One of the difficulties of writing about financial markets these days is that it's hard to tell where politics ends and real markets begin. Many times it seems as though the stock market is just the tail of the Federal Reserve dog.
Yesterday's market was down big enough to make mainstream news. Wall Street is desperately hoping that Bernanke's helicopter will come to the rescue, perhaps playing Wagner's Ride of the Valkyries, like in the movie, Apocalypse Now. This scenario is playing out as I sketched in an earlier post.
Obama must be nervous about Bernanke being too quick with QE3. There is a tremendous opportunity for him here if Bernanke doesn't blow it. If Obama wants to get reelected, the bloodletting in the job and stock markets needs a chance to look more desperate.
Then -- and only then -- should the money printing orgy of QE3 start. January 2012 would be a good time. By then there could be a broad consensus that Washington "needs to do something"; the Tea Party's objections will be swept away; Main Street businessmen will join hand in hand with Obama's friends at Goldman Sachs and favor unlimited debt expansion, the only thing that America has going for it.
The failures of QE1 and QE2 will be forgotten. They aren't Breaking News anymore. The public and the Media will be focused on this newer Crisis; and if the economy improves a little by Summer 2012, Bernanke/Obama will look like indispensable leaders that the public should be grateful for. As for paying all that debt off in the future, well, you know...
Keynesians have been patient with the world the last 80 years; normally they've been willing to settle for incrementalism and mild inflation. But if Bernanke will just hold off for another couple months, the Keynesians' program can finally dispense with half-measures and reach for the stars.
Yesterday's market was down big enough to make mainstream news. Wall Street is desperately hoping that Bernanke's helicopter will come to the rescue, perhaps playing Wagner's Ride of the Valkyries, like in the movie, Apocalypse Now. This scenario is playing out as I sketched in an earlier post.
Obama must be nervous about Bernanke being too quick with QE3. There is a tremendous opportunity for him here if Bernanke doesn't blow it. If Obama wants to get reelected, the bloodletting in the job and stock markets needs a chance to look more desperate.
Then -- and only then -- should the money printing orgy of QE3 start. January 2012 would be a good time. By then there could be a broad consensus that Washington "needs to do something"; the Tea Party's objections will be swept away; Main Street businessmen will join hand in hand with Obama's friends at Goldman Sachs and favor unlimited debt expansion, the only thing that America has going for it.
The failures of QE1 and QE2 will be forgotten. They aren't Breaking News anymore. The public and the Media will be focused on this newer Crisis; and if the economy improves a little by Summer 2012, Bernanke/Obama will look like indispensable leaders that the public should be grateful for. As for paying all that debt off in the future, well, you know...
Keynesians have been patient with the world the last 80 years; normally they've been willing to settle for incrementalism and mild inflation. But if Bernanke will just hold off for another couple months, the Keynesians' program can finally dispense with half-measures and reach for the stars.
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