Wednesday, September 18, 2013

Last Call For The No Taper Caper

Helicopter Ben made everybody happy today when the Fed decided that with, you know, a government shutdown coming in a couple of weeks that now may not be the best time to roll back bond purchases.  The immediate short-term result?  A record high for the Dow Jones and S&P 500.

Fed chair Ben Bernanke added fuel to Wednesday's stock rally during his press conference.

Bernanke laid out plans to maintain the central bank's "highly accommodative monetary policy" for the foreseeable future, even if the Fed eventually chooses to taper.

Bond yields, which have been rising lately, slid back as well as investors bought more bonds. The 10-year Treasury yield fell to 2.71% from 2.87% earlier in the day.

The Fed's moves also pushed down the dollar and drove up commodities. Gold prices spiked more than 4% following the announcement. Oil prices rose more than 2%.

Whoever does get the keys to Helicopter Ben's ride will be dropping billions in bond cash each month for a long, long time.   Our economy has become more and more dependent on it.  Stimulus by any means necessary when Republicans in Congress wants to end government assistance anyway...well, to everyone but the one percent.

More Shutdown Countdown Nonsense

Orange Julius is now being completely controlled by the Tea Party wing, and the move to shut down the government is moving forward.

In the weekly conference meeting Wednesday morning, GOP leaders intend to propose a continuing resolution to keep the federal funded beyond Sept. 30 but strip out funding for Obamacare. The move was first reported by the conservative National Review.

Senior Republicans know the strategy is a nonstarter in the Democratic-led Senate, and for months have wanted to avoid a shutdown confrontation over Obamacare. The latest move is a tacit admission from leaders that they have, for the moment at least, been defeated by conservatives who are eager to eliminate the health care law at all costs. When the House bill fails in the Senate, as it is certain to do, House GOP leaders would then try to pass a "clean" continuing resolution that funds the government but leaves Obamacare alone. The prospects of a clean stopgap bill winning over most House Republicans are also remote.

"No decisions have been made, or will be made, until House Republican Members meet and talk tomorrow," said House Speaker John Boehner's (R-OH) spokesman Michael Steel.

There's now the very real chance that Orange Julius will have to face the prospect of taking 40-50 Republicans and the vast majority of House Democrats in order to pass a budget bill that favors the Democrats, or shut down the government because the Tea Party won't be able to get the votes to defund Obamacare in the House.

And the Tea Party has made it clear such a bill going around them will cost Boehner his gavel.

The long-predicted schism in the House GOP is maybe only days away from erupting.  Stay tuned, folks.  This might be the big one.

Hungering For More GOP Pain

House Republicans lost a bill to cut $20 billion over 10 years from SNAP.  Their solution?  A bill to cut $40 billion over 10 years from SNAP.

House Republicans on Monday introduced a food stamp reform bill that they say will cut $40 billion from the program over 10 years.

The move sets up a dramatic debate and vote on the bill on Thursday, with the fate of the stalled farm bill likely hanging in the balance.

The House Rules Committee announced a meeting on Wednesday on HR 3102.

The bill contains twice as much in cuts as the House Agriculture Committee originally sought for the program and it was devised by a task force led by House Majority Leader Eric Cantor (R-Va.) after an integrated farm bill failed on the House floor this summer.

The House later passed a bill just dealing with the rest of the farm bill, including crop subsidies and crop insurance, before the August recess.

Rural Republicans appeared torn on the new bill, which has 10 times the level of cuts to the food stamp program as the Senate-passed farm bill. The difference could make it impossible to complete a planned House-Senate farm bill conference.

Which, if you've been paying attention, is the point.  Republicans are sick and tired of seeing Obama win, and this time with Mitch McConnell facing a real Tea Party challenge and Orange Julius facing revolt, the wheels could come off the government as soon as October 1.

The question then is will the GOP be forced back to reality and cave before the debt ceiling blows up two or three weeks later.  If that doesn't happen, then serious chaos ensues.  It's conceivable too that a shutdown within weeks of the debt ceiling deadline may be the leverage the GOP thinks it needs to get major concessions from the White House and Senate Dems on everything.

We'll see.


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