Barack Obama seem prepared to chage everything about everything.
Just today he set out to reform the tax code at the IRS. Since Tim Geithner is busy and was never good at taxes anyway, Paul Volker will head a commission.
But Geithner added uncertainty of his own today saying it was OK by him if China replaced the dollar with something else as a reserve currency. When the dollar pitched downward, Geithner had to ‘clarify’ his first statement to get markets going again.
But it is just part of an ever swirling vortex of change, tinkering and tampering that makes businesses and investors shudder.
We’ll provide health care to all, we’ll reform education, we’ll take care of climate change, we’ll do away with gas and oil and coal, we’ll….well it looks like we’ll do everything. We’ll use embrionic stem cells to cure Alzheimer’s and Parkinson’s and then we’ll cure cancer.
And what will it all cost? Who cares, really. It isn’t our money……
Well, people do care like China, the nation that holds most of our debt….
Just today FedEx said it might back off on billions of dollars of aircraft sales planned to go to Boeing. The reason? Card check. FedEx is worried that fast unionization of its work force will dramatically change its bottom line.
The Dow was way up today and then way down. Why? In one word? Uncertainty.
Today on the Dow: uncertainty
“A weaker interest or wider spread in a Treasury deal today could certainly cause some angst,” said Warren Koontz, chief investment officer for large-company value stocks at Loomis Sayles & Co., which manages $106 billion in Boston. “As anxious as the market is after the run we’ve had here, it gives people an excuse to step back.”
Late on Wednesday the Associated press said this about the stock market today: “Trading was extremely erratic….Analysts said weak demand during an auction of government debt stirred up worries about how easily Washington will be able to raise money to fund its economic rescue program. The fear in the market is that the government might not be able to easily raise the hundreds of billions of dollars it needs.”
Anxious, cautious, uncertain, confidence: they are all part of the stew that’s boiling; which might be good and might not.
The economic recession gave us uncertainty enough. Now the president has himself compounded the problem.
If the United States was an aircrft, Obama has already touched every dial and lever in the cockpit. And what does that mean? Only one thing for sure: Uncertainty. And a lack of confidence. That’s why businesses are not yet rehiring and people are holding on to their money.
First Obama said we were in a crisis and he was all gloom and doom. Then he spoke of confidence and Biden even mentioned the “Obama factor” when the markets went up. Last night he exhibited neither confidence nor gloom; but instead a kind of boredom.
The president is overexposed and not helping. This is a time to lower uncertainty and emphasize confidence: and do the hard work necessary to move the nation forward. Enough of the media events, press conferences and fake bipartisanship. Get to work already.
Primum non nocere
The uncertainty that the president has mentioned himself, just a little, is what militay people call the “unknown unknowns.” While we have so much economic uncertainty compounded by self imposed uncertainty, we should have some money saved for a rainy day like an new war on terror, a troop deployment to the border with Mexico or some other really far out scenario…..Putin and Hu Jintao like American uncertainty and they aren’t the only ones…..We live in an uncertain world and we have added to the uncertainty since January….
FedEx Corp is threatening to cancel the purchase of billions of dollars worth of new Boeing Co cargo planes if Congress passes a law that would make it easier for unions to organize at the package-delivery company, the Wall Street Journal said.
FedEx may cancel plans to buy as many as 30 new Boeing planes should Congress pass a bill that would remove truck drivers, couriers and other employees at FedEx’s Express unit from the jurisdiction of the federal Railway Labor Act of 1926, the paper cited the company spokesman as saying.
In January, FedEx said its express unit exercised options to buy 15 more Boeing 777 freighters, worth $3.75 billion at list prices.
However, the company deferred delivery of some of the planes as the U.S. economy faces a bleak outlook.
FedEx’s actions raise the stakes in an increasingly bitter battle involving chief rival, United Parcel Service Inc, and the Teamsters union, which has been trying for years to organize at FedEx, the Journal said.
FedEx and Boeing could not be immediately reached for comment by Reuters.
Treasury Secretary Timothy Geithner sent the dollar tumbling with comments about China’s ideas for overhauling the global monetary system, only to drive it back up by affirming that it should remain the world’s reserve currency.
Geithner was initially asked at a Council on Foreign Relations event in New York about proposals from People’s Bank of China Governor Zhou Xiaochuan for a new international reserve currency. He said “as I understand his proposal, it’s a proposal designed to increase the use of the IMF’s special drawing rights. And we’re actually quite open to that.”
The dollar slid as much as 1.3 percent against the euro within 10 minutes of news accounts of Geithner’s remarks. The U.S. currency was down 0.6 percent at $1.3553 as of 12:31 p.m. in New York.
Roger Altman, who worked with Geithner as deputy Treasury secretary in the Clinton administration, later asked Geithner whether he wanted to “clarify” his remarks.
“I’d like to ask one final question, in effect on behalf of the market,” said Altman, founder of Evercore Partners Inc. “Let me ask the question this way. Do you see any change over the foreseeable future in the basic role of the dollar as the world’s key reserve currency?”
Geithner responded by saying that “I think the dollar remains the world’s dominant reserve currency.” In an interview with CNBC broadcast after the event, the Treasury chief said that a “strong dollar” is in “America’s interest.”
In his earlier response, Geithner said an increased use of SDRs should be “rather evolutionary, building on the current architecture, rather than moving us to global monetary union.”
Those remarks don’t indicate Geithner favors moving to a system with the SDR as a reserve currency, strategist Lee Hardman at Bank of Tokyo-Mitsubishi Ltd. wrote in a note.
“That was the big concern amongst the confusion,” London- based Hardman said. “A move to an SDR-linked system away from the dollar would naturally lead to a reduction in the dollar’s share of global reserves.”
Geithner, a former Treasury undersecretary for international affairs and president of the Federal Reserve Bank of New York, which carries out U.S. interventions in currency markets, also said that “we will do what’s necessary to make sure we’re sustaining confidence in our financial markets.”
Geithner and Fed Chairman Ben S. Bernanke both told lawmakers yesterday that they expected the dollar to remain the most important global currency. President Barack Obama said at a news conference late yesterday that “the dollar is extraordinarily strong” because investors are confident in the ability of the U.S. to lead a worldwide recovery, and also rejected calls for a new global currency.
China is the largest foreign holder of U.S. Treasuries, and Premier Wen Jiabao earlier this month expressed concern about the value of its investment. Central bank governor Zhou this week advocated a “super-sovereign reserve currency” that’s disconnected from any individual nation.
Zhou said, in an essay posted on the PBOC’s Web site, that the IMF’s special drawing rights, a unit of account at the fund used for member countries’ reserves with the IMF, offer “light in the tunnel for the reform of the international monetary system.” He said the SDR has yet to be “put into full play due to limitations on its allocation and the scope of its uses.”
Geithner said in his interview with CNBC that “China is playing a very important stabilizing role in this financial crisis we’re seeing globally.” U.S. officials are “working very, very closely with them. I think they have a lot of confidence in the policies we’re pursuing,” he also said.
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