Several jigsaw pieces to assemble this week, but they fit neatly into pictures of leadership from the Fed all the way to Pope Francis.
First the taper-taper caper. Don’t misunderstand: The Fed’s un-taper is a stay of execution, not a commutation. One day the governor will say, “Get on with the show,” and the lights in the Big House will dim. Only an economic relapse will preserve QE.
For those mewling about Fed inconsistency and bad communication and how confusing it all is, I’m sorry. If you want certainty, pick a different line of work.
I admire Fed Chairman Ben Bernanke’s honesty: “… The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy.”
Translation: Our taper jawbone jacked rates a lot farther than we expected, here and overseas, and we’re going to let all of that settle down and see what new data say.
Next to that puzzle piece fits an amoeba-shaped thingy. Larry Summers put himself out of his misery, triggering a stock rally — not because an alternate Fed chair would provide easier money, but because we won’t have to watch Congress hang Summers.
Everybody saw it coming long before the president indicated that Summers was his pick by coming to his defense in June. Everybody except the president.
Last weekend, Sen. Jon Tester, the centrist Montana Democrat who sits on the Senate Banking Committee, revealed his intention to vote “no” on Summers, and said the White House hadn’t asked him for his views until Friday.
The next piece requires a hammer to put in place. The White House is now scrambling to vet the nomination of Janet Yellen, whose quiet dignity through the Summers fiasco should be admired by all.
The White House has treated Yellen as the fifth choice in a field of two. It has also mistaken the position of Fed chairman for Supreme Court-style political football. We’ve nearly wrecked that joint, but the Fed still has great internal integrity, despite fierce policy disagreements.
Get on with Yellen.
Now slip in the piece with the erased red line, and we have half of the overall puzzle: a president lost in professorial self-enrapture, the rest of us lesser beings.
The other half of the puzzle-picture comes together quickly, the doppelganger of the first found in congressional Republicans. For destructive self-congratulation, they and the White House are each other.
Defund Obamacare? What for? If you are right and the whole thing collapses of its own weight, then disassembly does not require your attention. There is no going back: The prior “system” had long-since failed.
Since Obamacare will not be defunded, and if it works in a process of evolution, you Teapots are going to look worse than usual. Quite the feat.
Same for the budget. Obama is not going to reform entitlements and is not going to allow any Bowles-Simpson-style tax and budget reform. We’re going to waste the next three years and that’s how it is.
That’s the Democrats’ problem. You Republicans have a heaven-sent opportunity as the minority party to look responsible. Zounds — even act responsibly! Make your points, dig in on the sequester line, stop this debt-limit brinkmanship, and offer something useful to the country.
Census data released this week confirm the terrible flaw in the economy and the fatal flaw in Obamacare. Median household income adjusted for inflation is the same as it was in 1988. Much of the tax burden of those households properly has been shifted to higher-earning ones, but the cost of health care in real dollars has doubled. Ideas, Teapots? Restore house calls by Marcus Welby, M.D.?
Religion is dangerous, and I fear to trespass. However, slide this last piece between the halves of the puzzle above. Yesterday Pope Francis said that his church has become “obsessed” with abortion, gay marriage and contraception. “The dogmatic and moral teachings of the church are not all equivalent … a disjointed multitude of doctrines to be imposed insistently. We have to find a new balance.”
He did not change official church doctrine, nor become entangled its bureaucracy. Nor did he fear wisdom. When at a dead end, redefine priorities and move on.
Thus endeth the lesson.
Lou Barnes is a mortgage broker based in Boulder, Colo. He can be reached at lbarnes@pmglending.com.
