REASON PREVAILS IN D.C.? MAYBE!
Yesterday Congress voted to raise the debt ceiling without preconditions. The importance of this event, done without past histrionics, is huge. Leader Boehner and other Republican leaders allowed this to happen with only about 12% voting support from Republican representatives. A contrary result would have been very bad news for the markets.
Today, Tea Party groups are attacking both Boehner and Republicans for allowing the debt ceiling to rise.
On Monday, The US Chamber of Commerce encouraged Republicans to raise the debt ceiling in order to help confidence in the economy, the markets, and the country. Only 12% of Republicans followed their wishes. Does this indicate a split between the Chamber and Republicans? Probably not. But it does shine a light on the infighting in the Republican Party between the pro-business wing and the anti-many things Tea Party wing.
The Tea Party has threatened challenging Republicans in upcoming primary elections. The Chamber and other groups have vowed to defend pro-business Republicans in elections. How this plays out over the next few months will greatly affect the political landscape of the country.
Is it just me, or did the market tanking of January and early February coincide with debt ceiling concerns? And, has the market soared when it became clear that Mr. Boehner would get it raised?
Attributing market reactions to debt ceiling events is probably not totally correct. But debt ceiling concerns have likely contributed to market sentiment—both pro and con.
Yesterday’s action in Congress is hopefully a sign of reason starting to prevail in Washington. Recent compromises on the Budget and the Farm Bill bolster these hopes. The country needs a respected, rational Republican party that does more than just obstruct, obstruct, obstruct—and crush the markets in the process. Hopefully, recent events have signaled reason and sanity gaining momentum.
Floyd at KOTM
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