Irresistible force, let me introduce you to immovable object?
Ben Bernanke took a lot of flack from politicians ahead of the central bank’s statement on Wednesday.
But now after the Federal Reserve chairman downgraded the economic outlook and initiated a Treasury-buying program in an attempt to keep longer-term rates down, it’s Congress that is on the hot seat now.
The latest continuing resolution to keep the government funded has failed to pass the Republican-led House.
The 230 to 195 defeat came at the hands of Democrats who joined Tea Party Republicans. Forty-eight Republicans voted against the bill. In the Senate, the measure awaits a battle with Democrats, where U.S. senators on both sides of the aisle have debated how much disaster aid to provide and whether any of it should be paid for with offsetting spending cuts.
When will they have the guts to pass a budget and not just another continuing resolution? NEVER; they are gutless.
The House failed to pass a stopgap continuing resolution to fund the government today, as Democrats mostly held together to reject the bill, which included a cut to a clean vehicles loan guarantee program to offset disaster relief funding.
The reason that the minority Democrats had leverage at all was because House conservatives refused to vote for the stopgap bill, which funds the government for two months in Fiscal Year 2012 at the level of spending agreed to in the debt limit deal. Those 48 conservatives wanted to break the deal and cut spending to a lower level than the agreed-upon amount. And John Boehner couldn’t whip them to his side.
Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) had long-term credit ratings downgraded by Moody’s Investors Service, which said U.S. support has become less likely if lenders get into financial trouble.
Citigroup Inc. (C)’s short-term rating also was cut by Moody’s, which said today “there is an increased possibility that the government might allow a large financial institution to fail, taking the view that contagion could be limited.” Citigroup’s stand-alone credit has improved, Moody’s said in a statement, leading the service to confirm the bank’s long-term rating.
Bank of America, the biggest U.S. lender by assets, had its ratings cut two levels to Baa1 from A2 for long-term senior debt [emphasis added], and to Prime-2 from Prime-1 for short-term debt, Moody’s said. The outlook for long-term senior ratings at the Charlotte, North Carolina-based company remains negative, indicating another cut may be ahead.
The Federal Reserve will replace $400 billion of short-term debt in its portfolio with longer- term Treasuries in an effort to further reduce borrowing costs and counter rising risks of a recession.
The central bank will buy bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less, the Federal Open Market Committee said today in Washington after a two-day meeting.
Yields on 30-year Treasuries fell below 3 percent for the first time since 2009 and U.S. stocks had their biggest drop in a month on the Fed’s plan [emphasis added], dubbed “Operation Twist” after a similar Fed action in 1961.
Obviously the Fed is feeling the love from all of the publicity it has garnered since it began debasing the currency with QE1 and QE2. Many market pundits were expecting QE3 today. As were the markets…
- Treasury yields slid, with the 10 year yielding just 1.871 and the 30-year at 2.999 percent after the Fed announcement. Stocks tumbled, with the Dow down 283 points to 11,124 and the S&P 500 falling 35 or 2.9 percent to 1166. The Nasdaq, lifted by tech buying early, was down hard, losing 52 points or 2 percent to 2538. Of the 10 biggest S&P sectors, financials were the worst, losing 4.9 percent, and tech was the best, down only 1.3 percent.
These idiots in Congress and at the Fed think they can manage the economy. Politicians love claiming credit for strong economies.
You wanted to be in charge? IT’S ALL YOURS. Let’s see whatcha got, boys.