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Thursday, May 04, 2006

 

Was it a slip or a plant ?


A lesson for Fed Chairman Bernanke * And the President extols his tax cuts

A black-tie affair, a few drinks, an attractive woman reporter. Not too hard to imagine that Chairman Bernanke loosened up and said something he shouldn't have. On the other hand, there are those who feel that it was a deliberate plant. At the annual White House Correspondents Association dinner on March 29th, during a conversation with CNBC reporter Maria Bartiromo, the Fed Chairman said his comments before the Senate Finance Committee were misinterpreted by the financial community. From Bloomberg.com: "Bernanke, who became Fed chairman in February, told the Congress's Joint Economic Committee on April 27 that the Fed may suspend the increases even if economic risks are tilted toward faster inflation. Policy makers meet to decide borrowing costs next week.
  • ``We were swept off our feet'' by CNBC's report of Bernanke's comments, said Richard Franulovich, a currency strategist at Westpac Banking Corp. in New York. ``Bernanke is still easing his way into the role and learning what he can and can't say, and to whom. He won't be speaking off the cuff to media people again. He's probably learned a lesson.''
What is the truth ? Chairman Bernanke isn't talking. In the absence of denial there is no dispute about what Ms Bartiromo reported from the Chicago Stock Exchange on Monday(May 1st) afternoon. It roiled the spooky market. The choppiness continues. With the stalemate in respect to efforts to control Iran's nuclear capability, high oil prices, and the mess in Iraq, the market has little to feel confident about.
*

The War President.....and the Tax Cut President. The massive tax cuts back in news as Republican lawmakers agreed on extending them beyond the 2008 expiration date to 2010. Jonathan Weisman in the Post:"With this week's hard-fought agreement on a $70 billion tax-cut extension, President Bush and congressional Republicans have effectively set a date for a fiscal day of reckoning for the next president and a future Congress: Jan. 1, 2011."
  • Taking a partisan turn, the president mocked Democrats who had opposed his tax cuts and had warned that they would lead to economic disaster. "The Democrats' record of pessimism has been consistent: It's been consistently wrong," Bush said to loud applause.
  • "But the decisions taken now inevitably will cause politicians in the future to confront difficult choices -- a trade-off that Bush did not acknowledge in his speech.
Lost in the smoke and mirrors is the true picture of the tax cuts---who are the major beneficiaries and who will bear the brunt.
*****





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