Roll crimson tide! Get it? Because the color of the Republican party is red and they took home a solid electoral victory this week? Yeah, that’s smart humor right there. And the only bone I’m throwing at you ‘Bama fans EVER.
Alright, housekeeping note first: I just did a massive update of my distribution list, meaning that this is the first newsletter of mine a lot of you are seeing. Hello, new people. Good to have you in my bi-monthly blasts. I hope you enjoy them. If you don’t, you can unsubscribe. And see how dull and pointless life is without my awesome opinions and humor, jerk.
Okie dokie, now that all of that is settled, I got a ton of ground to cover. To address the elephant in the room: big ol’ victory for the GOP Tuesday as they took back the House of Representatives. Lots of happy people, lots of sad people, such is the nature of politics. I’m just glad to be done with the inun-dation of roadside signage and attack ads on TV. Now old people can go back to being angry about their nurses stealing their medication instead of the government stealing their retirements.
One consequence of this shift in the balance of power is that Nancy Pelosi shall be replaced as speaker of the house by John Boehner. I’m sorry, but every time I hear representative Boehner’s name I can only think about Kirk Cameron’s idiot sidekick Boner from Growing Pains. And that makes me giggle because I’m immature.
Wednesday, our Federal Reserve ended their two day FOMC meeting and announced QE2, which sounds a lot more like a move in a chess game than a stimulus plan. It stands for quantitative easing 2 and means that they are going to crank out 600 billion more in long-term treasury purchases at a pace of approximately $75,000,000,000 per month.
So how is this series of big numbers supposed to affect you? Well, the idea is that the Fed buys treas-uries from banks, giving them money to lend. It also increases bond demand, which drives interest rates down. Banks lend more money (more mortgages get written helping the housing market, small business loans become more accessible which spurs hiring in the private sector) and investors are dissuaded from investing in safe-haven bonds and turn their money to equipment purchases (expanding their businesses) or stocks (expanding business balance sheets and capitalizing growth, hopefully translating to more jobs).
The potential downside? Dollar devaluation. A weak currency weakens our overall stature in the in-ternational economic community. It also opens the doorway to high-level inflation, as commodities get more expensive and our currency weakens. Policy-makers believe that the benefits of quicker growth right now outweigh the costs of dollar weakness and inflation later on. There are strong opinions on either side of this issue. Only time shall tell if the course they are taking is the right one.
Existing home sales leapt upwards by 10.0% in September. I could rant and rave about how awesome this is and what a portent it is of things to come and how we all ought to cash out our kids’ college funds and buy properties, but I know how little credibility to give a single month’s worth of gains. It’s a good thing, don’t get me wrong. But we’ll see if the housing market can maintain this kind of trajectory over the tail end of 2010.
And a big ‘WOO HOO!’ for UPS and Fed-ex for successfully identifying and intercepting what could have been explosive devices sent by terrorists from Yemen. Seriously, think about how many boxes those people crank through on a daily basis and they found the two that held threats. That’s logistics. Suck failure, terrorists.
I rarely redirect y’all to another writer’s work, but Diana Olick of CNBC had a striking article recently concerning the housing market with a particular focus on the South Florida condo market. If you’ve got time to kill, it’s a good read. Click here to link over to it. Happy November, everybody.
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