large-scale emergency response.
Other states that have announced participation in the program include Ohio.
Finance bill favors interests of unions, activists
The financial reform bill expected to clear Congress this week is chock-full of provisions that have little to do with the financial crisis but cater to the long-standing agendas of labor unions and other Democratic interest groups.
Principal among them is a measure to make it easier for unions, environmental groups and other activist organizations that hold shares to put their representatives on the boards of directors of every corporation in the United States.
The so-called “proxy access” provision, which activist groups say they will use to try to improve oversight of corporate financial practices, has provoked a backlash from the Business Roundtable, U.S. Chamber of Commerce and other major non-Wall Street business groups.
World at Risk of Folding in on Itself: Deputy Doom
The global economy is at risk of folding in on itself unless policy makers face up to the threat of inflation and exchange rate inflexibility, according to Arun Motianey, director of fixed income strategy at Roubini Global Economics.
A Japan-like outcome is a big risk for the developed world with deflation a big danger, he said.
Recent figures show that the recovery is sputtering in the US while China’s booming growth has slowed down slightly, as Beijing unwinds stimulus measures.
The next crisis, manufactured or just exploited?
Buried in a recent Financial Times article are some cryptic statements by former Clinton official and globalist Rob Shapiro,
“The bottom line here is that Americans don’t believe in President Obama’s leadership,” says Rob Shapiro, another former Clinton official and a supporter of Mr Obama. “He has to find some way between now and November of demonstrating that he is a leader who can command confidence and, short of a 9/11 event or an Oklahoma City bombing, I can’t think of how he could do that.”
Liquor wholesalers cash in on sobriety
Congressmen in both parties are rallying behind alcohol legislation they say is needed to protect our youth from binge drinking and public drunkenness. They call it the CARE Act.
Any time politicians start talking this way, it’s time to ask: “Who’s getting rich off of this regulation?”
The answer in this case: beer, wine and liquor wholesalers.
The history of liquor regulation is a history of regulatory robbery. In 17th century England, “large distillers of alcoholic beverages actually favored an excise on their producers because of its prejudice in favor of efficient production,” according to historian Thomas Slaughter. In 20th century America, one leading prohibitionist was Coca-Cola’s founder.
Afghan success could be worse than failure
Last July, when Petraeus replaced the discredited General Stanley McChrystal as Afghan war commander, he was hailed as an “American hero” by Senator John McCain, as “the most talented officer of his generation” by the New Yorker’s George Packer, and as “the nation’s premier warrior-diplomat” by Karen
DeYoung and Craig Whitlock of the Washington Post – typical of the comments of both Republicans and Democrats, liberals and conservatives, at the time. Petraeus then promised that the United States was in Afghanistan “to win”.
In the year since, the Taliban insurgency has been blunted and “a tipping point has been reached”, says a senior US military official with the International Security Assistance Force in Afghanistan, who could speak only on the condition of anonymity, in keeping with the policy of his organization.
