|"The cat, it bounces no more..."|
[Keep this in mind. We'll get back to it shortly - I promise.]
In May of 2011 I wrote a post called, "Bouncing the Cat" regarding the the President's approval 'Bounce' when he went in (guns blazing, face painted, wearing wicked cool custom Air Jordan Presidential Combat Boots) to personally kill Osama Bin Laden.
I had almost forgotten that the President killed Bin Laden until a short while ago multiple DNC speakers told me that "The President of the United States killed Bin Laden!" and, um, some other MAJOR achievement that I just can't seem to remember. Hmm, what was that OTHER thing?
Begin random sequence of likely 'Presidential Success Stories' possibilities in 3, 2, 1...
- Focused like a laser on the economy?
- Developed a cohesive energy plan for the Nation?
- Lowered gas prices to Bush/Clinton/Bush Era levels?
- Saved Social Security?
- Extended the shelf-life of Medicare?
- Lowered unemployment to Bush Era levels?
- Secured our borders?
- Cut our Deficit in half by the end of his first term?
- Lowered the sea level?
- Made the World a 'Safer Place'?
- Was a better President than Jimmy Carter?
Nope. None of these things seemed to have ever happened during the past four years. So what was the OTHER major accomplishment they talked about during the DNC in Charlotte?
That's funny, nothing springs to mind. Oh well, time to moo-ve on. I could spend the rest of today focusing on the worthwile things the President didn't achieve, but I ONLY have a day to cobble this post together, and list of stuff the man couldn't, or wouldn't do, might take the better part of a week's typing.
Regarding his other major achievement? I'll keep that running as a sub-routine in the back of my mind. Maybe it will come to me, maybe not. We'll see...
However, since it is critical to the post which follows, let's spend a moment together to gain a better understanding of what the "Dead Cat Bounce" is, before proceeding, okay?
Wikipedia: The term "dead cat bounce" is derived from the idea that "even a dead cat will bounce if it falls from a great height".
Soooo, let's look at what the President IS up to these days.
"Bouncing the Cat" is no longer enough to get his approval numbers up. Bin Laden, at last glance, is still dead, and presumably 'back to' Whale Chow at this point in time (it's a 'Circle of Life' thing, I don't have time to go through the details here... Just go with it, okay?)
The President is fully-involved in the "Dribbling the Cat" to increase his chances of reelection.
How do you Dribble a Cat? Great question! Thanks for asking!
First you take advantage of any tool at your disposal in an attempt to bolster your faltering economic and personal reputation. Then you slam them 'really hard' (think basketball) into any flat surface in your general area. With any luck - they bounce.
Being President of the United States has perks - let's take a few moments and check out one of them.
1. You can have friends print worthless dollars in an attempt to 'spur the economy'. In essence, you reach into your left pants pocket and pull out your wallet. You notice that you have no cash so you...
Reach into your right pants pocket, pull out your check book and... Viola!
Problem solved, checks are written, you 'economy' looks brighter and you feel really good about your innovative method for dealing with your 'Economic Malaise'.
This is referred to as Quantitative Easing. Ben Bernanke has done it before - it is not a good thing. The Carter Administration did it also (what an odd coincidence.)
You KNOW it's not a good thing when even CNBC knows it's not a good thing...
CNBC.com, September 14, 2012 -- Fed's 'QE Infinity': Four Things That Could Go Wrong
The Federal Reserve's latest stimulus target is intended to rouse the housing market, generate wealth and drive down unemployment, all of which conceivably could happen.
But it will be the assortment of unintended consequences that all the money printing and price-boosting — even outside of the obvious inflation risk — will have that will keep Fed Chairman Ben Bernanke awake at night.
So while investors were busy Thursday and Friday buying up stocks and metals and selling bonds and the U.S. dollar, financial experts were sizing up what "QE Infinity" also might bring to the economy and marketplace.
1. Moral Hazard, Washington Version
Bernanke has time and again exhorted lawmakers in the nation's capital to get serious about fiscal reform and economic growth.
But with Thursday's announcement that the Fed will engage in quantitative easing for as long as it takes to get the economy rolling again, he may have taken the onus off Washington to put its own house in order.
That's dangerous, considering Congress and the White House need to reach deficit-reduction goals or risk falling off the fiscal cliff of mandated tax increases and spending cuts.
"My sense is that Ben and his colleagues at the Fed do not expect much support from a trade policy that would be more growth-oriented, from fiscal policies that would be more longer-term," former Fed governor Kevin Warsh said on CNBC. "So they've got to be worried about these things, and they are trying to compensate for these other failings."
Result: The dollar [.DXY 78.78 -0.06 (-0.08%) ] will continue to tumble because of Fed policy. In another time, that would give policy makers time to act while conditions improve, but if Washington stays in gridlock there could be no end in sight for U.S. currency weakness.
2. Moral Hazard, Wall Street Version
The concept of moral hazard essentially means the rewarding of bad behavior.
But it also extends to the notion that somebody will be there to support you no matter what. The Fed, with its perpetual QE, seemed to appoint itself as the stock market's nanny for years to come, even though the Standard & Poor's 500 [.SPX 1465.77 5.78 (+0.4%) ] and Dow industrials [.DJIA 13593.37 53.51 (+0.4%) ] are within a few percentage points of historical highs.
"The real unfortunate impact of this latest Fed action is to continue to propagate the idea the economic recovery remains on life support and the U.S. stock market is simply on a sugar high," said Jim Paulsen, the perpetually bullish chief market strategist at Wells Capital Management in Minneapolis.
3. Hurting Confidence
With the latest round of easing, the Fed's balance sheet will soar past $3 trillion and could get to $4 trillion in electronically generated cash before everything is finished.
In doing so, it has created a good news-bad news scenario: The good news is that the Fed is willing to go to extreme measures to pump up the economy; the bad news is that the economy needs it.
4. It May Not Work
All of the economic progress Paulsen cited may be valid, but there's still the reality that $3 trillion in new liquidity — along with more than $800 billion in fiscal stimulus — has generated the worst recovery since the Great Depression.
So is it worth the aforementioned risks if the economy will continue only to creep along, as it usually does after financial crises?
"This is the nuclear option for them. This is a never-ending weapon that is being fired at the middle class," said Fed critic Michael Pento, the founder of Pento Portfolio Strategies and an economist concerned with the effects QE is having on future inflation and on savers who are getting no interest on their deposits.
"If the unemployment rate stays elevated, as I know it will, and inflation eclipses (Bernanke's) 2 percent target, what is his next move? What part of the Fed mandate takes precedence?" he added. "Economic growth comes from more people working and more people becoming productive, and all the Fed can do is destroy our currency's purchasing power."...
"It's a bold move, but we're skeptical that it will have a significant impact," said David M. Darst, managing director and chief investment strategist at Morgan Stanley Smith Barney. "These (measures) are all useful, but they obviously do not alter the longer-term outlook in a meaningful way."
So how MUCH (remember the empty-wallet example above) money is Ben Bernanke looking to pump into the US Economy to get it humming in time for the November election?
40 THOUSAND MILLION DOLLARS (a.k.a.: $40 Billion)
Nah, 40 THOUSAND MILLION DOLLARS per month. For as long as it is deemed necessary to reelect the President. Your tax dollars (you haven't paid yet) at WORK!!!
Will this create long term economic stability? Um, no. As pointed out above by David Darst, "These (measures) are all useful, but they obviously do not alter the longer-term outlook in a meaningful way."
And if these measures do not alter the longer-term outlook, what might we have coming up in the nearer term?
Oh, that Election thing.
Tomorrow, you'll hear more cat dribbling as the President takes on ENERGY.
It'll be a gas.