So that’s that — until March.
And by then it probably won’t be so easy for the Federal Reserve to cut its cancerous quantitative-easing bond program.
The Fed and outgoing Chairman Ben Bernanke announced Wednesday that it would be reducing bond purchases under QE from $75 billion a month to $65 billion.
That’s the second month in a row that the Fed’s Open Market Committee trimmed $10 billion from its monthly purchases.
The Fed already has more than $4 trillion worth of government bonds and mortgages on its balance sheet.
Even at the lesser pace of purchases, that figure will be around $5 trillion by the end of 2014.
And the Fed doesn’t have a clue how get rid of those bonds, which it must eventually do because it had to print additional money — albeit the digital, not the paper, kind — to make those purchases.
The stock market didn’t like yesterday’s Fed decision, even though it was widely expecting it. The Dow Jones industrial average fell another 190 points to close at 15,738.79.
For the year, the blue-chip index is now down 840 points, equal to 5 percent.
One of the bigger concerns about yesterday’s selloff should be that it occurred so late in the month.
Wall Street is usually able to keep stock prices up at month’s end — at least long enough for investment statements to go out to clients.
So we learned this: QE gave to Wall Street in the form of a bubble-icious 30 percent rise in stock prices in 2013 alone.
And now the tapering of QE is taking some of those gains away.
The Fed signaled through its media mouthpieces two weeks ago that it had decided to taper quantitative easing again at its January meeting, which was held on Tuesday and Wednesday.
The only question was whether the stock market’s tantrum since the beginning of the year would alter those plans.
To its credit, the Fed didn’t cave in and continued with its plans.
Now the question becomes: Will the Fed reverse course, or at least keep the current $65 billion in purchases, if Wall Street continues to be cranky?
The next Fed policy meeting won’t be until March 18 and 19. That’ll be the first one chaired by Janet Yellen.
But it gets trickier from here. Next week the Labor Department will announce its jobs report for January.
And historically — but not always — the January report has been a stinker.
I think this one will stink, and not only because of weather-related factors. And that’ll leave the Fed in a major bind.
With other economic reports like durable goods orders retail sales and home sales already smelling a bit foul, the Fed will have to hold its nose and close its eyes to economic reports if it wants to continue along the tapering road.
For the record, I’m in favor of raising the nation’s minimum wage. How can anyone be expected to survive on $7.25 an hour?
But let’s think about what President Obama plans to do.
Namely, he intends by executive order to raise the wage to $10.10 an hour for any company doing business with the US government.
So, what will those companies do with that extra $2.85-an-hour cost? Right — they are going to build the extra expense into their government contracts. Washington will be paying at least $2.85 an hour more for stuff. And that’ll increase the Federal budget deficit, which everyone in Washington agrees needs to be smaller.
I’m still waiting to hear Albany’s reaction to the fact that California is getting tough against merchants who “zap” transactions using sophisticated cash registers so they can beat paying the state’s sales tax.
New York investigated these zappers and even ran an undercover operation more than four years ago and then dropped it. A spokesman for the NY inspector general told me the state didn’t trust the investigation.
OK, so start from scratch! I’m writing this now in hopes of convincing Albany that losing nearly $1 million a day to tax zappers is unacceptable. I’d like to think politicians can be embarrassed into action, but that might be naïve of me.
This is all kinda funny since New York City Mayor de Blasio and Gov. Cuomo right now are fighting over funding universal pre-kindergarten programs.
The $250 million-plus that merchants are stealing from the city with zappers would not only fund pre-K, but also the kids could be given cab fare to school.
About 18 months ago, I spoke with Turkey’s ambassador to the US, Namik Tan, who told me that his country was lobbying to join the European Union.
Back when that column ran in June 2012, the EU was struggling and Turkey wasn’t. “Turkey is tempting cash-hungry EU,” was the headline on that column.
Tan told me he had even approached French president François Hollande, and “his first reaction was positive.
This week, Turkey’s central bank had to take emergency action to save the country’s currency from disaster.
So, forget Turkey coming to the aid of the EU. But the EU, I bet, is very concerned that Turkey’s proximity to European countries could cause the fear of a contagion.
Here’s some good economic news for a change.
In 2013, 69 percent of Americans were spending money on their lovers on Valentine’s Day.
This year, according to American Express’ Spending and Savings Tracker Data, the number will be up to 74 percent.