The Mess That Greenspan Made - Part 415

What Did the Fed Do?

The Federal Reserve’s policy making committee should have concluded their meeting in Washington a few moments ago and, unfortunately, we’re far away from a computer right now on the Beartooth Highway. We’ll probably listen in to Bloomberg Radio now and then to hear what happened, but won’t be able to provide any comments until later in the day.

It is probably safe to post the graphic to the right, the one that normally appears here on Fed meeting days, since a change in short-term interest rates isn’t likely.

It’s been updated to reflect last month’s decision to lengthen their extended low rate pledge to at least mid-2013.


Ben Bernanke’s easy money policies are really putting his predecessor to shame, something that few would have thought possible a few years ago.

By the time mid-2013 rolls around, that will make a whopping five-and-a-half years of ZIRP, a similar span last time around seeing rates climb back to 5.25 percent in mid-2006, yet another reminder of how unprecedented these times are.

Anyway, my guess is we’ll get “Operation Twist” today (for all the good that will do) and, perhaps, a change in the policy statement that hints at doing more (if necessary), but that the stock market will be disappointed by it all.

Bernanke should have never made those comments last time around about how higher stock prices are, effectively, the Federal Reserve’s third mandate.

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What Will the Fed Do?

After the Republic leadership in Congress sent a letter to Federal Reserve Chairman Ben Bernanke yesterday urging he and his fellow central bankers to refrain from any more monetary stimulus to aid the economy (and, not uncoincidentally, President Obama’s election chances), the Fed’s meeting today has gotten a bit more interesting.

See video link in Links.txt

The letter was signed by Senators Mitch McConnell and Jon Kyl along with Representatives John Boehner and Eric Cantor and, while they do make a few good points, such as, the dismal results of prior money printing efforts and the potential for further intervention to harm the U.S. economy, it was rather unusual (unprecedented?) and bordered on bullying.

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Wednesday Morning Links

Global markets wait for Fed, Greece – AP
Bernanke Has Few Tools to Heal Economy – Bloomberg
Fed looks set to ease policy as U.S. outlook dims – Reuters
Republicans Urge Bernanke to Refrain From Further Stimulus – BusinessWeek
IMF’s prognosis for advanced economies just got a whole lot bleaker – Telegraph
Greece hit by new wave of protests, braces for fresh austerity measures – xinhuanet
The 2007 Bust: How Could They Not Have Known? – Real Clear Markets
Bank of England ready for more money printing – Telegraph
Obama’s Tax Hikes Expected To Have Little Impact On The Rich – HuffPost
Euro Crisis: The General Haig school of crisis management – Economist
Doom! – Krugman, NY Times

Oil hovers near $87 ahead of US Fed policy meeting – AP
Gold edges up in countdown to Fed policy decision – Reuters
PIMCO Launches Fund to Hedge Inflation Risk – AdvisorOne
Investors Must Take ‘Leap of Faith’: BlackRock’s Doll – CNBC
Bullion Vaults Run Out of Space on Gold Rally – Bloomberg
Ready for the annual Christmas rally in gold and silver? – StockHouse
Asian gold demand driven by rising wealth, savings mentality – Kitco
Grantham: ‘No market for young men’ – MarketWatch
Gold Likely to Retest $1,920: Charts – CNBC

A Little Inflation Can Be a Wonderful Thing – Mother Jones
Short-Term Stimulus Won’t Help U.S. in Long Run – Bloomberg
Japan exports rise less than expected on yen surge – BBC
Australia to Europe: Get your act together – Channel News Asia
Australia’s Mortgage Stress Jumps as Costs Rise – Bloomberg
With high inflation and weak currency India not like other BRIC Countries – Economic Times
Record 37% Say Their Home Is Worth Less Than the Mortgage Payments – Rasmussen
$1B foreclosure aid program helps fewer than planned – USA Today
Housing Is to the U.S. What Greece Is to the Euro Zone – WSJ
California Housing Market Sees August Boom – MainStreet
The Twist and Shout Should Be the Fed’s Next Maneuver – Bloomberg
Why Many U.S. Banks Don’t Want Your Money – Time


A Gold Car in India? Why Not?

A few years ago the world learned of Saddam Hussein’s gold toilets and, of course, gold plated AK-47s have been around for some time. Now comes news from Commodity Online in India that Tata Motors has produced a gold-plated car worth a reported $5 million.

Ironically, the vehicle above is Tata Nano, a model designed specifically to bring low cost transportation to the masses in Indian. Now they’ve gone and made it unaffordable again…

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