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As expected (but in an unusual way), the Federal Reserve came to Wall Street's rescue today (Aug. 9). After the stock market chaos of the last several weeks, observers had expected the central bank to pump in liquidity to buoy the market.

But Wall Street had expected QEIII, or a third round of quantitative easing (the Fed buying bonds to lower long term rates.) Instead, the Fed did an unprecedented thing: it said it would hold interest rates at very low levels at least through mid-2013. The market initially gulped and dropped.

Then the Dow Jones Industrial Average zoomed more than 600 points in less than an hour and a half, finishing the day up 429.92 points or around 4%. Pros realized the Fed had provided QEIII without saying so. (QEII pumped up stocks, but didn't help the economy at all.)

There is another side to this coin that the public may never realize. Since Ben Bernanke, Fed chairman, has stressed that he will keep short term interest rates (now 0% to 0.25%) low as long as unemployment remains high, the Fed is telling the world that U.S. unemployment will remain extremely high until mid-2013. This is exactly what Wall Street wants; it would rather have zero interest rates than lower unemployment. Once again, Wall Street gains from Main Street's pain.

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Comments

SurfPuppy619 Aug. 9, 2011 @ 3:10 p.m.

U.S. unemployment will remain extremely high until mid-2013. This is exactly what Wall Street wants; it would rather have zero interest rates than lower unemployment.

Obama has very little chance of being re elected with high UE.

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Don Bauder Aug. 9, 2011 @ 8:21 p.m.

History shows that incumbents have a very difficult time winning when unemployment is high. Best, Don Bauder

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tomjohnston Aug. 10, 2011 @ 2:05 p.m.

The only chance Obama has of being re-elected is if the republicans go off the deepend with their nominee, which at this point is not seeming to br that much out of the question. IMO the only reason he ran for the US Senate was to gain visibilty for a presidential campaign. I think he was under the impression that 7 yrs as a state senator was sufficient experince to run the country. I did not support him or vote for him then, and his perforance thusfar has given me no reason to change my mind now. I supported, campaigned and voted for Hillary Clinton in the primary.Despite what other say about her lack of experience, I still feel she was, and is, far more qualified than Obama. He was and still is a political neophyte. There is one thing still conspicuously missing from Obama's actions, one thing that I still believe Hillary Clinton still has more of than Obama: BALLS. I think Obama's performance thus far has shown he has none; he hasn't once stood up once and said, either literally or figuratively I am the President and this BS stops now. And because he hasn't, everyone, not just his political opponents but the whole world knows he can be pushed around. If he had any balls, he would do an LBJ impression and not even run for re-election. I don't normally express my own opinions on politics with such specificity online, but there they are. So if you disagree, have at it. I'm always ready.

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SurfPuppy619 Aug. 10, 2011 @ 5:32 p.m.

The only chance Obama has of being re-elected is if the republicans go off the deepend with their nominee, which at this point is not seeming to br that much out of the question.

I was thinking this exact same thing, as bad as it is with the UE and economy, the candidates from the GOP are not very inspiring.

Reminds me of the CA gov's race. Two losers to pick from.

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Don Bauder Aug. 11, 2011 @ 10:25 p.m.

In so many political races the electorate has a choice between syphilis and gonorrhea. Best, Don Bauder

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Don Bauder Aug. 11, 2011 @ 10:23 p.m.

There is no question that Obama has been a great disappointment. Read the lead piece in last Sunday's NY Times Sunday Review section. Excellent analysis. I think you may be right: the Republicans will run a nitwit redneck. This will give Obama a chance for a second term. Best, Don Bauder

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tomjohnston Aug. 12, 2011 @ 9:44 a.m.

I was watching something on cable last night, I don't remember which show, and the reporter spoke of several Democratic members of Congress who had made thinly veiled comments suggesting they were beginning to wonder if they made a mistake in supporting Obama during the 2008 primary and maybe Hillary might have been the better choice after all. It's bad enough when the Republican's stated goal is to prevent Obama from bein elected and at least 60% of the country disapproves of the job he's doing. But how much worse can it get when it's starts being reported that members of his own party are beginning to think they should have chosen his adversary in the primary instead. At some point the question has to be asked: Do the Democrats have a prayer of getting Obama reelected and if not will someone from the DNC have the balls to tell an incumbent President that he can't win and he needs to step aside. Granted, the Democratic party isn't nearly as fractured as it was in 1968 when LBJ decided not to run. And although the public wasn't made aware of his own concerns for his health, he was acutely aware of the fact that he probably wouldn't beat either McCarthy or Kennedy in his own party. If things continue opn there President course, will Obama suffer the fate of Jimmy Carter, or will he bow out with grace and at least give the country a chance by letting the Democrats field a candidate that might actually have a chance if winning next November.

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SurfPuppy619 Aug. 12, 2011 @ 11:44 a.m.

At some point the question has to be asked: Do the Democrats have a prayer of getting Obama reelected and if not will someone from the DNC have the balls to tell an incumbent President that he can't win and he needs to step aside.

In a word= NO.

Won't happen.

But Obama needs to really pick up his game, we are what?? 450 days out from another presdiential election??????? I cannot believe the presdential primaries are now in full gear, and in another 3-4 months it will be a full on race. My brain is still fried out from the sad sorry gov's race we had here in CA. Have not had enough time to recover.

Time flys-especially when the country resembles a toilet.

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tomjohnston Aug. 12, 2011 @ 2:18 p.m.

Exactly what do you think Obama can do to pick up his game? He really has no hope of getting any meaningfull legislation passed, in terms of helping the economy. The GOP will block anything that could be construed as helpful to Obama's re-election chances. They only care about keeping him from having a second term and how that affects the country is of absolutely no concern to them. The dimwitt governor of Az is talking about moving up their primaries because she thinks the country needs to focus on their problems in the primaries, or some stupid reason like that. The other primary states ahead of Arizona have already said if that happens, they will move theirs up., too. The first primary could be as early as December. The race is already full on my friend, just not every one knows it and Obama is already lagging behind. IMHO, the 2012 election will be decided by people like me, the independants. The sad part is, if the election were held next week, I wouldn't be voting to keep Obama in office, I'd be voting to keep some other lunatic out of office. And that's absolutely NOT the scenario I want to be in, but it's looking increasingly likely it will be. Let me ask you this surfpuppy619. Isn't it the epitome of narcissism when the vast majority think you're not doing your job and some else could do it better when all the while you continue to think that you're the best man for the job? Or maybe it just stupidity.

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SurfPuppy619 Aug. 12, 2011 @ 7:50 p.m.

The economy is cyclical and it could tunr no matter what Obama does and no matter what Repubs do to torpedo him.

I don't think that will happen, not enought time left.

One thing is for sure-I am not happy with Obama and I voted for him, doubt I will twice.

The Independants-like me- WILL be the ones who decide the election

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Don Bauder Aug. 10, 2011 @ 8:11 a.m.

I haven't heard of High Speed University but it is worth a look. Best, Don Bauder

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Psycholizard Aug. 12, 2011 @ 12:02 p.m.

Obama will likely win this election, good economy or bad. His advantages are numerous. Unfortunately he is unlikely to forge the consensus necessary to fix our problems, because good government is necessary to do this, and a majority of our elected representatives have vowed to destroy the government by eliminating it's taxing and regulating power. Fanaticism rules the day.

Don't blame Obama for poor driving, the steering wheel has fallen off.

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Don Bauder Aug. 12, 2011 @ 1:14 p.m.

A lot of Republicans want the economy to continue very soft, with unemployment very high, so Obama can be beaten. That's one reason we are slashing spending in a terrible economy. Best, Don Bauder

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tomjohnston Aug. 12, 2011 @ 2:23 p.m.

"Don't blame Obama for poor driving, the steering wheel has fallen off."

Yeah that may be so, but Obama is the one who has been in charge of maintainence for the last 2 1/2 years.

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Don Bauder Aug. 13, 2011 @ 7:50 a.m.

The economic collapse we are still wallowing in has its roots going back three decades or so when consumer, government, and banking sector debt began escalating wildly; we trusted deregulation, naively believing corporations would act responsibly; our companies sent our manufacturing base overseas to jack up short term earnings; the gap between superrich and the middle class began widening; the tax cut mania took over the public psyche, and, generally, an aura of unquenchable greed swept over the country. But voters always tend to blame the incumbent. Best, Don Bauder

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SurfPuppy619 Aug. 12, 2011 @ 7:47 p.m.

Don't blame Obama for poor driving, the steering wheel has fallen off.

================ That excuse was good for the first couple of laps (years) but now Obama has had a pit stop and a fresh set of tires and a fresh start, and HE is now the driver.

And he better start driving the economy and not healthcare-which IMO is going to the SCOTUS and there is no doubt it will be going go down at the SCOTUS with the current justices (who do not like him after he reamed them in public at the last SOTU address) and all of his hard work on it -a very noble cause IMO- will have all been for nothing. A colossal waste of time and energy.

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Don Bauder Aug. 13, 2011 @ 7:52 a.m.

Obama erred in not tackling unemployment at a time when he pushed for the healthcare legislation that may face the Supreme Court's wrath. Unfortunately, our Supreme Court is in the pockets of big business. Best, Don Bauder

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tomjohnston Aug. 13, 2011 @ 10:40 a.m.

Obama's first, and only, priority should have been the economy. Period. That should have been his main focus on that BEFORE anything else. Of course their were other concerns that needed and continue to need addressing, but they should have been relegated to second tier status.

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SurfPuppy619 Aug. 13, 2011 @ 11:04 a.m.

Obama's first, and only, priority should have been the economy. Period.

The economy should have been the #1, TOP priority, but not the only priority.

He should have made a list of goals, with economy at the top of the list, with others below, and worked them in a systematic order.

This quanatative easing has been a complete and total failure and it has really hurt the nation, I hope it is over. If they do a QEIII that will be the straw that breaks Obama's back.

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tomjohnston Aug. 13, 2011 @ 12:27 p.m.

I disagree, surfpuppy619. There were and still are many issues needing resolution. Many of the things Obama has gotten personally into could have, and imo should have, been handled by his closest staff, advisors, cabinet, etc; his minions as it were. It's called delegation. Set the goals and expectations, tell them how far they can/can't go on their own and have them keep him in the loop, but getting involved only when necessary. That would have let him free to concentrate his own efforst on the economy. Look at Clinton. Four weeks after his inauguration, he annnounced his economic plan. That set the tone. I still don't think Obama has ever really truly come up with an economic plan, rather he just keeps throwing bandaids on it. You can say what you want about some of Clinton's other shenanigans, but he had a 66% approval rating when he left office. Even with 4 more years, I don't think Obama comes close to that.

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Twister Aug. 12, 2011 @ 9:02 p.m.

For whom would those who are not entirely happy (including myself) with Obama vote?

The president does not run the show, but he doesn't have to cave so much. Or does he? Maybe, like Perot, he doesn't want "anything" to "happen" to his family.

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tomjohnston Aug. 12, 2011 @ 10:26 p.m.

For me, unless something changes drastically in Obama's performance, it's not a matter of whom I would vote for. It's a matter of whom I am voting against. My first Presidantial election was the 1972 election. Since then, I admit I have had to resort to voting for the lesser of two evils on a couple of occasions. However, this time I feel it's going to be more a case of voting for the least of two incompetents in order to keep the other out of office. As I said, not voting for one candidate so much as voting against the other. Or perhaps abstention will be the choice de jour come next November.

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Don Bauder Aug. 13, 2011 @ 7:56 a.m.

Our two-party system is failing us now. Wall Street controls both parties. Best, Don Bauder

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Don Bauder Aug. 13, 2011 @ 7:55 a.m.

Even with unemployment very high, and slow growth or recession, plus another banking collapse, facing the country (and most of the industrialized world) for several years, Obama could win if the Republicans nominate a damned fool. And that looks likely. Best, Don Bauder

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tomjohnston Aug. 13, 2011 @ 10:48 a.m.

I disagree completely. Such a comment demeans serious, well intended fools everywhere. I don't think the GOP has a candidate that could even be considered to have risen high enough to be considered a fool. Right now I would consider them to be at best like Marty Feldman's "Eye-gor" to Gene Wilder's "Dr. "Fronkensteen". In other words, they're an only somewhat comical parody of what a real life politician should be.

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SurfPuppy619 Aug. 13, 2011 @ 11:09 a.m.

country (and most of the industrialized world) for several years, Obama could win if the Republicans nominate a damned fool. And that looks likely.

Oh how I agree!!! Just like CA's gov race, two pathetic choices.

Romney cannot beat Obama, and he is the leader! I saw him gettign heckled yesterday at the Iowa pow wow, and he said that "coororations are people too". I swear, what an idiotic comment to make. Statements like thay will kill whatever one in a million shot he had.

One of the biggest reasons we are now a banana republic is because corporations are treated with "personhood" though a freak accident in SCOTUS court reporting. No corporation hsould be viewed as a person, ever, IMO.

Google the case, Santa Clara County v (one of the railroads, forgot which one), an 1886 case, and put in personhood-read it, good stuff.

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Psycholizard Aug. 13, 2011 @ 5:51 p.m.

We should remember that we were losing almost a million jobs a month before Obama took over, and the largest intervention ever undertaken brought the economy out of free fall. The Health Care Plan is flawed, but it is a direct attack on a horrible disaster that is destroying the nation. The nation spends two months of every year paying for health care. The US will be hobbled until the health care mess is fixed. Think of the generations of politicians that allowed this disaster to swell, while taking bribes (contributions) from the health care groups. These should be condemned not Obama.

I can't speak for the nation, but no thinking person will vote Republican after the shameful display of worsening fanaticism we have seen for ten years. We have a right and a duty to complain, but Obama is our only hope.

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