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Who’s to Blame?
I think the President has done an excellent job of scaring the crap out of everyone over the sequester. The administration has used all of the key department heads to get on national TV and warn the country that some very terrible things are about to happen. Liberal Senators and Congressman have all chimed in with the fear talk. But today we went totally over the top.
Maxine Waters has said that the sequester could cost as many as 170,000,000 jobs. That would be some feat Maxine, there are only 150m workers in the country. I doubt the sequester will put them all out of work, much less the extra 20m.
The CBO did a quick review of the sequester today. The cuts for the balance of the fiscal year come to $42b; an amount that is equivalent to 45 points on Apple’s market capitalization. I have trouble believing that the country is going to fall off the cliff with a 2% cut in government spending.
The sequester was designed to be a meat axe. The assumption by most observers was that it was would be such a dumb thing to implement, that both sides would come up with a more workable alternative. This sets up the worst-case scenario where a relatively small reduction in spending results in headline problems. While Ms Water’s projections will not be realized, there could be flight delays, disruptions in the food supply and other visible issues.
If some of the scare talk about the sequester becomes a reality, there is going to be hell to pay. The question is, Who is going to get blamed?
Obama won the election. Mitt got 47% of the votes, Obama got 51%. There is no mandate behind that result. Of those over 18, only 58% voted. The 120 million who did not vote may not have cared about the election, but their voices might be heard if the grocery store runs out of meat. I would not be surprised if some of the 30 million teenagers get involved.
The answer to the question of who gets blamed is, “All of them”. I see a silver lining in that outcome. As stupid as the sequester is, I hope it causes all sorts of distortions. I want Obama to take every step possible to make it as painful as possible. (I think the President will do just that.) His motivation will be to get public support to swing further from the Republicans. Obama might end up with a public reaction that he can’t contain. Not much of a legacy.
Notes:
- S&P plays into this story. When it downgraded the USA it made the reasoning behind the decision clear. It was not a reflection of the inherent strength of the USA, the reason was the inability of D.C. to do anything but go from month-to-month year-to-year with no budgets and no plans. On that basis, I thought the downgrade was justified. Based on what is about to unfold, another notch downward would also be justified.
- The Sequester may prove to be a pain in the ass that causes more problems than anticipated. It's still a side show to the Main Event. There are now 26 days before the government is forced to shut down. Either a budget is passed by Congress or a Continuing Resolution is required. As of today, I see zero possibility of a fix on on the CR.
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“He who controls the past controls the future. He who controls the present controls the past.”
? George Orwell, 1984
There is no longer any attempt to govern. Statesmanship is long since dead. Increasingly, Congress would prefer to abdicate their responsibility to legislate, and only take a stand when it is necessary to put on a show. Should someone of character actually run for office the lapdog media does everything in their power to assassinate said character.
There is no easy road back from here. Perhaps that is what these loons mean with their slogan 'forward'. We will go forward into the darkness... What we will find there is open to speculation. But it is the only way back into the light.
Hmmm... That sounds a tad bit apocalyptic doesn't it? Guess it has been a long day...
In the courtyard of the Moon
an old man holds a broom
walking slowly backward
sweeping evey step away...
Are we navigating blind?
Will heaven send a sign?
moving farther out to sea
where the stars have always shined....
"Coronation Fair" -Daisy House
Relax, Lordflin. Things tend to turn on a dime.
Only when they go from bad to worse...
How can any ratings agency look at these games in the US and not drop our debt to junk status?
Who elects these morons? Oh yeah that would be us.
That would be DIEBOLD. Wake up.
There would be 170 million jobs to lose if it weren't for the Cloward-Piven Presidency.
We are being asked to pay the mob protection money to ensure nothing bad happens to us.
Yeah, but if the country is going to fall off the cliff anyway, regardless of what the Congress does, the sequester fight makes it very easy for Obama to blame the Republicans and take back the House. I think the Fed told Obama about something really bad coming in 2014. Something like a wave of bank failures crossing the pond. Obama is simply exploiting the opportunity to make big political gains.
I have to agree since...
1. It was his idea (sequester) in the first place.
2. He said a couple of months ago that he would veto any bill that eliminated the automatic cuts.
Liar, fraud, plain and simple. He doesn't care about the country, only about how he can maintain the upper political hand...
Maxine Waters makes Jesse Jackson Jr. look like a competent Congressman.
She voted against NDAA.
Maybe she's predicting 170 million blow jobs will be lost? Or she has a decimal problem.
She voted for TARP, twice. Then again her husband was a former director of OneUnited Bank who needed 12 million of that sweet sweet TARP money.
This is what we pay for? No wait... This is what we pay GOOD MONEY for??
Maxine and her numbers would look good wrapped around a watermelon and shoved up her ass.
I ain't flying and I ain't buying so who gives a fuck about flight and supply delays. If pussymerica cannot deal with gooberment losing two days worth of "production" (hahahaha, I said goverment and production in the same sentence) Let me clarify, name one "Good" that goverment produces, government produces "Bads" not "Goods" so having the government do without for 2.2 days worth of borrowed cheese that they in turn beat us over the head with, well, I say, let er rip tater chip.
I'm going to sign up for more of these posts.
Great insight, thanks Bruce.
Except Maxine is correct:
The 150m workers are working 2-3 jobs, so what she means is, they will all lose 1-2 of their 2-3 jobs.
Bruce is a 1%er; the 1% forget that the 99% have multiple jobs.
Maxine is not even close to correct. Neither are you. And I wish I was a 1%er.....
Man...you want to be a 1% er. Sad.
cue in "The thrill is gone...the thrill is gone baybee..."
I prefer to live.
Whatever.
To al of the Congresscritters that left today for a long weekend....FUCK YOU, YOU'RE FIRED.
Personally, I wish they'd never come back. They do far more harm than good. We don't need them. They need us.
The whole government should go on vacation, permanently. We would manage very nicely.
It's my belief that government at the federal, state, and local levels is so incredibly inefficient and bloated, in terms of resources devoured and numbers of personnel employed, that it actually decreases real economic output in the U.S. by an honest minimum of 15% of GDP.
The result from cutting 20% or even 30% of federal, state and local unit of government employees would be an immediate and serious hit to the economy, but this would be limited in duration, after which time economic output would accelerate at a robust pace, and soon more than compensate for the temporary drag created by culling significant government fat.
I don't believe it's possible for a person to be either a) intelligent or b) sincere if they have any factual knowledge as to what government at all levels actually accomplishes (or doesn't accomplish, more accurately), how productive government employees are (or are not, more accurately), or how massively government agencies interfere with and act as a drag on the private sector, if they claim I'm more wrong than right in my statements.
Stop perpetuating the myth that cutting government spending harms the economy.
GDP = C+I+G+X. This is an identity in which GDP is fixed (the GDP formula expresses how production is DIVIDED, not how it arises!). Reducing G means that some combination of C, I and/or X must increase.
If you want to increase the size of GDP, the only way to do that is to increase production through the deployment of savings into investment in capital goods.
Bravo!
Time for Government to go on Biggest Loser and get out of the wagon and help us push this thing.
:D
When the two children end up on drugs and strung-out, you can ask them when they get to rehab, "Gee. That must have been expensive. Where did you get the money?"
Nine times out of ten, "My parents."
Who is at fault? One may say the parents handing out money. In this case, the Fed. Or you can say the kids because they are the ones doing the doping. To me, it almost always comes back to the parents. They can show "tough love" and cut them off or they can become enablers.
The Fed has been the enabler here. I lay blame squarely at the feet of the Federal Reserve for enabling the kick the can attitude and not showing tough love to the younguns in Congress.
:D
And by the way, did Maxine have some work done? Looks...good.
:/
she is 75 years old, a regular joan rivers i tell ya
Or Phyllis Diller, who had, "so many face lifts, my mouth used to be my belly-button."
...except Phyllis Diller had talent
"Sorry Ma'm, can't do no further lifting, unless you want to shave your goatee in the morning"
My sister who is married to a black gentleman says, "black don't crack"...
Looks like a Lateral Temporal Lift, quite common and kinda cheapish...well for someone on the taxpayer payroll.
Why, Chump, I had no idea...
We'll have to talk.
Ha!
: )
lol
about the eur, it's supported above the 1.30 handle since Jan, you sure you want to short this? the only Fed weapon for Eurozone confidence is the massive EUR swap it does to fund the ECB directly, which is a powerful tool at underwriting the EUR/stocks. The AUD is the trade (short) if fiscal issues go bananas in Australia.
The FX market is looking like leaning to reality more than stocks. Which is a good thing.
As evidenced by Dr. Bernanke's appearance the other day, he's got other problems. Namely that the wealth-effect self-propigating fantasy failed, even as the Congress did absolutely nothing. His unkempt beard leads me to believe that he is on to Plan B.
Plan B may be to keep the DXY steady by relative devaluation of both the Pound and the Euro, which would play into Mark Carney's hand quite well. The Euro would tank but the Pound would tankerer. That leaves a mongo appreciation of USDCHF to try to carry some balance in commodity prices. The Aussie and the Loonie could also help in that arena, which is why I wouldn't short the Aussie right now.
Either way for the FED, Plan B ain't gonna work. He's in a world of trouble and he knows it but he is about to run out of runway and has no choice but to bring on drastic measures. I know, "drastic," right? I suppose we'll see what that means.
Maybe it means he'll have to watch the Euro hang ten while he jawbones the Congress. I think it does. Everyone knows Cable is sunk, prolly to ~1.42 but GBP is not my game; been burned too many times. I'll wait for a nice Jack 'n' Jill bottom before I touch that one.
But technically speaking, the Euro is rolling over hard here and has been since yesterday morning, Asian time. It is currently trading strongly below the Weekly Pivot, and it is about to break through the major harmonic support level at 1.302. Once it pierces that line, there could be a free-fall, first to the first Weekly support level at 1.296. That's the new battle-ground. If that fails, well, things are going to change around here pretty quick.
It is definitely worth a short to the first support but I don't see much holding it back until the next major Fibo at ~1.28.
:D
On the EUR/GBP trade, any deep sell off of the EUR will benefit the gilts and UK in general as flows move in, Cameron will want this too offset the Canadian bubble maker. So yes a EUR sell off would be a tasty trade, problem is, The Fed is keeping the EUR bid via the ECB (4billion in swaps a month). It's tight and who will blink first. Generally a major risk off will send the EUR slamming into your profit ranges. Major meaning US equity markets shredding 2%. So far...
Meantime...The trade is Asia/South America note: China/Taiwan/South Korea all hard landings, India hard landing/crash/bonds done, South America more so Argentina hard landing/crash/default/inflation again.
As for the DXY spread, it's all about the game of Asia/South America buying and the West selling. Which is Asia's/Americas inflation hedge, has been for decades. I think the attention will shift from Europe to Asia and South America in 2013.
Argentina could blow: http://online.wsj.com/article/BT-CO-20130228-717927.html
"As for the DXY spread, it's all about the game of Asia/South America buying and the West selling. "
So that's why they're crashing the SA currencies? I'll have to study your post for a week to get it all straight. :0 Not that my head ain't spinning already.
Long dollar/franc looks like a sure thing. Check it out.
Thanks, Chump!
:D
Looks like the Euro to 1.28, barring some "miracle."