That's what President Obama said when he was signing his "stimulus" bill.
He may live to regret using that phrase.
He meant, I assume, the beginning of the end of the recession. He may wind up meaning the beginning of the end of his Presidency, or worse, the beginning of the end of The United States under a Representative Republican government.
The latter is a real possibility if the people in DC do not get their heads out of places where the sun does not shine and stop destroying liquidity in the market, along with writing checks with their mouths they are unable to cash.
Yesterday we saw a horrifying selloff, undamped by President Obama's signature ceremony. But most of it was over in the first 10 minutes of the day, and nearly none of it had anything to do with the United States per-se.
Rather it was a translation problem from over in Europe, which in turn originated over in, it appears, South Korea when one of their big banks decided not to pay down a callable bond.
None of this, you'd think, would do all that much.
You'd be dead wrong.
We have made a terrible policy mistake in that we have intentionally tied ourselves at the hip to Europe and SE Asia via Ben Bernanke's "currency swaps." As such we are not only tied up through trade, but also through formal links in the monetary marketplace. If they go down, we go down.
Ben's intent is obviously to try to use the "stronger" United States as a means of steadying world markets. But one must ask - where did he get the authority to do that?
See, I thought treaties, such as they were, happened to be vested in the Presidency, with the right of ratification belonging to The Senate. Or did I miss something being changed in the Constitution - again?
This would be twice, it seems - first, Bernanke has arrogated to himself the right to pass revenue bills, and second, he appears to have now arrogated to himself the right to enact treaties by encumbering our monetary system with foreign entanglements and entitlements.
There is a reason that the right to negotiate treaties is vested in the Presidency with a ratification requirement in the Senate. Treaties obligate our nation - our people, in fact - to perform in some fashion. They tie our interests to that of another sovereign state. And mishandled, they can lead to severe, even critical damage to our country - and even, in extreme cases, to war.
Some people may think that $600 billion in swap lines is "no big deal." I disagree. In fact, I'll go so far as to say that this is arguably the biggest risk on the Federal Reserve's balance sheet at the present time - if not in size, then certainly in unpredictability.
Such swaps have the potential to become immediately worthless in that we have loaned out dollars against a foreign currency. If that currency were to implode unexpectedly, much as Iceland's did, we would be sitting on a pile of their worthless paper while they had perfectly good dollars.
To say that this would be "disruptive" would be the understatement of the year. It would also be extraordinarily deflationary.
This morning things have settled down a bit, but the bank "performance" over in Europe tells the story - nobody is really easing off the trigger on this as of yet, although the sort of jumpiness that produced near-meltdown conditions in both Europe and the US are absent - for the time being.
Keep your ear to the ground on this one....
The homeowner "rescue" plan appears to be quite a bit more than the WSJ was originally reporting last night. It appears that the biggest components are in both principal and interest rate changes - the former being something that the market did not expect. In addition it appears there are a bunch of incentives - that may actually help, with the big ones being incentive payments to servicers for modifying loans and keeping them out of default.
A panacea? No. But this does look like a positive step, as opposed to the jokes that were foisted on us during the Bush Administration. I'll have to let this one roll around my head for a while to see if this is more flash than substance.... More later!
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
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