We all should applaud Obama's decision to nominate the first female head of Federal Reserve in history.
But if you wonder whether that superficial fact will bring any fundamental changes to Fed policy and US economy, then consider the changes that have been promised and achieved by the first African American president and Nobel Peace Prize winner in history.
You will hear many "first in history" in the future, only because US has only about 250 years history. The market might choose to focus on the gender of the new fed chairman for one day or two, but it has to come back to reality soon enough: failed mission of QEs, perpetual fiscal deficit, ballooning sovereign debt, etc.
It looks like that Yellen could be the first female head of Federal Reserve to oversee the final unwinding the massive PONZI scheme in the recorded human history
Apparently the austerity programs are out of the windows, since they tend to cause recession and unrest.
The question is how long Fed can keep pumping the "imaginary credit" into the system while pretending those money are real? Who will be the first to say " The Emperor does not have anything on him."?
Senator Portman made a proposal about solving US long-term debt problem. But his proposal disappeared from the Mainstream media the next day.
It looks like that nobody at DC wants to have a long-term solution. The fake drama might be played to benefit their Wall Street friends.
Although Oct 17 "deadline" might be another fake, but the outcome really depends how the global bond and equity markets will react. So get yourself prepared when rational decisions in no longer in fashion.
It is hard to understand what the Congress is trying to achieve, since there is no serious proposal yet on how to reduce the debt over longer run and how to maintain the perception of solvency of US finances.
The market seems to be so sure about Yellen's willingness to continue to roll out more QEs, and keep the short-term Treasury rate at a level close to zero.
But the question is whether the T-bill rate will stay at close-to-zero level, when more and more overseas investors have doubt about DC's willingness to resolve the debt malaise, hence the willingness to service the interest and repayment of the principals when due.
Here are some possible scenarios on how that might unravel:
One of the steps includes a so-called “haircut”, or a discount, on the value of US Treasuries held as collateral against futures trades.
The interest rate for bonds held with maturity of less than one year would be raised to 3 percent from 1 percent.
“Participants should make necessary funding arrangements to cover any shortfall to their margin requirements resulting from the increase in the US Treasuries haircut,” HKEx said.