DRAT! I could have written this post earlier today with a long analysis and then just posted the highly predictable article below to it. Now I’m in rush so I’ll just paste in part of the article that I KNEW we’d see today or I KNEW we’d see if the Federal Reserve took any new measures before election day to help the economy.
And I bet many TMV readers who are independent voters as yours truly, expected to see it too. And the quotes were taken yesterday before the Fed’s action today.
The increasing likelihood of a new Federal Reserve effort to boost the economy has some Republicans questioning whether the central bank is trying to help President Obama win reelection.
Congressional Republicans, wary of the Fed’s recent efforts to stimulate the recovery, said Wednesday that the its political independence could be jeopardized if officials embark on another round of stimulus so close to Election Day.
“It really is interesting that it is happening right now before an election,” said Rep. Raul Labrador (R-Idaho). “It is going to sow some growth in the economy, and the Obama administration is going to claim credit.”
“I am shocked, just shocked, that politics are going on in this city!” Rep. Tom McClintock (R-Calif.) said sarcastically.
On Thursday, the Fed’s policy-setting committee will announce its latest decisions regarding the nation’s monetary policy, followed by a press conference by Fed Chairman Ben Bernanke.
With the economic recovery continuing to lag, financial analysts believe the Fed is on the cusp of launching another massive effort to stimulate the economy. Many expect the Fed to unveil a third round of massive bond purchases known as “quantitative easing.”
By buying up billions of dollars worth of bonds, the Fed believes it can spur more economic activity by lowering borrowing costs, despite interest rates that are already near zero. Roughly two-thirds of economists surveyed by Bloomberg believe the Fed will announce “QE3” on Thursday.
Republicans have harshly criticized similar Fed efforts in the past. Last year, GOP leaders in Congress sent a letter to the central bank urging it to stay on the sidelines, warning its policy choices were encouraging damaging inflation.
But Fed officials have held their ground, refusing to rule out further attempts to tackle unemployment and insisting they do not take politics into consideration when weighing their decisions.
The bottom line is this: people are suffering and these guys are suggesting the people suffering need to suffer more because it might make people think Obama improved their situation:
Help the economy = Help election Obama.
Wait: Isn’t this the same conclusion some Republican members of Congress made before Obama even set his fanny down on his chair in the Oval Office?
The Fed’s action did spark a “bump”:
BLUE chips surged more than 200 points after the Federal Reserve announced a much-anticipated plan to aid the US economy. The news sparked a similar rally in gold while rattling currency and fixed-income markets.
The Dow Jones Industrial Average gained 206.51 points, or 1.55 per cent, to 13,539.86. The blue chips’ rally picked up steam through the session, as Federal Reserve Chairman Ben Bernanke detailed the central bank’s plans geared to stimulate the US economy.
The Standard & Poor’s 500-stock index gained 23.43 points, or 1.63 per cent, to 1459.99, and the Nasdaq Composite gained 41.52 points, or 1.33 per cent, to 3155.83. Shares of materials and financial companies rallied. All three major indexes reached multiyear highs.
“The doom-and-gloomers are probably not that happy about this,” said Michael Strauss, chief investment strategist of Commonfund, which has more than $US25 billion under management. “Will it push the economy to grow 4 per cent? No. But it does provide more ammunition, and that’s better than what the market was anticipating.”
The central bank will buy $US40bn of mortgage-backed securities a month, and is willing to take more action if the labour market doesn’t improve, its policy-setting committee said. The Fed also extended an existing stimulus effort known as Operation Twist, under which the central bank has been selling short-term bonds and using the proceeds to buy longer-term bonds in an effort to bring down long-term rates. Officials also said they expect to keep short-term interest rates near zero until at least mid-2015, past the previous estimate of late 2014.
“Hats off to Mr Bernanke today. He had to say something that would give the markets confidence, and he definitely did that,” said J.J. Kinahan, chief derivatives strategist for TD Ameritrade.
The Fed’s statement extended a rally that had started last week with the announcement of stimulus from the European Central Bank. The Dow industrials are up 3.8 per cent since that announcement. The bond-buying decision also whipsawed bond, commodity and foreign-exchange markets.
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.