The Fed to push harder on the rope?

[Tilted]

Fed Will Ease Monetary Policy on Aug. 10: Economist

Japan's Nomura has become the first investment bank to predict the Federal Reserve will begin to ease monetary policy following the recent slowdown in growth in the world's biggest economy.

The deterioration in expectations for growth and inflation argues for an easing of monetary policy, Paul Sheard, the global chief economist at Nomura, wrote in his latest report.

"We expect the Fed to at least stop the passive contraction of its balance sheet," he added.

Pushed by lawmakers last month, Fed Chairman Ben Bernanke outlined three ways the Federal Open Market Committee (FOMC) could further stimulate growth.

First, Bernanke indicated he could change the Fed's language to convince the market it will not allow deflation. Second, the FOMC could endorse a decision by the Board of Governors to lower the interest rate it pays on required and excess reserves.

And the final option would be for the FOMC to restart the asset purchase program that ended in March. For any of these actions to be taken, would have to become clear that the recovery was no longer sustainable, according to Bernanke.

Last week, Federal Reserve Bank of St. Louis President James Bullard told CNBC that the central bank needs a plan for more quantitative easing if the situation will require it.

Although what is being predicted here would be craziness, I fear the prediction is likely on target. Push that rope people - harder - it's not working fast enough, push harder! Apparently, free money isn't cheap enough.

 

[Tilted]

Fed Is Unlikely to Take Major Steps to Boost US Economy

Markets might be getting ahead of themselves in anticipating some bold new moves from the Federal Reserve to combat the weakening economy.

Whether the Fed will embark on a new round of quantitative easing, or money printing, is the central market debate of the moment, but there are reasons for low expectations for any announcement by the Fed after its meeting next week.

If you sliced, diced and otherwise parsed the economic speech of Fed Chairman Ben Bernanke on Monday, you might have come to the conclusion that his outlook was a bit more somber. But that conclusion is debatable. The Fed chairman, unlike his predecessor Alan Greenspan, is not one to be subtle about changes in his outlook for the economy or policy. If Bernanke changes his mind, he feels the better outcome for monetary policy emanates from direct and transparent communication.

He seemed pretty balanced in his outlook: sticking to his forecast that the recovery would continue, but cautioning against any quick tightening of either fiscal or monetary policy.

More to the point, completely absent from his speech was any mention of additional measures the Fed should take in the face a slowing economy. Again, if the Fed chairman wanted to signal to markets that the Fed would embark on a new policy, he simply had to put a line or two in his speech. He knows we’re all watching, slicing and dicing. Markets would have picked it up.

New easing measures will be on the table next week, but the next steps the Fed takes are likely to be limited. The Fed owns some $1 trillion of mortgage-backed securities, the product of an aggressive buying program begun last year to expand its balance sheet and pump money into the financial system amid the Great Recession. The Fed stopped buying those mortgages in March.

The Fed will now consider whether to take the money from maturing mortgage securities and roll them back into new securities or Treasurys. That means the Fed would keep the size of its balance sheet, $2.3 trillion, the same. The mortgages are estimated to roll off at a rate of $200 billion annually, and deciding not to reinvest the money would be an effective tightening of monetary conditions.

 

[Tilted]

Fed Printing May Create 'Final Crisis': Marc Faber

The Federal Reserve will create a "final crisis" by continuing to print money because it is underestimating the strength of the economy, Marc Faber, the author of "The Gloom, Boom and Doom Report," told CNBC Tuesday.

investors who share his bearish view would be better off holding stocks instead of bonds in their portfolios, Faber said.

Analysts have said the Fed will decide to re-start easing monetary policy, possibly by buying assets, as early as Aug. 10 when the next meeting over policy is scheduled.

"Investors should have listened to me already six months ago when I wrote that the Fed will continue to monetize … they will print and print and print until the final crisis wipes out the whole system," Faber said.

Fed Chairman Ben Bernanke has "no clue what the economy is doing," and the Fed "misread in the last few months the strength of the economy," he added.

He sees "significantly more" quantitative easing ahead. A report in the Wall Street Journal said the Fed might decide on buying government bonds or mortgage bonds again.

 

[Larry Gude]

A golden opportunity returns;

New easing measures will be on the table next week, but the next steps the Fed takes are likely to be limited. The Fed owns some $1 trillion of mortgage-backed securities, the product of an aggressive buying program begun last year to expand its balance sheet and pump money into the financial system amid the Great Recession. The Fed stopped buying those mortgages in March.

The Fed will now consider whether to take the money from maturing mortgage securities and roll them back into new securities or Treasurys. That means the Fed would keep the size of its balance sheet, $2.3 trillion, the same. The mortgages are estimated to roll off at a rate of $200 billion annually, and deciding not to reinvest the money would be an effective tightening of monetary conditions.

The reason why TARP was such a bad idea is that it not only rewarded bad business, it also did not serve the interests of we, the people. We got to pay for the big banks profits and bonuses AND got to keep paying way to much for our homes.

The home owner, as I have argued again and again, we, the people, the ones who pay our bills, need to be the ones who are bailed out. As long as we are nervous about the economy and the value of the home and job security, we ain't spending. If we ain't spending, it does not matter how much money business has if they have no customers.

Ditch the mortgage backed securities, watch Wall Street balance sheets, finally, lose artificial asset value and let the banks go back and re write every last mortgage based on the value of the home, THEIR homes, by the way, and then and there the people who played by the rules are rewarded for it, every month, and then we will start to feel a little better about things instead of being the chumps for everything.

And then, when the hit, the proper hit is taken, we shall have hit bottom and we can start up.

 

[Tilted]

Fed Signals Further Easing Amid Slowing US Economy

The Federal Reserve on Tuesday took fresh steps to lower borrowing costs amid a softening economic recovery, announcing it would use proceeds from its maturing mortgage bonds to buy more government debt.

The decision to reinvest proceeds from the more than $1.3 trillion in mortgage-related debt the Fed holds, an effort to keep market-set borrowing costs down, represents a significant policy shift.

Just a few months ago, the central bank had been avidly debating an exit strategy from the extraordinary stimulus delivered during the financial crisis.

"To help support the economic recovery in a context of price stability, the committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities," the Fed said in a statement.

The move was somewhat surprising.

Although many analysts and investors had expected the Fed to announce it was reinvesting the mortgage proceeds, most had thought it would buy more mortgage debt instead of government bonds.

I don't know what to say. It's beyond ridiculus at this point. Long live phony economies. Long live free money. Long live debt-centricity and living for today, tomorrow be damned.

 

[BOP]

Fed Printing May Create 'Final Crisis': Marc Faber

May?

 

[Tilted]

US Recovery Softer, Fed Ready With Stimulus: Bernanke

U.S. Federal Reserve Chairman Ben Bernanke said on Friday the recovery has softened more than expected and the Fed is ready to take further steps if needed to spur the stumbling economy.

"The committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly," he said in remarks prepared for delivery at a Fed conference in Jackson Hole, Wyoming.

Bernanke said the U.S. central bank's purchases of longer-term securities have been effective in lowering borrowing costs and that he believes the benefits of buying more such assets, if needed, would outweigh any disadvantages.

 

[Larry Gude]

US Recovery Softer, Fed Ready With Stimulus: Bernanke

When is someone of note, instead of an internet noboby like me, going to point out that Bernanke, Mr. Great Depression Expert, has been fighting the last war, the War of 1929, and that is why everything he has done, and Obama and Timmy, has failed?

 

[Otter]

When is someone of note, instead of an internet noboby like me, going to point out that Bernanke, Mr. Great Depression Expert, has been fighting the last war, the War of 1929, and that is why everything he has done, and Obama and Timmy, has failed?

I've always thought of you as a nobody, its interesting that you describe yourself as a noboby.

 

[Larry Gude]

I've always thought of you as a nobody, its interesting that you describe yourself as a noboby.

How sweet of you.

 

[Tilted]

Fed Will Boost Balance Sheet by $500 Billion: Survey

The Federal Reserve will boost its balance sheet by about half a trillion dollars over a six-month period beginning in November and keep it inflated for up to a year, according to a survey of leading markets participants by CNBC.

About 70 percent of the 67 respondents, which include economists, strategists and fund managers, believe the Fed will begin quantitative easing again.

Of those, 80 percent believe the Fed will start before the end of this year. November is seen as the most likely month for the Fed to restart asset purchases by 38 percent of those who took the survey, but December was a close second with 32 percent.

I sure hope they're wrong, but my gut tells me they aren't. The amount of quantitative easing implemented by the Fed is already disturbing. A charting of the value of the Fed's balance sheet would be quite striking. Yes, I realize that the dramatic expansion of its balance sheet hasn't really shown up in higher order money supply metrics (e.g. M2, M3), and isn't thusly problematic - yet. But, in essence, that just means the QE hasn't worked all that well.

In essence, the 'don't worry about the size of the Fed's balance sheet' argument is thus: Pfft, the potential inflationary side effects of our QE policies aren't particularly worrisome, because they'd only come about if our QE policies actually worked - and they haven't been working all that well.

 

[Tilted]

Fed Certain to Act in November In a Big Way: Survey

Following Friday’s disappointing jobs report, market participants are now virtually certain that the Federal Reserve will announce that it will resume buying assets at the conclusion of its November meeting and do so in a sizeable way, according to an exclusive CNBC Fed Survey.

Nearly 93 percent of the 70 respondents, including economists, fund managers and traders, believe the Fed will boost the size of its portfolio, up from 69 percent in the survey two weeks ago.

Of those who expect the Fed to move, 86 percent look for an announcement in November, up from 38 percent in the last survey. Market participants forecast that the Fed will announce plans to purchase $500 billion in assets at the conclusion of the upcoming meeting, the first time the question has been asked.

They keep trying to get blood sugar into the economy's blood stream by way of a crimped peripheral IV line. They should just use a central IV line and pump that stuff in at full speed. They could exchange all the single dollar bills in circulation for newly minted hundred dollar bills and everyone could pretend they were rich for a while.

 

[Larry Gude]

Fed Certain to Act in November In a Big Way: Survey



They keep trying to get blood sugar into the economy's blood stream by way of a crimped peripheral IV line. They should just use a central IV line and pump that stuff in at full speed. They could exchange all the single dollar bills in circulation for newly minted hundred dollar bills and everyone could pretend they were rich for a while.

The current line is that TARP and GM and Chrysler absolutely prevented a depression and we would be in far worse shape right now absent them. The Obama team needs this to be true to make their case for the election this fall because D's far and wide are suffering from voter push back on spending. If they are right, that those programs worked then, of course, by all means, more spending is the answer.

Of course, you do not hear them give President Bush credit for TARP or bailing out the UAW, neither of which happens without him.

Worse, you do not hear the GOP standing up and saying "Hey! What about us!? We lead the charge on those two policies!"

TARP was wrong. Bailing out the UAW was wrong. Neither did anything more than kick the can down the road. Neither forced the fundamental changes necessary to fix what went wrong in the first place. There is no conversation about Fanny and the Community Reinvestment Act and the governments central role in creating the Wall Street mess. There is no conversation about the governments central role in allowing companies to put pennies aside on promises for dollars, year after year after year.

So, there is no fix. There is only band aids and the nation wide Cover Yer Ass Act of insert year here_________.

I would argue we would have been far worse off absent TARP and the UAW bailout. I would also argue, strenuously, we would be far better off right now. We would be recovering, broadly, because no TARP and no UAW bailout forces the reckoning absolutely necessary to address and fix, correct, the deep seated flaws in the Community Reinvestment mess and it's bastard children which handed Wall Street the rope to hang us all. It forces the reckoning absolutely necessary for GM and Chrysler to made the fundamental changes in their business models to become successful businesses again.

And there sits the Fed behind all of this. Secret. The Wizard behind the curtain. The catch all where all mysteries go to die. Where transparency is not spoken. It has failed it's mission to protect the dollar.

And we do not talk about any of this because both the D's and the R's do not, can not have these conversations.

 

[Tilted]

The Fed is expected to announce today just how hard it intends to push on the rope (this time around).

 

[Larry Gude]

The Fed is expected to announce today just how hard it intends to push on the rope (this time around).

If they do this, gold, gas and heating oil will launch as ever more dollars seek stability.

This is just silly. None of them, not Bernanke, not big business, not bankers, no Obama or any of the R's, not even Romney in his Mitt '12 editorial debut today, are talking about the one and ONLY thing that matters;

CONSUMERS

 

[Tilted]

For the heck of it, and for those who may not have seen it in graphic form before (as it is thusly quite striking), here's a chart of (roughly) the Federal Reserve balance sheet - roughly of the monetary base. We might call the right side of this graph Quantitative Easing I. We seem to be about to enter Quantitative Easing II. What will it look like?

 

[Vince]

If they do this, gold, gas and heating oil will launch as ever more dollars seek stability.

This is just silly. None of them, not Bernanke, not big business, not bankers, no Obama or any of the R's, not even Romney in his Mitt '12 editorial debut today, are talking about the one and ONLY thing that matters;

CONSUMERS

None of them give a crap about the people. They only care how they look come election time. After that it's business as usual. In Obama's case, he only cares about how he looks on TV.

 

[Larry Gude]

For the heck of it, and for those who may not have seen it in graphic form before (as it is thusly quite striking), here's a chart of (roughly) the Federal Reserve balance sheet - roughly of the monetary base. We might call the right side of this graph Quantitative Easing I. We seem to be about to enter Quantitative Easing II. What will it look like?

View attachment 78460

It looks like a side view, ground level, of a man laying on his back, after taking a double barrel shotgun to the face.


Coincidence?

 

[Tilted]

It looks like a side view, ground level, of a man laying on his back, after taking a double barrel shotgun to the face.


Coincidence?

Man, I'd love to be a fly on the wall of a psychologist's office when they were giving you a Rorschach test.

 

[Larry Gude]

Man, I'd love to be a fly on the wall of a psychologist's office when they were giving you a Rorschach test.

Where do you think I saw a guy lying on his back after taking a self inflicted double barrel to the face?