Until a few days ago, it looked like a sure bet that the U.S. Federal Reserve would announce the beginning of the end of its massive bond buying program in September. Now, investors are less certain.
The prospect of Western military action against Syria has sent stock markets worldwide reeling. Emerging markets have sold off and oil prices soared to six-month highs. And another potential showdown over the federal debt ceiling limit is looming this fall.
Taken together, the developments have eroded the conviction of most Fed watchers that the U.S. central bank would start backing off its $85-billion-a-month bond buying program, known as quantitative easing, or QE, at its September 17-18 meeting.
While the sequestration scare earlier in the year brought us some bad theater in the form of a road trip by The Idiot King, the debt ceiling “debates” are more like a well rehearsed dance, replete with opportunities on both sides to show off their moves. The problem thus far is that John Boehner is a horrible dancer.
Also, as we’ve chronicled here on countless occasions, the Fed’s actions aren’t really producing the results they wanted which, perversely, is being used as rationale for continuing those actions.
If this all makes sense to you, congratulations, you have a promising career in government ahead of you.