No Fed bubble blowing at this time. Just an admission that the economy sucks and will continue to suck for a long time.
The economy is slumping, and the word from the Fed is that the central bank is just as paralyzed as Congress is............
That was a very negative announcement. It clearly says "We see nothing good for two years"
The Fed delivered less than the market expected............
AND STILL THE MARKET RALLIED............. FOOLS AND THEIR MONEY!
Hard to see how QE3 can proceed with three dissenters.
Collegiality certainly did not prevail at this meeting.
The Bernank is facing a brewing mutiny.
What should be obvious to the fed is that they are powerless to turn this thing around.One things for sure, a healthy market doesn't move 500 points in 90 minutes, especially on consecutive days. Actually, it was 610 points in only 75 minutes or so. This market is so broken.
What we have is an economic problem that has triggered a political problem, which in turn is making the economic problem much worse.
On Perpetual ZIRP
by Bruce Krasting
I had this to say last week:
I got it right, but I got it completely wrong. I feared that the Fed could extend the ZIRP language for as long as a year. Not in my wildest dream did I think they could take the extremely risky move of guaranteeing that interest rates will remain at zero for another 24 months. Having been shocked, my thoughts.
This action is indefensible on economic merits. This move is not motivated by sound monetary policy. It's motivated by politics. This is a payback to Obama. Shame on the Fed for mixing politics with money.
*We will not go two years with this monetary policy without inflation (measured by core) exceeding the previously stated commitment by Bernanke that policy would not be allowed to rise above 2%. Bernanke and the dove members that signed onto this policy have lied to the American people.Bernanke has done it on 60 Minutes. He has done it to Congress. Shame on all of them.
The Fed has taken away its ability to react to a situation that would require them to tighten. We are now on a one-way street. There is no way to turn around anymore. I believe the Fed has abdicated its responsibilities under the dual mandate. They have no ability to react if inflation should pop up in a year from now. Even worse, they have no policy options should there be a run on the dollar. The possibility of a run on the buck has gone up exponentially as a result. Should that happen, the Fed will have left us economically defenseless. Shame on the Fed for making us more vulnerable to a speculative attack.
The mistakes of 2011 will mark a point in history where America turned a corner downward. One that will take a few decades to recover from.
AND STILL THE MARKET RALLIED.............
I had this to say last week:
The Fed could easily attempt to buy some market peace by issuing a statement that the policy of zero interest rates would be extended for a minimum period of one year. I consider this to be a "high probability" to happen in the next 30 days.
I got it right, but I got it completely wrong. I feared that the Fed could extend the ZIRP language for as long as a year. Not in my wildest dream did I think they could take the extremely risky move of guaranteeing that interest rates will remain at zero for another 24 months. Having been shocked, my thoughts.
This action is indefensible on economic merits. This move is not motivated by sound monetary policy. It's motivated by politics. This is a payback to Obama. Shame on the Fed for mixing politics with money.
*We will not go two years with this monetary policy without inflation (measured by core) exceeding the previously stated commitment by Bernanke that policy would not be allowed to rise above 2%. Bernanke and the dove members that signed onto this policy have lied to the American people.Bernanke has done it on 60 Minutes. He has done it to Congress. Shame on all of them.
The Fed has taken away its ability to react to a situation that would require them to tighten. We are now on a one-way street. There is no way to turn around anymore. I believe the Fed has abdicated its responsibilities under the dual mandate. They have no ability to react if inflation should pop up in a year from now. Even worse, they have no policy options should there be a run on the dollar. The possibility of a run on the buck has gone up exponentially as a result. Should that happen, the Fed will have left us economically defenseless. Shame on the Fed for making us more vulnerable to a speculative attack.
A FED REALITY CHECK
The Fed is constantly trying not to surprise the markets and the markets are constantly trying to anticipate the Fed. What we end up with are interest rates that usually do not signal what they are supposed to signal -- interest rates that bear no resemblance to the economy-wide balance between saving and consuming. No wonder the economy is in a downward spiral.
The bottom line is that the Fed doesn't control the markets, but it has a lot of control over the "risk free" short-term interest rate. Furthermore, its actions distort the prices of everything, not just the price of short-term credit.
The bottom line is that the Fed doesn't control the markets, but it has a lot of control over the "risk free" short-term interest rate. Furthermore, its actions distort the prices of everything, not just the price of short-term credit.
Yesterday's "face-ripping" rally that we got post FOMC is already fading.
US futures are off in overnight trading.
This is more fun than Vegas!
Hand me them dice, I think I'll roll em one more time.
Charles-Louis De Secondat (1689-1755) Baron de Montesquieu
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