Looking to November 2nd and 3rd: Elections and QE2

Through early next week I will mostly just be following those two stories as they develop.  I have a number of essays in mind for later in the month of November and December.  

The Fed's Impending Blunder:

Ambrose Evans-Pritchard expresses a view that I share but expresses it so much better than I ever could.

Now, I put my hand up and confess to having supported QE when the financial system was imploding in late 2008 and early 2009, and I continued to do so as the M3 money supply collapsed at 1930s rates earlier this year. I persist stubbornly in thinking that it was the right thing to do, AT THAT TIME.

But we are no longer in a systemic financial crisis, and the Fed’s motives have become subtly corrupted. Having argued during the boom that it was not the business of central banks to stop asset bubbles – and specifically that any fall-out could “safely” be cleaned up later – Bernanke now seems to determined to validate this absurd doctrine, bending all the sinews of the US economic and financial system to this end. One error leads to the next.

 Nouriel Roubini is a little more positive but sees a fiscal train wreck on the horizon:

What has been the fiscal performance of President Barack Obama? He inherited the worst economic crisis since the Great Depression, as well as a budget deficit that – after much needed bail-outs and a series of reckless tax cuts – was already close to $1,000bn. His stimulus package, together with a backstop of the financial system, low rates and quantitative easing from the Federal Reserve, prevented another depression. Mr Obama also deserves credit that the US, alone among advanced economies, currently supports a “growth now”, rather than an “austerity now” path.

But this is but one half of the picture; we must also judge his first two years on his ability to anticipate what the economy will need tomorrow.

I continue to watch a number of races that should not be competitive but are.  As I mentioned a few days ago, even Barney Frank (Chairman of House Financial Services Committee) seems to be in trouble.

Challenging the Massachusetts liberal is Republican Sean Bielat, an Iraq war veteran, and opinion polls suggest Frank has an uncomfortably narrow lead over a political unknown. 

In the run-up to Tuesday's congressional elections, Frank has faced a torrent of negative ads and mailings, much of it from groups outside the state who support candidates from the conservative Tea Party movement.

And to cleanse the palate, something lighter: