Apparently, there's been an election in the US. The BBC tells us that America's wholly unsurprising verdict on the past two years is frightfully important and signals the end of the Obama dream, whatever that may have been; it was never entirely clear.
The Fed is taking a massive gamble with America's long term future by blindly pursuing further monetary stimulus Photo: EPA
Barely able to disguise his horror at the result, Mark Mardell, the Beeb's North America editor, solemnly pronounced that the hope Obama raised when elected president had turned out to be "too audacious for the times".
It didn't seem to occur to him that Obama's drubbing was not so much a case of haplessly falling victim to economic circumstance but was in fact largely down to incoherent legislative experiment, blind disregard for the deficit and chronic mishandling of the economy. Americans had reasonably expected better.
Obama's punishment will make little if any difference to the mess the US economy finds itself in and in any case is something of a sideshow against the latest high risk policy initiative the Federal Reserve is visiting on an already battered nation. The Hill can't act, but the Fed still stands ready and willing at the roulette wheel.
The fresh $600bn (£372bn) infusion of quantitative easing announced on Wednesdaymay or may not provide a lift for beleaguered domestic demand – both Goldman Sachs and HSBC have said much more is needed to escape a real or imagined liquidity trap – but one thing it certainly does do is further debauch the currency. Never before has dollar hegemony been so much under threat.
By flooding the world economy with yet more freshly minted dollars, America further undermines faith in the greenback as an internationally reliable store of value and is thereby squandering an economic and geo-political asset of huge importance to the nation's history.
The dollar's reserve currency status means that America can borrow at will in its own currency from the rest of the world, and at favourable rates to boot. This privilege is being recklessly thrown away. Every time the Fed prints more dollars to fight the domestic recession, it further devalues that debt. The lenders are understandably getting restless.
As is now becoming steadily more apparent, dollar hegemony was a major underlying cause of the crisis, for it allowed America to go on an unrestrained borrowing binge; the developing world is ever more minded to think its demise part of the solution.
The Fed is taking a massive gamble with America's long term future by blindly pursuing further monetary stimulus; it may take time, but the dollar's all powerful reign on the world stage is drawing to a close.
And they wonder why US business remains in a state of paralysed shock. Policy seems hell bent on destruction.
In Obama's defence, it is usually said that the economic legacy he inherited was so poisonous that it was never likely to be easily fixed, and there is no doubt much truth in this contention.
But rather than focusing like a lazer on the economic catastrophe unfolding before him, Obama instead embarked on a wildly ambitious, disruptive and divisive legislative programme that has succeeded only in heaping further uncertainty on already damaged economic confidence.
If ever more mountainous public debt were not deterrent enough to investment and trade, the clutter of futile reform emerging from the White House would have frightened even the most loyal of American investors into inaction.
Stripped of his political authority, Mr Obama can only look hopelessly on as the newly enthused "Reds" suck the lifeblood out of health and financial reform. Hard won at near fatal political and economic cost, much of the president's legislative programme may end up neutered to death.
A Republican House cannot overturn these bills, which have already been passed into law, but it can render them toothless by influencing the fine print and more importantly, refusing to fund them. "Defunding" Obama's legislation is readily justified in pursuit of the small state Republicans aspire to.
Unfortunately, the Republican opposition seems as bereft of a credible plan to put public debt back on a sustainable footing as the White House. The political stalemate makes it most unlikely one will be found any time soon. Any long term fix requires a combination of tax rises, pension and medicare reform. There's no cross party support for any of these things.
The political class has no strategy for rolling back debt in a growth friendly way, while the blunt instrument of ultra loose monetary policy has called into question the dollar's international standing and therefore the nation's ability to refinance itself.
Larry Summers – who departs as the President's economic adviser in January – puts it like this: "For how much longer", he asks, "can the world's top borrower carry on being the world's top power?" It's a good question.
http://www.telegraph.co.uk/finance/comment/jeremy-warner/8108660/Feds-600bn-gamble-risks-throwing-away-Americas-biggest-asset.html
