Futures are looking higher this morning as Obama agreed to a 2-year extension to the Bush tax cuts and Ireland prepares to announce an austerity budget with $6B in spending cuts and $2B in tax increases. Amazing that the 'budget hawk' Republicans were able to push through this tax cut extension despite its $600B annual cost. Why not approve a $600B federal jobs program instead? I suppose its for the same reason that Republicans were blocking unemployment benefit extensions without compromise on these tax cuts. If one continues to believe wholeheartedly that trickle down economics is more stimulative than putting people directly back to work, then I encourage them to challenge my position in the comments section. I would be delighted to finally be convinced of the effectiveness of this ideology (if only to improve the flavor of the Kool Aid we are all being forced to drink...)
Last night the EU announced they had failed to reach an agreement to increase the size of their $1T rescue fund. Germany will not be adding to the bailout fund for its freewheeling neighbors (not yet anyway.) The fear is that more funds will be needed should larger nations such as Spain and Italy need assistance. (Does this amount to an admission on the part of EU leaders that the domino rally is already underway?) One would think this would put a dent in the futures, but not so.
China may see a rate hike soon, as inflation in October reached 4.4%, driven by a 10.1% jump in food costs.
With so many positive developments (I kid, of course!) why shouldn't we soon see Dow 36,000? And by the way, did anyone else catch Bernanke on 60 Minutes discussing the possibility of QE3? One would think that increasingly vitrolic commentary from both foreign and domestic leaders surrounding QE2, would make our proud Fed chairman at least somewhat apprehensive about discussing another round of asset purchases a month after the commencement of the current program, but you would be wrong.
Bring on the POMO.
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