US equities ended lower on Friday as the curtain closed on what should have been a consequential week.
While market participants were assured that “deadlines” around Brexit and a new US stimulus package were actually “deadlines,” that turned out not to be the case. Cans were kicked, although resolution on both fronts is expected either Friday evening or, at the latest, over the weekend.
Mitch McConnell and Nancy Pelosi, who were both vaccinated for COVID-19 on Friday, asked their staff to close the deal on virus relief, but another day of haggling didn’t produce an agreement by the closing bell on Wall Street.
Pat Toomey attempted to inject (no vaccine pun intended) a provision into the stimulus legislation that would prevent the Fed from reviving a handful of key crisis programs going forward, a move some Democrats derided as an effort to sabotage Joe Biden or, perhaps more to the point, Janet Yellen. Steve Mnuchin faced similar accusations last month after his controversial decision to end a hodgepodge of Fed facilities met with pushback from Jerome Powell.
By Friday afternoon, the debate over the Fed’s lending powers had emerged as one of, if not the only, remaining hurdles to a deal. The eleventh hour tussle threatened to force a government shutdown given that lawmakers planned to attach stimulus to the broader, must-pass spending bill. Discussions were underway for a second stopgap measure to fund the government through Sunday, which ultimate cleared the Senate Friday evening.
There were no adjectives, folks. Thesaurus entries for “absurd” are all exhausted.
Toomey insisted not just on preventing the revival of some facilities established in the wake of the pandemic, but on banning the establishment of “similar” facilities in the future. “The language Senate Republicans are advocating for affects a very narrow universe of lending facilities and is emphatically not a broad overhaul of the Federal Reserve’s emergency lending authority,” he said, in a statement.
Suffice to say not everyone agreed with that assessment.
The notion that Republicans would attempt to tie up desperately needed aid for the US economy and risk a government shutdown days before Christmas in order to debate the merits of the Fed’s emergency lending powers is so ludicrous that one struggles to comprehend it. That anyone would do this while nearly 3,000 Americans are dying every, single day from a deadly disease and the economy is still 10 million jobs short of pre-crisis levels, seems borderline pathological.
This was all the more mind-boggling when you consider that a key reason the Fed feels compelled to i) jealously guard against the premature suspension of emergency lending powers and ii) pledge to keep rates low and asset purchases running in what might as well be perpetuity, is that monetary policymakers are terrified of precisely the kind of legislative gridlock America witnessed this week. If lessons were learned in the aftermath of the financial crisis, lawmakers aren’t demonstrating it.
This kind of brinksmanship (which is tantamount to courting economic disaster and playing with people’s lives during the worst public health crisis in a century) is exactly why Fed officials spent the past six months emphasizing that fiscal policy cannot fail the American public.
Powell reiterated as much on Wednesday, only to look up 48 hours later and find himself, his colleagues, and the scope of their emergency powers, being presented as the final stumbling block to the very kind of fiscal stimulus that would make it less likely the Fed would need those emergency powers in the future. In other words: If Congress is worried about the Fed’s use of its emergency lending powers, one way to solve the problem would be to just deliver fiscal stimulus.
Everyday Americans need jobs. They need a federal unemployment supplement to help them get through the next several months. They need stimulus checks. Broadly, they need help. What they absolutely don’t need right now is an esoteric debate about 13(3) moral hazard.
“[We] shouldn’t leave it lying around so it could be used for unapproved purposes, like a back door to more state and local aid,” John Cornyn tweeted. He was referring to the $455 billion originally earmarked to support Fed lending programs, but since clawed back.
Again: One way to solve that problem is for Congress to send aid to state and local governments, instead of starving them for political reasons, forcing the Fed to rescue everybody from congressional incompetence.
The near-term problem is that pulling this stunt at the last minute during the holidays is wildly cruel not to mention economically imprudent. The longer-term problem is that if the Fed has to wait around on Congress every time US monetary policy needs to put out a fire, houses will burn down all over the globe at unpredictable intervals because, i) the Fed is the de facto central bank of the world, responsible at times for ensuring the Earth doesn’t stop spinning, and ii) US lawmakers are famous for not getting anything done, no matter how high the stakes.
The Biden team isn’t amused. “While we are encouraged by the bipartisan effort underway to provide critical relief to millions of Americans, the package should not include unnecessary provisions that would hamper the Treasury Department and the Federal Reserve’s ability to fight economic crises,” Brian Deese, the incoming director of Biden’s National Economic Council, said, adding that “undermining that authority could mean less lending to Main Street businesses, higher unemployment, and greater economic pain across the nation.”
Toomey insisted he wasn’t trying to pull anything deceitful or otherwise nefarious. Explaining his position to reporters Thursday, he said it’s about “preventing the Fed from being politicized.” (Nobody tell Pat about Donald Trump’s Twitter account and what it’s been saying about Powell and the Fed for the past three years.)
It’s “not at all an effort to in any way hamstring the Biden administration or weaken our economy,” Toomey promised.
I can scarcely imagine worse optics than a US senator having to explain that he’s not trying to deliberately sabotage the US economy by undermining the central bank, torpedoing pandemic relief, and forcing a government shutdown, on the Friday before Christmas.
Thank you, H., for underscoring the absurdity of Toomey’s and the GOP’s nihilistic tactics. One of your best. I mean, it’s almost as if they want democracy in America to die.
Yes, it is does appear almost that they want democracy in America to die.
They absolutely want America’s version of democracy to die. They are not shy about their desire to limit voting to a selected group of their choosing. They have some notion that a significant portion of the population doesn’t have a right to vote. That’s a 180 from what I learned about American democracy in the 50’s and 60’s. My wife, who taught school for 30 years, tells me public schools no longer have required civics classes. Can that possibly be true, we don’t teach our kids the tenets of democracy and good citizenship? Maybe Toomey is one of those lizard people QAnon folks talk about. Unfortunately, that’s the best explanation I have at the moment.
I heard on PBS news tonight that Americans are dying from Covid at the rate of about one death every 30 seconds. And a significant number still can’t be bothered to wear a mask. They rant that it’s too much of a sacrifice even if it might save someone else’s life. And the President encourages them and sets the example. These people make a mockery of ‘home of the brave’. Something has gone dreadfully wrong in this country since WWII. ‘These colors don’t run’ is a joke when it turns out they were put on with invisible ink. And we are learning that everybody who is anybody has been (and still is) hacked by Putin. And the stock market is acting like a college kid on Spring Break pre-covid. How does this end well?
Damn, who has Senator Toomey’s ear and wrote that provision for him? That’s the more interesting question.
I read the statement on Toomey’s website. Weird. What is going on? …the smell test.
What was the point he was trying to make? (Obviously, this was the point of H’s article.) And, why, and why now? What is going on?
What’s going on is simple, the GOP has a hit list of people and groups to harm and more than half of all of us are on it. The problem is society is too complex to use simple-minded tactics to accomplish this goal. Inevitably they will make simple mistakes and many more than expected will be harmed. We don’t need Russian and Chinese enemies, we have the GOP who are much more dangerous.
I’m at a loss for words when it comes to these shenanigans. Does it just come down to power for power’s sake? Sabotage the democratic president and continue gaslighting their constituents into believing that they have their best interests in mind for what? I tend to fall in the camp that failings like this can usually be ascribed to incompetence as opposed to malice, but when it happens repeatedly, it becomes hard not to assume it’s something more nefarious. I just can’t wrap my head around republican senators’ willingness to impose suffering on so many people for the sake of donors and whatever power trip they get from being a senator. It’s clearly not just ideology because they only ever seem to find religion when a democrat is elected.
it’s simple they don’t care about anybody but themselves.
Nobody cares about anybody but themselves in the final analysis. (A lot of folks will dispute that, but the fact is, we all die alone.)
What makes this situation so absurd is how brazenly idiotic it is and how lawmakers are coming pretty close to that almost unreachable threshold where even the most undereducated, gullible voters will stop and say something like “Geez, this is the stupidest thing I’ve ever seen.”
If you’re a politician, you shouldn’t ever get to that threshold in America. Voters are not, generally speaking, very smart. Americans are more inclined to believe Hugo Chavez hijacked Georgia’s electoral process from beyond the grave than they are to take a hard look at what’s actually going on in terms of Beltway incompetence.
So, when you reach the point where you’re irritating a public that would rather be listening to Alex Jones’s radio show or watching looped videos of cats chasing laser pointers, you know you’ve really screwed up.
And that’s the territory we’re getting into now in D.C. That’s what I’m trying to communicate here. When people start thinking a $600 check could be in the mail to them within a week and you’re the only thing that’s stopping that from happening, that’s when they turn on you. Senate Republicans would do well to try and understand that, especially ahead of the Georgia runoffs.
I agree they are playing with something more powerful than fire, that a spark could set off a chain reaction. A reaction that may not die of it’s own accord. If you are to believe Ray Dalio’s analysis the economic conditions are at the brink where even a messy revolution by the poor may not be worse than doing nothing.
Is it too much to hope that the Democrats can make the people of Georgia aware enough of what the Republicans are doing to turn the senate?
I had the same though. We need a majority in order to get anything done.
It is as if they want to burn it all down.
Yes. It does have that appearance. But, what is the aim? Why? What is motivating this behavior?
One mind control technique is the normalization of atrocities. Those committed by Idi Amin, Hitler, Stalin etc. This then encourages more radical behavior. I think the end is the hope there are enough patriots to commit innsurection.
My greatest fear is a set up to a December 24th George Washington style attack on our country by ‘patriots’.
power for powers sake… Democracy is all well and good as long as they have control
I note that all the answers to the question about what is causing this Politicized “absurd ” behavior wind up being questions in the end…Could be to quote a psychologist friend (pun) ‘Could just be too many Rats in the cage ‘ The net outcome and trajectory of events may shed some more light on Today…