Tag Archives: Barack Obama

Video of the Week – Janet Yellen Nominated as FED Chair

Ladies and gentlemen, its official.

As many, including myself, had predicted, Janet Yellen has been nominated by President Obama to be next chairman of the Federal Reserve. Her nomination was almost a done deal when Larry Summers withdrew himself from the race. Since investors predict that Yellen will continue Ben Bernanke’s accommodative monetary policies, stocks rallied across America and emerging markets when the nomination was officially announced.


Idiocracy – U.S. Government Shuts Down


Many people, including myself, didn’t think it would happen, but the government of the United States, the most powerful nation on Earth, has shut down.  A social media intern at the White House, President Obama confirmed the shutdown on Tuesday via his twitter account.

obama tweeted

As I had discussed in my last post, Republicans in Congress, more specifically, Tea Party Republicans, started this whole debacle when the time came to pass a resolution to keep the government’s operations funded. But they insisted that they would only pass the bill if the bill also defunded Obamacare, which is another name for the Affordable Healthcare Act passed by President Obama in his first term. That bill was passed through the House of Representatives but was rejected by the Senate, which is ruled by the Democrats. As the deadline for the budget approached, both sides did not compromise and did not back down. There were rumors of a deal being passed in the last second where the Republicans would agree to have a budget passed in return for delaying the implementation of Obamacare for a year. Personally, I too expected a dodgy weak deal being passed in the last minute to kick the can down the road. That’s what Republicans and Democrats had done in the past when they were in time sensitive situations and were unwilling to compromise. However, that was not the case this time.

September 30th came and passed and the government shutdown. 800,000 federal employees have been sent home indefinitely and another 1.3 million continue to work without pay. That of course does not include the endless list of  government agencies that have been hampered.

Obviously the shutdown has important economic effects. A median of estimates by economists according to Bloomberg state that for every week the shutdown continues, GDP growth will be reduced by 0.1%. Additionally, the US Dollar declined in value against other currencies. However, markets have remained relatively calm. As evidenced by the graph from Yahoo! Finance, the S&P 500 hasn’t had a very big drop after the government shutdown on September 30th.


This is because markets expect Congress to come up with a deal quite soon. Even though politicians from both sides remain adamant, investors believe a compromise is close. What is a cause to worry however, is the debt ceiling. Towards the end of this month, the American government will reach its legal limit to borrow money. Unless Congress raises that ceiling, the government will default on certain payments its obligated to make. If this shutdown prevents the debt ceiling from being raised, it could effect the entire global economy. The American economy and the US dollar is seen as the safest and most trustworthy financial investment. Many financial contracts across the world are written with the understanding that America will certainly pay its debt. If that assumption is broken, who knows what could happen. Finally, because the shutdown is slowing economic growth, the Federal Reserve is likely to delay tapering QE even further.

Now for a bit of my own opinion. There are certain parts of Obamacare that I like and certain parts of it that I disagree with. The fact that insurance companies can’t deny customers based on pre-existing conditions for example is a great idea. However, I’m against the mandate, which fines individuals if they do not purchase health insurance. I don’t think government can fine people for inaction. Its ok to tax transactions, but what prevents the government from forcing people to buy a certain company’s products for example. I’m sure Republicans disagree with certain parts of Obamacare too. But holding a nation hostage for a single law that has already passed is no way to act. Who’s to say that they won’t do it again for another law that they disagree with. And this doesn’t just apply for Republicans. If this precedent is set, Democrats might try it if they’re in the minority too. Making the people of a country pay for political bickering is not right. There are other ways the minority party can try to overturn a law they don’t agree with. They can try to convince members of the opposing party, they can go on the campaign trail and try to turn the people’s opinion against it, or they can make sure they win their elections and get enough seats to overturn the law. But, as I said before, forcing 800,000 people out of their jobs and leaving 1.3 million without pay, especially in these hard economic times is unacceptable. Saying that Obamacare will raise premiums might be correct, but nothing is worse than leaving people without a job.

If the shutdown drags on for too long, maybe America can learn a lesson from Australia. When there was a similar government shutdown in Australia in 1975, the queen came in and fired everyone in parliament. That begs the question, if America had a cold no-nonsense queen, who could it be?


“It’s to us Norwegians, hard to understand that it can be happening in one of the most influential countries in the world that you can have such a dysfunctional government. It is kind of a joke or disbelief. We laugh about it”
-Andres Tvegard (journalist for the Norwegian Broadcasting Corporation)

Video of the Week – US Government Looms Towards Shutdown

The inability of Democrats and Republicans to agree on anything is once again dragging the United States government towards a cliff. This time, the argument could lead the government to shut down indefinitely. Here we go again.

Typically, Congress is supposed to pass a budget for government agency operations. But, for many years, Congress has been so divided that instead of passing a budget, they could only pass a short term stop-gap funding measure called Continuous Resolution (CR). The current Continuous Resolution, which expires on September 30th, is in jeopardy of not making it through Congress. This is because Republicans in Congress are adamant that the only way they will approve the new Continuous Resolution is if Obamacare is defunded. The most fervent supporters of this measure are the Republican representatives that are backed by the Tea Party movement. Obamacare is the name that has been given to the Healthcare bill passed by Congress under President Obama’s first term. The first parts of the law will be enacted in October and the bill will be fully implemented in January 2014.

On the other hand, President Obama and the Democrats have stated that they will not agree to defund Obamacare. Thus, we’re slowly approaching September 30 and both sides are not caving in. The House of Representatives, where the Republicans are in majority, passed a bill that renews the CR but demands reducing funding to Obamacare and repeal a medical device tax. However, the Senate, where the Democrats are in majority, rejected this bill.

If September 30th passes without a deal between the two sides, the government will effectively shut down. A shut down won’t effect mandatory government payments such as Medicaid and Medicare, but it will put a vise on discretionary spending. That means that national parks and Smithsonian museums would close, pensions and

veterans’ benefits checks would be delayed, visa and passport applications would be delayed, and as many as 2.1 million public employees could temporarily be out of their jobs.  A brief government shutdown occurred in late 1995 and it cost the government more than $1 billion.


The Video of the Week comes from Ted Cruz, a Republican Senator, who spoke on the Senate floor on Friday for roughly 21 hours in order to hold up delay voting on the bill approved by the House so as to make the Senate more desperate to accept it. In that 21 hours, Ted Cruz referenced Star Wars, tried to speak like Darth Vader, compared Obamacare to Nazi Germany, read Green Eggs and Ham by Dr. Seuss, talked about Whitecastle hamburgers. The most ironic part is that Green Eggs and Ham is a story about how people may not like things they haven’t tried but once they try it, they find out that they in fact like it. That may be the worst story to read to oppose Obamacare. The clip I’ve shared is just a short snippet of that speech. You can find longer versions on Yotube. So sit back and enjoy the hilarity that ensues.

It seems that as of yesterday, Republicans and Democrats agreed to a deal where Obamacare would be delayed for a year and in return, Republicans would allow the CR to pass. We’ll probably have to wait for the final hours of Monday to see what kind of deal is struck. As usual, we can expect the US Congress to never do their best, to try their softest, and to disregard the well being of the rest of the nation. Typical politics.

If you’re still concerned regarding this issue, you can take a look at this link from the Telegraph which answers most frequently asked questions about the impending government shutdown.


“immediately on hearing that phrase [rebellion against oppression] I wondered if at some point we were going to see a tall gentlemen in a mechanical breathing apparatus come forward and say in deep voice ‘Mike Lee, I am your father.'”
-Senator Ted Cruz



Larry Summers Throws in the Towel

Down goes Summers! Down goes Summers!

Several days ago, I had written a post about the candidates that were in consideration to become the new FED chairman after Ben Bernanke. The two leading candidates were Federal Reserve Vice Chairwoman Janet Yelen and renowned economist Larry Summers. But on Sunday, Larry Summers stated to President Obama that he would be dropping out of the race.

"I was too sleepy to be FED Chairman anyway"
“I was too sleepy to be FED Chairman anyway”

 “I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation’s ongoing economic recovery,” stated Larry Summers in his letter to President Obama

That sounds so noble but let me translate that for all of you.

“There is no chance of me becoming the next FED chairman so I’m throwing in the towel” is what Larry Summers really meant to say. If you think I’m being too cruel, allow me to explain.

The process for electing the chairman of the Federal Reserve is as follows: the President elects a nominee which is then voted on by the Senate Banking Committee. On Friday, senator Jon Tester of Montana became the fourth Democratic senator on the Senate Banking Committee that stated that they would not support Larry Summers. The other three dissenting Democratic senators are Elizabeth Warren from Massachusetts, Sherrod Brown from Ohio, and Jeff Merkley from Oregon. The reason why so many liberal Democratic senators dislike Larry Summers is because they believe that his policies of deregulating the financial markets in the 1990s (as President Clinton’s Treasury Secretary) caused the economic crisis of 2008. In order for the Senate Banking Committee to vote in favor of Summers, Obama would have to lobby votes from Republican senators and that is something he doesn’t have the time or leverage to do right now.

Thus, with Summers out of the picture, Janet Yelen appears to become an even greater favorite to become the next and first FED chairwoman. Her resume checks many boxes. She has experience with working in the FED, she would be the first woman FED chairman, and her support of quantitative easing is supported by Wall Street investors. Now recall that quantitative easing is the FED policy of pumping money into financial markets. Summers had at times spoken against this policy. Therefore it wasn’t a big surprise that the stock market increased following the news that Summers had dropped out of the race. It must be a horrible day for any person if you decided to give up on your dream and the financial markets rejoice.

A final candidate for the job is Fed Vice Chair Donald Kohn. Additionally, Timothy Geithner, the former Treasury Secretary under Obama’s first term, was also listed as a possible candidate. However, Geithner had turned the job down. Thus, Janet Yelen appears to likely be the next FED chairman.

 In honor of Larry Summers, we remember him one last time by taking a look at his most memorable moments courtesy of Bloomberg.

“There are children who are working in textile businesses in Asia who would be prostitutes on the streets if they did not have those jobs.”
-Larry Summers