1. The market is clearly convinced they will make a last minute arrangement but does not seem to understand that almost any last minute compromise will trigger a downgrade of US debt which will at some point in Q4 trigger a sharp sell off. America does not deserve a AAA anyway it should rather be already at a single A but these corrupt rating agencies do not act according to fair common sense rules but serve interests for very mundane reasons. Actually no country deserves a AAA right now even not Germany but that is another story. The market will become nervous again before the weekend and the self-imposed deadline may be extended anyway for a few days next week which will create a bit of volatility but the underlying assumption is correct they will pull off a suboptimal solution sometime next week which will trigger a minor rally.
2. Obama will enter history books as one of the worst Presidents,, not that Mc Cain would have handled things any better. Unfortunately Obama seems to be a snake oil salesman with no own convictions or belief and the government is run by the same advisors (Axelrod,Summers,Emmanuel just to name a few) who are responsible for the mess as they initiated with Clinton most of the banking deregulation which brought the world into this depression. On top the oil interest running Reps under Bush brought the 2 wars unto the US taxpayer which have cost them at least 2 tril if not even 4 tril and they allowed Wallstreet to carry on with their robbing party which is costing again trillions now from many angles.
The problem as Obama was a rookie who has never been a leader of anything and just a Greenhorn Senator with no political buddies to pull strings he is also not skilled i negotiations it seems. A smart guy would have known that the Reps will led him bleed on this issue and would have made his homework instead of playing Jetset. what he does not seem to understand though is that America will be downgraded and lose the AAA because the compromise they will make now will not be enough and the Teaparty morons within the GOP do not seem to understand the consequences of losing the reserve currency status. Probably they think Japan gets along with a AA so it can not be that bad but in any model portfolio USA is weighted with around 50% for stocks and bonds and Japan may account for 2-3%. Imagine the same happening to the USA the SPX would be down by 10-20% and bonds would need to trade at least 100 basis points higher if not even 200 since Japan has almost no foreign investors and USA depends on them.
DC has lost the bit credibility it had left and the majority of the people are disgusted with this corrupt bunch of opportunists who lie once they open their mouths. Democracy has failed in its current form but thats also has to be blamed on the people as democracy is not just about voting and collecting money for candidates. It is rather a daily exercise of getting involved. Furthermore it is about not getting people away with loose standards and lies. I am not sure how people can find time and energy for all this after working hard and taking care of their families. That is why TV brainwashing works so well as people are exhausted and the so called relaxation time is used to manipulate their minds or distract them with sports or gossip.
The Super Congress amounts to an institutionalization of the gang structure that exists informally in the Senate, where a small number of lawmakers write legislation behind closed doors and then announce it to the public? Legislation written by the Super Congress would be extremely difficult for individual members of Congress to stop.
No wonder both liberals and conservatives hate the proposal.
Indeed, the Founding Fathers’ vision of prosperity has been destroyed – and we’ve gone from the “wealth of nations” to the “debt of nations” – at least in part because our political system has been subverted by non-Constitutional committees and entities.
While the Fed’s Washington-based Board of Governors is a federal agency subject to the Freedom of Information Act and other government rules, the New York Fed and other regional banks maintain they are separate institutions, owned by their member banks, and not subject to federal restrictions.
For that reason, the New York Fed alleged in a lawsuit – Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan) – that it was not subject to Federal Freedom of Information Act.
As the long-time Chairman of the House Banking and Currency Committee (Charles McFadden) said on June 10, 1932:
Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies ….