In big Ben Bernanke we trust

Well, it’s been an interesting time in both politics and economics this past week. Where to begin…

Ben Bernanke was re-appointed for a second term as Chairman of the Federal Reserve. Four more years! As was widely expected, Big Ben was re-appointed just before the expiration of his term. The big surprise was the Republican support that he ended up getting in the final vote. It’s not that the GOP didn’t have their qualms with Mr. Bernanke, it’s just that no one could figure out a viable alter­native to replace the guy. Honestly, the mere act of a changing anything would have spooked the mar­kets on it’s own. So “if it ain’t broke, don’t fix it” wins again. In Ben we trust.

Advance 4th quarter Gross Domestic Product reported at 5.7%. Yyyyyyowza! For those of you just tuning in, that’s a big ol’ gain in production. But here’s what’s really up: business has realized that we’re not all riding the bullet-train to bankruptcy. You see, when everyone thought that we were entering a Book of Revelations-style cataclysm, they slashed production and started reducing inven­tory that they already had on hand. It’s best to clear the shelves if you might go out of business. Now that it doesn’t look like we’re all doomed, businesses are just starting to replenish their bare warehouse shelves. It’s going to be a while before big GDP gains translate to job growth, though.

Institute for Supply Management’s PMI registers 58.4%. Basically, any number above 50% here indicates an expanding economy from the perspective of suppliers and anything below 50% indicates a contraction. This is the 6th month in a row that we’ve been above that dividing line. No huge deal, but indicative of some distant, glimmering rays of hope for our weathered economy.

Obama gives his State of the Union address. I’m not going to try to cram all the things our Com­mander-in-Chief expounded into one paragraph. It was a good speech. If you haven’t seen it yet, you really should. YouTube search for “State of the Union”. Now we watch and see what action tran­spires from his strong words.

The long-awaited Obama Budget Plan was released. It adds a new jobs and wages tax credit amongst an aggressive business stimulus plan in order to curb unemployment. It anticipates higher tax revenues through increased taxes on certain population segments. It looks for above-average GDP growth over 2011-2015 which may or may not happen. It freezes investment in a lot of localized dis­cretionary programs. It expands the deficit spending in an effort to focus on righting the economy before reigning in our growing mountain of debt. It, like every other thing in the world of politics, will be hotly debated for untold months to come. It is also going to throw a gigantic monkey wrench at getting anything accomplished on health care reform. Things were hard enough when we were trying to get both sides of Congress to agree on something BEFORE we threw a 3.834 Trillion (with a ‘T’) dollar budget at them to argue over.

There’s nothing like the smell of endless political gridlock in the morning. Mm hm.