Posts Tagged ‘Fed’

Helicopter Ben Hovers In Place

Friday, August 27th, 2010

Well, the Fed admits at last that things aren’t going as swimmingly as possible during Recovery Summer, and pledges to do more if more needs to be done.

Mostly, this will consist of buying more long-term Treasuries, but it might also consist of a more strongly worded statement about short-term rates staying low for a long time and a reduction in the interest rate the Fed pays on excess reserves.

What it won’t include is a raising of the inflation target, which the Fed has missed consistently on the downside for the past 2 years.

Central bankers around the world still seem petrified by non-existent inflation.

Helicopter Ben seems convinced that deflation isn’t a problem, but he also says that “central bankers alone can’t solve the world’s economic problems”.

Gorilla says: “Ben doesn’t think we’re Japan, but the jury’s still out!”

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Ben Does A Very Little

Tuesday, August 10th, 2010

The Fed’ll buy some long-term Treasuries and expand the balance sheet, but…

It won’t raise the inflation target and still seems unable to grasp the seriousness of the deflationary situation we’re either in or approaching.

Gorilla says: “The Helicopter isn’t dumping enough cash on an economy and unemployed people who need it!”

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Getting It Totally Wrong, Fed Style

Wednesday, July 14th, 2010

From Calculated Risk, here are the Fed’s economic projections for this year, made in April 2010, only two months ago:

Real GDP: 3.2-3.7% (actually GDP in first half is 3% and will be less in second half, now that stimulus is pretty much over)

Unemployment: 9.1-9.5% (average of first six months: 9.7%)

PCE: 1.2-1.5% (actually 0.7% and prices appear to be dropping)

To sum up: the Fed’s been wrong consistently on growth, unemployment and inflation.

Oh, and retail sales have fallen the past two months.

Hey, but that doesn’t mean the Fed won’t do anything (cue crickets chirping), or wait a minute, so long as inflation remains a non-existent threat and non-existent credibility remains the Fed’s only objective, yes it does.

Gorilla says: “Fighting inflation? Fighting unemployment? It’s time to fight the Fed before it screws us any further!”

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Quote Of The Day

Thursday, May 20th, 2010

Fed Governor Daniel Tarullo: “If sovereign problems in peripheral Europe were to spill over to cause difficulties more broadly throughout Europe, U.S. banks would face larger losses on their considerable overall credit exposures. In addition to imposing direct losses on U.S. institutions, a heightening of financial stresses in Europe could be transmitted to financial markets globally.”

Gorilla translates: “Our banksters are worried they’ll look like your banksters, who look like our banksters used to look!”

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Deflation Doesn’t Hire

Thursday, May 20th, 2010

Unemployment claims back above 470,000!!!

With inflation at its lowest level since 1966, will the Fed at last decide to do something about its other mandate: unemployment?

Not so far, the Fed wants to be seen as unwinding, from crap mortgage loans to low interest rates, because fighting non-existent inflation is the only thing that matters!!!

Feeling deflated yet? Paul Krugman is…

Gorilla says: “Helicopter Ben is headed for a crash landing!”

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Quote Of The Oughts

Tuesday, May 4th, 2010

Bubbles create toil and trouble…

Alan Greenspan in 2004: “We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand.”

Gorilla: “And we still haven’t got a clue what’s going on!”

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Spinning As The Toilet Flushes

Thursday, April 22nd, 2010

Unemployment: the Easter Bunny is no longer to blame!

Unemployment: still above 450,000 weekly claims and 4.6 million continuing claims!

Unemployment: if a dent was being made by “recovery”, weekly claims would be in the 300-350,000 range!

Unemployment: still forecast to be at 8% two years from now!

Unemployment: still nothing to see, and certainly nothing to be done, as far as our leaders are concerned!

Gorilla says: “Nearly 2 million could be hired at $25K/year from Helicopter Ben’s 2009 profits, but he’d rather hire inflation hawks!”

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Quote Of The Day

Thursday, April 15th, 2010

From an anonymous Labor Department official:

“I don’t think there is a whole lot of layoffs going on”.

Ah, it’s all seasonal!

Another two weeks of seasonal volatility, and the Easter Bunny better have some answers!

Continuing claims are rising and unemployment numbers are rising, and nothing much is being done about it.

Helicopter Ben reiterated this week that non-existent inflation and deficit fetishism are far more important to the Fed than the mandate to do something about unemployment.

Gorilla says: “Workers of the world, uscrewed!”

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Reshaping? Don’t Make Me Laugh!

Monday, March 1st, 2010

The Fed’s Vice Chair retires, and the Washington Post is on the case: “creating a key vacancy and setting the stage for President Obama to reshape the leadership at the Fed”.

This begs the obvious question: Why?

There are currently 2 vacancies on the Fed Board, so now there are 3.

If Obama wanted to reshape the Fed’s leadership, wouldn’t it be a good idea to fill a few vacancies?

And since when is the Vice Chair of the Fed a key position?

Can anyone, including the Post’s editorial board, name one Fed Vice Chairman in the history of the institution?

If someone can, that would be one more Vice Chairman than has ever mattered in the history of the institution.

The chance to reshape the leadership came with Obama’s decision to reappoint Ben Bernanke as Fed Chairman: Obama chose the status quo, so there will be nothing new coming from the Fed.

The Fed’s more or less missed the boat on bubble watching and unemployment since Paul Volcker departed, so what exactly is the change the Post (and the Times, who also think this is a reshaping opportunity) has in mind?

Better regulation? Not when trillions of easy money are still being given to the banks to keep their bubbles afloat.

Better inflation control? The Fed’s been fighting non-existent inflation since Obama came into office. There’s no more committed inflation hawk/peacock than Helicopter Ben.

Better attention to unemployment? Both before and after his reappointment, Chopper Pilot Ben essentially said: “Thanks, but no thanks, you jobless workers are on your own. It’s supposed to be in my remit, but sorry, it’s not my job!”

Gorilla says: “You can beat your head against the wall, our mainstream media remains out of shape!”

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Want To Get Banks Lending?

Thursday, February 18th, 2010

Stop running with the inflation hawks, and lower the discount rate to (your choice, Ben, perhaps -5?) percent…

Hoarding zombies won’t be too keen on piling up more losses, so they might decide to be good, but courage, like unemployment, apparently is no longer in the Fed’s remit…

Ben wants to be seen as winding down, preparatory to being really semi-tough, so up goes the discount rate, markets think uh oh, the party’s over, and the economy tanks for another year (or three or four)…

Gorilla says: “Break through the zero bound and save America from itself!”

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