Today news sources are reporting on four of the Republican Party's heavyweights writing a letter to Ben Bernanke expressing concern about the Chairman's QE2 plans. Expressing their worries about the possibility of inflation getting out of control, Senate and House Republicans are reported to have voiced some displeasure about the Fed giving the impression that it will keep adopting new measures to improve the short-term performance of the economy at the cost of its long-term fundamental health.

The sincerity of these protests are dubious at best. First of all, everyone knows that the introduction of the too-big-too-fail doctrine, the launching of the massive bailouts, the implementation of gigantic fiscal stimulus programs, and anti-USD policies are all rooted in the policies of the former President Bush, and is Treasury Secretary, Henry Paulson. It is not so much that President Obama and Ben Bernanke are right in pursuing their present course, but if there is anything worrisome, it is only the consequence of a state of mind and philosophy that is almost a consensus among the higher echelons of Washington. If it is correct that the Federal Reserve is sailing as if it were without a captain, it is only because, over the years, the existing paradigm of central bank conduct seemed to have created so much prosperity and stability in the U.S., that successive adminsitrations found it expedient to leave Alan Greenspan and his successor with a free-hand to do as they please as knowledgeable and experienced bureaucrates. The policies that are right now in place, are a natural extension of the doctrines that were in vogue during the boom years, and since they appeared to perform well back then, officials are hoping that they will deliver this time too. In contrast, what, if anything, is being proposed by the Congress is unclear.

If the Congress were serious about taking action about the U.S.' economic troubles, it already have a very suitable China bill at hand, and could easily fast-track that, and help the jobless by goading the Chinese to move faster towards appreciation. This, of course, runs into opposition from the corporate sector, and as they pay for the election campaigns, senators and representatives do not find it advantageous to push too hard. Still, talking about the Fed, and blaming it for the disastrous situation of the global system will not contribute much to the solution. With the Obama administration still in favor of the Geithner-Bernanke team, it is very hard to see what kind of impact the protests of Congress can have, if any, on monetary policy.

In the rest of the world, much of the action is dominated by worries and rumors about China and Ireland. Of these two, the Irish problem has not yet reached its climax, and, if authorities cannot produce a strong resolution soon, it may remain with us for quite some time to come. But even if Ireland gets bailed out and the nation's creditors escape without a scratch, speculators are likely to turn their attention to the remaining nations of the periphery in light of the fact that there is neither unity nor vision among Eurozone leaders, and the stronger the pressures become the wider the fissures will be. One may recall that about 1-1.5 years ago the ECB almost always spoke with a unanimous voice, as articulated by the Governor. Nowadays almost all members express strong opinions that are frequently in conflict with each other. European officials scold and chasten each other publicly. And the electorate is quiet, but that is only because they have been sheltered from sufffering the full-brunt of the crisis, thanks mostly to Asian dynamism.

That brings us to China. It is possible to make a case that if the Chinese tighten too much in order to curb the impact of hot money flows created by their distorted exchange rate, there is a chance that they will bring down the commodity complex and burst their bubbles in violent manner. Yet the Chinese have shown consistently that they do not intend to confront their domestic problems strongly even in the best of boom times, so we suspect that the developments here will not be as dramatic as markets seem to anticipate at the moment, especially if there is a market deterioration in data.

So in all, today we had a rather bleak day with uncertainty remaining the dominant theme. The future of Ireland hangs in the balance, and the rest of the periphery remain on the rack. Gold has remained stable, although remains on a downward bias, bourses were higher, and the Euro appreciated on bailout expectations. Perhaps tomorrow will bring greater clarity to the important issues