Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
An Update on the End of College… and a New Way to Profit - 16th Sep 21
What Kind of Support and Services Can Your Accountant Provide? Your Main Questions Answered - 16th Sep 21
Consistent performance makes waste a good place to buy stocks - 16th Sep 21
Dow Stock Market Trend Forecasting Neural Nets Pattern Recognition - 15th Sep 21
Eurozone Impact on Gold: The ECB and the Phantom Taper - 15th Sep 21
Fed To Taper into Weakening Economy - 15th Sep 21
Gold Miners: Last of the Summer Wine - 15th Sep 21
How does product development affect a company’s market value? - 15th Sep 21
Types of Investment Property to Become Familiar with - 15th Sep 21
Is This the "Kiss of Death" for the Stocks Bull Market? - 14th Sep 21
Where Are the Stock Market Fireworks? - 14th Sep 21
Play-To-Earn Cryptocurrency Games Gain More and Is Set to Expand - 14th Sep 21
The CashFX TAP Platform - Catering to Bull Investors and Bear Investors Alike - 14th Sep 21
Why every serious investor should be focused on blockchain technology - 13th Sep 21
SPX Base Projection Reached – End of the Line? - 13th Sep 21
There are diverse ways to finance the purchase of a car - 13th Sep 21
6 Tips For Wise Investment - 13th Sep 21 - Mark_Adan
Gold Price Back Below $1,800! - 10th Sep 21
The Inflation/Deflation debate wears on… - 10th Sep 21
Silver Price seen tracking Copper prices higher - 10th Sep 21
The Pitfalls of Not Using a Solicitor for Your Divorce - 10th Sep 21
Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
This Boom-Bust Cycle in US Home Ownership Should Give Home Shoppers Pause - 9th Sep 21
Stock Market September Smackdown Coming Next? - 9th Sep 21 - Monica_Kingsley
Crazy Crypto Markets How to Buy Bitcoin, Litecoin for Half Market Price and Sell for TRIPLE! - 8th Sep 21
Sun Sea and Sand UK Holidays 2021, Scarborough in VR 180 3D! - 8th Sep 21
Bitcoin BTC Price Detailed Trend Forecast Into End 2021 - 8th Sep 21
Hyper Growth Stocks - This billionaire is now using one of our top strategies - 8th Sep 21
6 common trading mistakes to avoid at all costs - 8th Sep 21
US Dollar Upswing, S&P 500 and Nasdaq Outlook - 7th Sep 21
Dovish Assassins of the USD Index - 7th Sep 21
Weak August Payrolls: Why We Should Care - 7th Sep 21
A Mixed Stock Market - Still - 6th Sep 21
Energy Metals Build Momentum; Silver & Platinum May Follow - 6th Sep 21
What‘s Not to Love About Crypto Market Fireworks - 6th Sep 21
Surging US Home Prices and Gold – What’s the Link? - 6th Sep 21
S&P 500 Rallies To New All-Time Highs – Are The Markets About To Break Higher? - 5th Sep 21
Bond Conundrum - Boom or Bust for Gold? - 5th Sep 21
How the sale of a Sting CD sparked an Entire Online Industry - 5th Sep 21
Three Years of Fresh Thinking With Scott Dylan and Dave Antrobus - 5th Sep 21
Bitcoin Bear Market Trend Forecast 2021 and Model Crypto Portfolio Buying Levels - 4th Sep 21
The Most Actively Traded Companies on the Toronto Stock Exchange - 4th Sep 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

QE3 Delivers Fresh Ammo for Both Romney and Obama

ElectionOracle / US Presidential Election 2012 Sep 20, 2012 - 06:34 AM GMT

By: Money_Morning

ElectionOracle

Best Financial Markets Analysis ArticleDavid Zeiler writes: U.S. Federal Reserve Chairman Ben Bernanke never intended his latest stimulus program, QE3, to become an issue in the 2012 presidential election, but he had to know what would happen.

"We have tried very, very hard, and I think we've been successful...to be nonpartisan and apolitical," Bernanke said at a news conference Thursday after the official Fed announcement of QE3. "We make our decisions based entirely on the state of the economy....So we just don't take those [political] factors into account. And we think that's the best way to maintain our independence and maintain the trust of the public."


In case you missed it, the Fed's third round of quantitative easing entails the purchase of $40 billion of mortgage-backed securities each month until unemployment shows a marked improvement.

In other words, for as long as it takes.

But with QE3 arriving less than 60 days before a bitterly contested presidential election, the Fed move was bound to get caught up in the campaign.

Both sides reacted immediately, with Republicans criticizing QE3 as unnecessary while Democrats applauded.

A few Republicans even accused Bernanke of timing QE3 intentionally to boost President Obama's re-election chances.

For the record, Bernanke is himself a Republican, appointed chairman of the Federal Reserve by President George W. Bush in 2006 and re-appointed by President Obama in 2010.

But with the Fed becoming a GOP bogeyman in recent years (thanks largely to the attacks from Rep. Ron Paul, R-TX), QE3 was bound to become weaponized in this year's increasingly acrimonious campaign.

Don't be fooled when each political party throws out the following QE3-fueled lines to get your vote.

How Democrats Will Use QE3
Leading Democrats quickly converted GOP criticism of QE3 into political fodder.

"It is unfortunate that Republicansalready have expressed disappointment in this action and are clearly upset that they were unable to intimidate the Fed into putting partisan politics ahead of national economic interests," said House Financial Services Committee ranking member
Rep. Barney Frank, D-MA.

But of most utility to the White House is the QE3 impact on Wall Street. Like its QE predecessors, QE3 should fatten up stock prices.

Thursday's announcement helped the Dow Jones rise to a 287-point gain for the week. The 2.2% pop brought the index to within 600 points of its all-time high.

Previous doses of QE have contributed to the doubling of most market indicators since the March 2009 lows, hit just six weeks after President Obama was sworn in. QE1 gave the Dow a 45% boost and QE2 added about 24% more.

With most key economic indicators slumping - namely growth and unemployment -- the Democrats are only too happy to point to Wall Street's stellar performance over the past three years.

"Did the increase in the stock market before this, and now with this incredible boost, does that help Obama? Of course it does, because it helps the argument are you better off than you were four years ago when Barack Obama took office," Ed Rendell, the former Democratic governor of Pennsylvania, said Friday on CNBC's The Kudlow Report.

What could trip up the Democrats here, and President Obama in particular, is that they have spent the past three years blaming Wall Street for the Great Recession and making much ado about the unfair amount of wealth held by "millionaires and billionaires."

QE3 is doing far more for Wall Street than the general economy. And worse, the biggest benefits of QE3 will end up in the hands of the Wall Street's greatest villains - big banks like JPMorgan Chase (NYSE: JPM) and Goldman Sachs Group (NYSE: GS) -- while doing little to create jobs.

How Republicans Will Use QE3
The GOP will ignore stock prices and say that the need for QE3 in fact proves President Obama's economic policies have failed.

Romney wasted no time adopting this line of attack.

"What [Fed Chairman Ben] Bernanke's doing is saying that what the president's saying is wrong," Romney said on ABC's Good Morning America program Thursday. "The president's saying the economy's making progress, coming back. Bernanke's saying, "No, it's not. I've got to print more money.'"

Other GOP leaders also chimed in. Rep. Kevin McCarthy, R-CA, told The Wall Street Journal that QE3 shows the president's policies have "failed miserably." House Financial Services Committee Chairman Spencer Bachus, R-AL, called the Fed move a "scathing indictment" of President Obama's policies.

James Pethokoukis of the conservative think tank American Enterprise Institute offered the most colorful take on the "Obama has failed" storyline.

"Remember the Greenspan put? This is the Bernanke short," Pethokoukis said on The Kudlow Report. "He is shorting this Obamanomics. He's selling it. He's saying we're not on the right path, we can't stay the course, I have to do some kind of radical experimental monetary policy do something, anything, to boost this economy."

And that was just in the first two days after the QE3 announcement. Expect TV attack ads to follow shortly.

Ironically, both Romney and President Obama should be rooting for QE3 to work, because whoever wins in November will be saddled with an economy so weak almost any disruption could tip it into recession. And that could affect future elections.

"[If Romney wins] he is really going to have to fix the economy, he's not going to walk into any kind of booming recovery, the way team Obama seems to think," a Republican operative told the Washington Post. "If it's Obama and the economy continues in the [toilet] for most of his second term, it has the potential to do lasting damage to his party in the 2014 midterm and the 2016 presidential with a comparatively weak Democratic bench."

Source :http://moneymorning.com/2012/09/19/qe3-delivers-fresh-ammo-for-both-romney-and-obama/

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in