The Dow plunged more than 300 points today, closing below 11,000. This is mostly on fears of an impending European bank collapse, but the market was not helped by the Obama jobs plan either. Not because they don’t like it, but because they believe it has zero chance of passing the Republican House. They have undying love for the Republicans down on Wall Street but this relationship is really a suicide pact and some investors don’t care for that part.
Commodities were almost all down with a sharp drop in oil prices, but gold and grain (also canned goods) were up slightly. The USD hit a $1.36 to the Euro, a number not seen for several years, (this is a strong dollar, cheaper imports, weak exports). The ten year Treasury set another new high which means even lower interest rates. This is great news for Obama’s plan to reissue home loans as this sets the home loan rate. It also affects consumer interest rates in general and should boost spending for durable goods such as automobiles. This is all the opposite from what one would expect now that the US credit rating has been downgraded from AAA.
There continues to be widespread calls from the right for public sector unions to agree to across the board pay freezes if not outright pay cuts. In this light we have Obama’s new economic advisor, Alan Krueger, a Princeton labor economist. He’s considered to be liberal and knowledgeable on “real” economics. He’s not known to be devotee to the Ayn Rand/Ronald Reagan/Chicago School of Voo Doo economics that we have been living under the spell of for the last 30 years. To revitalize the economy, you need to raise the wages of lower paid public workers and not cut them as the “pins in the doll” crowd advocates in order to work their economic magic.
Surprisingly the Obama Administration is pushing for an immediate Senate confirmation hearing on Professor Krueger and apparently wants to make a show of it. Recess appointments are impossible as the Senate needs the permission of the House to recess and the Republicans won’t allow it. This is continuing to cripple the Obama administration and the courts where some Federal Districts have a shortage of Judges. This was the issue that John Roll, Arizona's chief federal judge wanted to talk to Congressman Giffords about when he went to meet her that Saturday morning. Federal Judges are allowed body guards from the US Marshal’s Service, he didn’t think he should need one.
Republicans in the Congressional leadership are starting to make noises about cooperation on the jobs bill as their disapproval rating now stands at 85%, a new record. Traditionally you always have polls that show the majority of voters thinking that all of the bums in Congress should be replaced, that is except their own local Representative who gets the nod anyway. Not so this year, a solid majority want to replace all of Congress, even the bum from their district.
The Senate had a working session before and after Obama’s speech yesterday and one thing they passed was a 500 billion rise in the debt ceiling. This got little attention in the media, as the trick baked into the process by Republican Minority leader Mitch McConnell failed to work. You see as part of the deal with Republicans to avoid default, the debt ceiling can only be raised in small chunks. Each time the House and Senate can pass a resolution of disapproval that the President could then veto in order to get the debt limit increased and with much fanfare the Republicans would then attempt to override the veto. All of this intended to create much press fodder to play for the low information voter back home.
Unfortunately for the Republicans, this scheme requires that enough blue dogs to vote with them to pass the resolution of disapproval in the Senate or it simply dies an unnoticed death. Because of the unusually low approval rating of Congress, blue dogs are staying under the porch and the resolution failed 52-45 in a vote held after Obama’s speech. The only crossover vote was from the perennial traitor, DemocRat Ben Nelson of Nebraska. www.prairie2.com