A MACRO DAY

Well, things appear to be looking good--or bad--for a government shut down on Friday. The administration seems to believe that they will come out of such an event ahead politically and the Repubs appear to be in no further compromise mood. Government employees were warned that "non-essential" personnel might be told not to come in on Monday. What I always wondered was, if the person is non-essential what's he doing there in the first place? A rhetorical question to be sure.
A mighty tug of war.

The Fed released the minutes of their last meeting and while there appeared to be unanimity as to the present continuation of QE II, some concerns were raised as to the specter of inflation down the road although, curiously, not because of the Fed's own actions. Then again, why blame one's self when there are other candidates lurking about...surely there are some out there. While all this was going on, the Chinese raised interest rates again and the dollar fell so maybe some good comes of this but I doubt it, and at the same time Bill Gross was telling CNBC once again that his holdings of Treasuries are entirely in the Bill sector. This highlights the question of who then is buying this stuff and for how long will they keep so doing as well as the fact that the average duration of ALL of our debt is less than seven years. And a very good night to you Mr. & Mrs. North. Sleep tight. Oh yeah, nobody wants to buy munis either.

The big story of the day, however, was Rep.Paul Ryan's budget proposal which is breathtaking in scope. From my standpoint the most important point in the plan is the adoption of the views of The Leader's own fiscal commission (which he has chosen to ignore) as to reforming the tax code. It is not a complete endorsement but it assimilates the basic guidelines of a flatter code, reduced rates for both indiduals and corporates and the elimination of wastful and jury-rigged loopholes and exemptions. In short, it is the only thing out there that recognizes the need for lower tax rates AND increased revenue through a fairer treatment of all taxpayers which will promote growth. It's not all going to happen as Ryan wishes but it's a heck of a start and a surprisingly brave one from my standpoint. He touched the third rail: reform not only of the code but of entitlements as well. At the very least, the knot has been cut and the debate can begin as to what our future holds. I hope this debate is the framework for the 2012 election because in my mind nothing is more important. Frankly, I was surprised by the limited Democratic response as I write this except for the usaly purely political posturing. Perhaps they were surprised as well by the scope of the plan and by the definite recruitment of the thoughts of The Leader's commission. Gotta be careful there, but not for long methinks. We'll be watching

We'll also be watching the gals tonight. Butler stank the place out last night. I could look reallllllly bad.