Posts Tagged ‘summer of recovery’

Fed Changes Mind After Changing Mind, Monetizing Debt Again As America Flushes Way To Ruination

August 12, 2010

First, the New York Times headline:

Fed to Buy U.S. Debt, Saying Recovery Has Slowed
August 10, 2010, 2:19 pm

The Federal Reserve acknowledged Tuesday that its confidence in the economic recovery had dimmed, and it announced that it would use the proceeds from its huge mortgage-bond portfolio to buy long-term Treasury securities, The New York Times’s Sewell Chan reports from Washington.

Bu bu but I thought Barry Messiah said this would be the summer of economic recovery.  I thought Barry Hussein had kissed the economy with his beatific wonderfulness and made it all better.

The fourth paragraph in the Slimes article underscores the fact that the Keystone cops of the Obama administration have absolutely no idea what they’re doing:

The Fed’s new stance marked the completion of a turnabout from a few months ago, when officials were discussing when and how to eventually raise interest rates and gradually shrink the $2.3 trillion balance sheet the Fed amassed through its response to the 2008 financial crisis.

Ben Bernanke came out back in February and had this finance fit:

Wednesday, Federal Reserve Chairman Ben Bernanke warned Congress that the Federal Reserve does not plan to “print money” to help Congress finance the exploding U.S. national debt.  In fact, Bernanke told Congress that the U.S. could soon face a debt crisis as bad as the one in Greece if the U.S. government does not get things in order financially.  This represents a fundamental change in policy for the Federal Reserve, because they have been enabling the massive borrowing by the U.S. government over the past couple of years by “buying” the majority of new U.S. government debt that has been issued.  But now the fat cats over at the Federal Reserve have apparently changed their minds.  Using uncharacteristic bluntness, Bernanke told Congress that the Federal Reserve is “not going to monetize the debt”.So why is the Federal Reserve changing course?

Well, have no fear: the Federal Reserve is Re-changing course.  Like a boomerang that comes back around to smack an ignorant fool right in the head.  Perhaps they have come to realize that the U.S. economy is about to flush down the drain and plunge into a deep, dark hole, and they figure the fall might be softer if we land on giant piles of worthless currency.

Yes we’ll monetize the debt.  Oh no we won’t.  Oh yes we will.  Stop arguing with me!  But I am you!

I thought the following was a good article due to its provision of a historic context for today’s Fed decision:

Fed begins monetizing the deficit

The Federal Reserve, in announcing the results of this week’s meeting of the Open Market Committee, surprised the market by revealing it will begin purchasing US Treasury notes and bonds with the principal income it receives from its vast holdings of Fannie Mae and Freddie Mac mortgage securities. This practice – wherein the Fed buys up US government securities and injects cash into the public market as payment for these securities – is a form of monetizing the debt. The last time the Fed did this on a big scale was back in the 1960s when it attempted to mop up the excess Treasury securities that were flooding the market as a result of Lyndon Johnson’s efforts to finance the Vietnam War. That Fed program was viewed at the time as a failure, since the cash the Fed put back into the economy in exchange for the securities was a big reason – perhaps the major reason – why price inflation accelerated from the late 1960s until a decade later, when Paul Volcker managed to squelch inflation once and for all with forbiddingly high interest rates.

The market was expecting some sort of monetary stimulus, but not this. The expectation was that the Fed would renew its “quantitative easing” program involving Fannie Mae and Freddie Mac securities – a program designed to push down long term mortgage rates. That program was successful inasmuch as mortgage rates are at record lows, but it left the Fed with well over a trillion dollars of these securities on its balance sheet. Fed officials have lately been pondering publicly how to get rid of these securities, and apparently have concluded they can’t under present market conditions without forcing mortgage rates back up again, which would only hurt the housing market. Instead, these officials have concluded that the Fed has no choice but to hold on to these securities until they mature, which is well over 10 years from now for the portfolio.

The Fed receives billions of dollars of principal and interest payments every year on this portfolio, and what to do with this cash has always been open for discussion until now. But using principal proceeds from these securities to monetize the government debt is fraught with risk. For one, should the housing market start to weaken again and foreclosures rise from current levels, the Fed will be sitting on billions of dollars of credit losses on its portfolio. This could eat up most if not all of the profit it would otherwise earn on this portfolio. Second, older investors have memories of the nasty inflationary consequences the last time the Fed monetized the debt, and the market has become very skittish about the risk of inflation, and maybe even hyperinflation ala Weimar Germany, that could result from the enormous fiscal and monetary stimulus put into the economy since 2007.

In terms of these risks, the best thing the Fed has going for it at the moment is that the pricing problem facing the current economy is not inflation, but deflation. A growing number of economists, and even some Fed governors, are worrying outright about deflation, but at least in a deflationary environment the Fed is given a lot more leeway to monetize the debt and build up its balance sheet as a consequence. The Fed press release today did not mention deflation per se, but the FOMC no longer described the economy as “progressing”, as it did in June. Instead, the Fed sees an economy with substantial slack, a stagnant housing market, repressed earnings power for workers, and very low inflation.

The bond market was happy to buy Treasuries on this news, concentrating in the 2 to 10 year maturities, in anticipation of higher prices (and thus lower yields) once the Fed begins actively purchasing. So far, in other words, the bond market sees no risk of inflation, much less hyperinflation, and is content to see yields continue to head to record low levels. Such excessively low yields on government bonds have only been seen in deflationary economies like Japan has experienced for nearly two decades. This is in essence what the bond market is forecasting for the US economy.

The stock market, which has been on a tear since early July, took this news in stride, but time and past experience is weighing heavily on this stock rally. When bond yields fall to record lows, this has never boded well for equities. In a deflationary economy, stock prices are one of the main victims, and the US stock markets have so far shown no significant adjustment downwards to reflect deflation. Stocks may have some serious “catching up” to do.

At the least, we can say we are no longer in that environment in the spring when Fed governors were talking seriously about how they were going to remove all their monetary stimulus now that the economy has recovered. Instead, we are witnessing yet another round of monetary stimulus, a recognition by the Fed that their previous efforts have failed to ignite a sustainable recovery.

All this from the Federal Reserve, an entity that is neither “federal” nor a “reserve.”  It is a private bank that issues currency based on fiat of delegated institutional power.  And what it is doing now is akin to photocopying a dollar bill to pay a credit card bill.  Another analogy would be if you were facing bankruptcy, and decided to start buying your own furniture from yourself.

Mind you, this is only partly the Federal Reserve’s fault.  They are in an impossible position as the Failure-in-Chief continues a path of spending America into collapse, and they have to figure out how to finance Obama’s addiction.

The Obama administration alternately fearmongered and promised that if the stimulus was passed that unemployment would not rise above 8%.  They lied.  The rate has been dropping from an earlier high exceeding 10% only because discouraged workers who give up are paradoxically dropped off the roles and aren’t counted.  Then they spent months creating pure fictions such as “created or saved” as “evidence” that Obama’s failed policy had succeeded.

To quote:

“One can search economic textbooks forever without finding a concept called `jobs saved.’ It doesn’t exist for good reason…” – Allan Meltzer, professor of political economy

“There is no way to measure how many jobs are saved.” – Harvard economics Professor Gregory Mankiw

Then Obama spent months telling us that the economy was recovering when it really wasn’t, culminating in his bogus “summer of economic recovery.”

This is an administration that falsely takes credit for a false recovery even as they falsely blame Bush and refuse to accept responsibility for their own policies.  It’s “win, we win, lose, Bush loses.”

These people should have zero-point-zero-zero credibility.

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Americans Recognize Obama A ZERO On Economy

July 23, 2010

What does a president do when his country recognizes he is an abject failure?

July 23, 2010
CNN Poll: Obama’s approval on economy drops to new low
Posted: July 23rd, 2010 12:30 PM ET

Washington (CNN) – Americans approval of how President Barack Obama is handling the nation’s economy has dropped to its lowest level of his presidency, according to a new national poll.

A CNN/Opinion Research Corporation survey indicates that 42 percent of the public approves of how Obama’s dealing with the economy, down 2 points from March, with 57 percent disapproving of his performance on the economy, up 2 points from March. The survey’s Friday release comes as the president made comments at the White House on what he termed the progress made this week on the economy and job recovery.

Full results [pdf]

The poll suggests a wide partisan divide on the issue, with nearly eight in 10 Democrats giving the president a thumbs up and nearly nine in 10 Republicans disapproving of Obama’s job on the economy. According to the survey, two-thirds of independents disapprove of the president’s economic performance.

The public hasn’t given Obama good marks on the economy since last September, and his approval rating on the economy, now at 42 percent, has been stuck in the mid-to-low 40s throughout this year,” says CNN Polling Director Keating Holland. “Part of the reason for that is that Americans haven’t seen much to cheer about on the economic front. Nearly eight in ten say that economic conditions are somewhat poor or very poor.”

While there were some vague signs of optimism in poll results earlier this year – when the number of Americans who said that the economy was in “very poor” shape had been slowly but steadily declining – that seems to have fizzled. Thirty-seven percent said things were in poor shape in our May poll; the same number feel that way now.

So what can Barry Hussein do?  Lying about his bogus “summer of recovery” isn’t working.

And he can’t agree with other Democrats that we should keep the Bush tax cuts in place in order to prevent damaging the economy even more.  He’s too much of an ideologue for that.

Dems may keep Bush tax cuts
By Alexander Bolton – 07/22/10 06:00 AM ET

Democrats are considering a plan to delay tax hikes on the wealthy for two years because the economic recovery is slow and they fear getting crushed in November’s election.

It could mean a big reprieve for families earning $250,000 and above annually.

President George W. Bush’s tax cuts will expire at the end of the year unless Congress acts to delay their sunset.

Some Democrats are now arguing forcefully that a delay is a win-win plan that would help the federal budget without hurting the economy.

Wealthy families would not have an incentive to cut back on spending and budget writers could assume an inflow of tax funds in future years, making five- and 10-year budget projections look less scary.

How long have the Democrats been demonizing the Bush tax cuts?  Seven long years?  And now more and more of them are arguing – likely out of fear for their own political skins – that they were misrepresenting the truth all along, and the Bush tax cuts maybe didn’t actually cause the Dark Ages after all.

But Obama is way too much of an ideologue for that kind of rubbish.  That kind of acknowledgment is about as likely as a bomb-vest-wearing terrorist acknowledging that maybe Allah ISN’T so great, after all.

So what’s Obama to do?

Only one option remaining: keep blaming Bush and Republicans.  No matter how obviously asinine it is, never quit blaming, never quit trying to divert attention for his failures to some GOP straw man.

The last time Republicans ran Congress in January 2007, unemployment was at 4.6%.

Financial Reform ALREADY Injuring Economy

July 22, 2010

This is something else.

From Business Insider:

Financial Reform Meets First Huge Unintended Consequence As Ford Halts Bond Offering
Joe Weisenthal | Jul. 22, 2010, 8:57 AM

Whenever you get new laws and “reform,” unintended consequences are sure to follow.

Usually they take awhile.

Not so with Dodd-Frank.

WSJ reports that Ford has already yanked a bond deal, because the ratings agencies, fearing legal liability, won’t let the automaker puts their ratings in the prospectus, making a sale impossible.

So did Dodd-Frank just kill the bond market? Well, probably not.. Regulators will likely find some way around this impasse, but it’s still amusing to see the bill INSTANTLY slow down the gears of capitalism (or at least capital raising) as its fiercest critics might have suggested.

Click here to see 15 signs the economy is rolling over

Here’s the Wall Street Journal piece cited above:

JULY 21, 2010
Ford Scuttles Debt Deal as Overhaul Chills Market
BY ANUSHA SHRIVASTAVA

Ford Motor Co.’s financing arm pulled plans to issue new debt, the first casualty of a bond market thrown into turmoil by the financial overhaul signed into law Wednesday.

Market participants said the auto maker pulled a recent deal, backed by packages of auto loans, because it was unable to use credit ratings in its offering documents, a legal requirement for such sales. The company declined to comment.

The nation’s dominant ratings firms have in recent days refused to allow their ratings to be used in bond registration statements. The firms, including Moody’s Investors Service, Standard & Poor’s and Fitch …

Oh, well. Nobody needs those stupid jobs that Ford would have financed through an expansion, anyway.  And who really cares if numerous deals that would have happened don’t now because of “finance reform”?  Surely we’re all fine with scraping our own feces to heat our homes as in the other socialist Utopia in North Korea?  Who isn’t willing to personally suffer to punish those greedy businesses?

Analyst David Rosenberg, in agreement with other market experts such as Bob Farrell, said on CNBC that the Dow could challenge the terrifying lows of March 2009 and drop below 5,000.

Well, surely the Chairman of the Federal Reserve would bring confidence to the market.

Not so much:

Bernanke says economic outlook is ‘unusually uncertain’
In congressional testimony, the Fed chairman predicts that unemployment will remain stubbornly high for years. His comments send stocks down sharply.

By Don Lee and Walter Hamilton, Los Angeles Times
July 22, 2010

Reporting from Washington and Los Angeles —

Saying the economic outlook was “unusually uncertain,” Federal Reserve Chairman Ben S. Bernanke predicted that unemployment was likely to remain stubbornly high for several years, straining families and endangering the nation’s economic stability and competitiveness.

“Long-term unemployment not only imposes exceptional near-term hardships on workers and their families; it also erodes skills and may have long-lasting effects on workers’ employment and earnings prospects,” he said Wednesday in his semiannual testimony to Congress.

“This is the worst labor market, the worst episode, since the Great Depression,” Bernanke said of long-term unemployment. “Not only for the sake of the unemployed and for the short-term strength of the economy but also for a long-term viability in international competitiveness, I think we need to be very seriously concerned.”

We look at the financial reform imposed by the Democrats and realize that it will cost banks billions and make them even more reluctant to lend than they already are even as they pass the increased costs to their customers in the form of a tax from Obama to you.

Business leaders are flat-out stating that Obama’s economic policies are stifling growth.

And I go back to the prediction of chief executive officers made prior to the worst decision America ever made:

In October 2008 I wrote an article which quoted Chief Executive Magazine as follows:

In expressing their rejection of Senator Obama, some CEOs who responded to the survey went as far as to say that “some of his programs would bankrupt the country within three years, if implemented.” In fact, the poll highlights that Obama’s tax policies, which scored the lowest grade in the poll, are particularly unpopular among CEOs.

Barry Hussein is preaching about his “summer of economic recovery.”  But he’s a liar without shame or principle.

On the flip side of the “summer of economic recovery,” there’s actual reality.

From CNN Money, July 22, 2010:

Jobless claims jump in latest week
By Blake Ellis, staff reporterJuly 22, 2010: 9:28 AM ET

NEW YORK (CNNMoney.com) — The number of Americans filing for initial unemployment insurance climbed last week, the government said Thursday.

There were 464,000 initial jobless claims filed in the week ended July 17, up 37,000 from a revised 427,000 the previous week, the Labor Department said.

The number of claims was much higher than expected. A consensus estimate of economists surveyed by Briefing.com expected new claims to rise to 445,000.

“It’s very disappointing to have this leading indicator of economic conditions jump higher,” said John Lonski, chief economist at Moody’s Economy.com. “This is the latest reminder of a weak labor market, and the jump preserves worries regarding the adequacy of economic growth.”

The Democrats passed a 2,300 page bill that is essentially mystery meat, which creates more than 20 new agencies that will write hundreds of as-yet unwritten regulations.

And even the author of the bill doesn’t have a clue how the massive Rube Goldberg Machine boondoggle will work:

“It’s a great moment. I’m proud to have been here,” said a teary-eyed Sen. Christopher J. Dodd (D-Conn.), who as chairman of the Senate Banking Committee led the effort in the Senate. “No one will know until this is actually in place how it works. But we believe we’ve done something that has been needed for a long time. It took a crisis to bring us to the point where we could actually get this job done.”

Never let a crisis go to waste.

If you are a Democrat, I suggest you burn your testicles off with a blowtorch.  Because that would be change.  And of course change is good.  And who really cares about the irrelevant details of “change,” anyway?

Analyst Meredith Whitney, famous for being one of the very, very few who predicted the economic disaster in 2008, has made another prediction that no one listened to:

“Financial Reform Will Cause ‘Tragic’ Unemployment Levels For An Extended Period Of Time

So, as the economy descends into the hell of unintended consequences, please comfort yourselves with my assuring you that I told you so.

CBS Poll: Only 40% Approve Of Obama On Economy

July 14, 2010

Obama keeps talking about “moving forward.”  But only an increasingly shrinking minority of Americans want to go anywhere with him.

From CBS:

CBS News Poll analysis by the CBS News Polling Unit: Sarah Dutton, Jennifer De Pinto, Fred Backus and Anthony Salvanto.


Economists have declared the economic recession over largely over, but most Americans don’t share their optimism, and they are increasingly blaming President Obama for their money woes.Mr. Obama’s approval rating on the economy has tumbled five percentage points from last month, according to a new CBS News poll, with just 40 percent of those polled expressing full confidence in his actions.

More than half of those questioned (54 percent) said they disapproved of Mr. Obama’s handling of the economy. Last month, 45 percent approved. The drop in approval has been seen mostly among independents, just 35 percent of whom now say they approve.

Three in four Americans think the effects of the recession will linger for another two years or more. Just 20 percent said they believed the recession’s aftereffects would continue to weigh on their lives and livelihoods for another year or less. The public is generally more pessimistic now than in February.

The national unemployment rate continues to hover just beneath the 10 percent mark, and it is estimated that many more Americans are underemployed – meaning they have given up looking for a full-time job, or are working fewer hours than they would like.

The poll shows widespread concern among Americans when it comes to employment. Seven in ten Americans rated the job market in their area “fair” or “very bad”; only a quarter of those polled described it as “good”.

There did appear to be some optimism that the job market would improve over the next year — but not a lot. While 28 percent said they expected the job market in their area to get better over the next year, twice as many — 56 percent — said it would likely remain the same. Another 14 percent predicted even fewer available jobs in the coming years.

CBS News Poll Database


This poll was conducted among a random sample of 966 adults nationwide, interviewed by telephone July 9-12, 2010. Phone numbers were dialed from random digit dial samples of both standard land-line and cell phones. The error due to sampling for results based on the entire sample could be plus or minus three percentage points. The error for subgroups is higher.

This poll release conforms to the Standards of Disclosure of the National Council on Public Polls.

Gee, Obama.  So much for your “summer of recovery.”  Got any other crap-sandwich assurances for us?

You can’t lie and weasel your way out of this one.  You’ve kept giving us “Are you going to trust me, or are you going to trust your lying eyes?” rhetoric.  And, well, we’re finally starting to open our eyes.

More than 70% of Americans say that the job market stinks in their area.  You promised us hopey-changey.  But more and more Americans are giving up even bothering to look for work in your Obamanomics nonsense.

As the job market in the United States continues to shrink more and more Americans are simply giving up hope. This is great news for the unemployment rate but for many jobless it leads to breadlines and homelessness.

The jobs are not coming back! The United States job market must add 125,000 new jobs each month just to keep up with young people entering the jobs market. For “recovery” to happen the United States would need to add closer to 250,000 jobs monthly. This is simply not going to happen. […]

The unemployment rate dropped from 9.7 percent to 9.5 percent, the lowest level since July 2009. But it fell because 652,000 people gave up on their job searches and left the labor force. People who are no longer looking for work aren’t counted as unemployed.

Even your very own Vice President is saying that you’re not going to do a damn thing to bring back the eight million jobs that have been lost, Barry Hussein:

Vice President Joe Biden gave a stark assessment of the economy today, telling an audience of supporters, “there’s no possibility to restore 8 million jobs lost in the Great Recession.”

Which is a pretty good way of realizing that your crappy policies are useless.  Why look for work when there’s “no possibility” to restore the lost jobs under Obama Hussein?

And, heck, more and more Americans (maybe after listening to all of your disgraceful apologies around the planet for how awful America has been) are just renouncing their U.S. citizenship altogether:

WASHINGTON — Amid mounting frustration over taxation and banking problems, small but growing numbers of overseas Americans are taking the weighty step of renouncing their citizenship.

“What we have seen is a substantial change in mentality among the overseas community in the past two years,” said Jackie Bugnion, director of American Citizens Abroad, an advocacy group based in Geneva. “Before, no one would dare mention to other Americans that they were even thinking of renouncing their U.S. nationality. Now, it is an openly discussed issue.”

I guess you’re going to have to redouble your already maximally demagogic rants blaming Republicans for everything.

The mainstream media propaganda depicted you as transcending the political divide and rising above petty politics, Barry Hussein.  But all you’ve gone is demonize and demagogue a now increasing majority of the American people.