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WHEN KEYNES POLICIES AND POLITICIANS FAIL

|Includes:AA, AAPL, BAC, BBY, BWX, C, CAT, DJP, EEM, EGPT, EPI, EWG, EWJ, EWZ, EZU, FXE, FXI, GDX, GLD, HYG, IBM, IEF, IWM, IYR, IYT, JJC, JJG, LUK, MS, QQQ, RSX, SLV, SMT, SPDR S&P 500 Trust ETF (SPY), TLT, UGA, USO, UUP, XLB, XLE, XLF, XLI, XLK, XLP, XRT


 

There isn't anything positive to say about market action Monday. The expected failure of the so-called congressional "Super Committee" has occurred. Rather than doing their job making even miniscule cuts in spending, both sides will look to make political hay from given the impending election cycle.

Bernanke's Keynesian policies are also a failure. Zero interest rate policies were intended to stimulate consumption but they've only enriched the Fed's Primary Dealers and other oligarchs. Let's remember, Keynes was a proponent of consumption versus savings. To achieve it he presumed ZIRP and QE would do the trick but even in the Great Depression, of which Bernanke claims expertise, those policies failed. It didn't help that Moody's warned about a French downgrade and rumors remain of another U.S. downgrade given congressional failure. I wonder why reducing the deficit by $1 trillion over a 10 year period with the deficit now at $15 trillion is even meaningful to any rating agency? 

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