Wednesday, September 23, 2009


Greetings good citizen,

All’s well that end’s well, got her done and now I’m on the road to ‘recovery’ (fortunately for me, I will recover, unlike the ‘real economy’, which is, coincidentally, the topic of tonight’s offering

In what might best be described as, er, ‘odd’ the markets ‘took heart’ that the Fed is going to keep rates low, even though the economy is ‘likely in recovery’…

Which leaves us where, precisely? Is the economy ‘recovering’ or isn’t it?

While our man Ben Ber says it’s all over, once again his ‘actions’ belie his utterances.

Fed Sees Recovery but Holds Steady on Rates
Published: September 23, 2009

WASHINGTON — The Federal Reserve acknowledged Wednesday that an economic recovery was under way, but signaled that it was still much too early to start raising interest rates.

The Federal Reserve decided to hold interest rates at close to zero percent, likely through 2009. The Fed's Open Market Committee made its decision at its headquarters in Washington, above. [Um, gee, what do you suppose is the real problem here? The only ‘bright spots’ (a.k.a. ‘green shoots’) have been the direct result of government stimulus money. Could cutting that money off cold really ‘crush’ the non-existent nascent recovery?]

In a statement following a two-day meeting by the Fed’s policy makers, the central bank repeated that it would keep its benchmark overnight interest rate at virtually zero for “an extended period.” That almost certainly means until at least some time in 2010. [Isn’t it a friggin’ shame you and I can’t take advantage of the Fed’s low interest rates (You need to be a criminal to do that!)]

Policy makers also announced that they would stretch out the Fed’s program to buy up almost $1.5 trillion worth of mortgage-related securities through the end of March. That program is aimed at keeping mortgage rates low and propping up the housing market. [Totally unsurprisingly, the government is the ONLY buyer of ‘securitized mortgages’. A huge profit center for the banksters, which is why it’s still going on.]

“Economic activity has picked up following its severe downturn,” the Fed said in its statement. It said that financial markets had “improved further,” that the housing market was rebounding and that household spending “seems to be stabilizing.” [Sadly, the Fed admits to being unable of pointing to a single genuine incident of this alleged ‘improvement’…]

But the Fed also gave itself ample room to keep interest rates low, saying that inflation would remain “subdued for some time.” [Just like their wild claims that the housing crisis was ‘contained’ and wouldn’t ‘bleed into’ the large economy…that sure worked out well!

The Fed’s chairman, Ben S. Bernanke, already said on Sept. 15 that the recession in the United States had ended and that a fragile recovery had begun. [Sadly, this was also a ‘wild butt’ assertion he has, stock market aside, absolutely zero proof of…]

But the Fed’s statement on Wednesday suggests that policy makers have become slightly more optimistic since their meeting in August. At the same time, policy makers continued to caution that the recovery would be slow and that unemployment would continue to rise and would only begin to edge down some time in 2010. [There is no such thing as a ‘jobless recovery’, it’s impossible!]

The unemployment rate was 9.7 percent in September, its highest level since the early 1980’s, and many analysts believe it will ultimately climb above 10 percent and remain well above its normal levels for several years. [The ‘genuine’ unemployment number is nearly 50% but that figure is ‘politically unacceptable’ so they lie about unemployment instead!]

Wall Street was encouraged by the Fed’s statement, and prices of stocks and bonds rose in its immediate wake on Wednesday afternoon.[ Again, one has to wonder what’s wrong with this picture? If the economy is ‘really’ recovering, aren’t investors afraid that the sudden burst of production is going to spur higher prices, which will in turn fuel demands for higher wages, which need to be kept in check with higher interest rates? How is this ‘good news’ again?]

Having helped pull the United States out of its worst economic crisis since the 1930s, Fed officials are now grappling with when and how to reverse the gigantic taxpayer funded financial rescue operations that it put in place over the last year.

The central bank, using its power to create money at will, has propped up credit markets and financial institutions with a maze of emergency lending programs and huge interventions in financial markets. On top of its program to buy more than $1 trillion worth of mortgage-backed securities, it has also completed the purchase of $300 billion in Treasury bonds.

As a result of those efforts, the central bank’s balance sheet has more than doubled in size, to about $2 trillion, since the fall of 2008.[And we all know who was president in the fall of 2008…don’t we?]

The Fed already announced that it would end its Treasury purchases in October. But policy makers have been debating how quickly to phase out the mortgage program. More hawkish members of the Federal Open Market Committee, the Fed’s policy-setting body, have worried that the program was displacing private investors in the mortgage market and feeding inflationary pressures. [When ‘private lenders’ return to the mortgage market, houses will remain ‘unaffordable’, not due to price but because of interest rates…only an idiot will buy a house once this is through.]

But Mr. Bernanke and many other policy makers have repeatedly warned that the economic recovery is fragile and that it would be a mistake to start tightening monetary policy quickly. On that issue, the Fed is roughly in sync with the European Central Bank, the Bank of England and other major central banks around the world.[Isn’t ‘collusion’ a wonderful thing? It sure is if you’re a bankster!]

The Fed’s policy makers were unanimous in Wednesday’s decision on monetary policy.

Fed officials say they are under no pressure to tighten monetary policy, because inflation remains extremely low. With unemployment approaching 10 percent, and underemployment pushing the true jobless rate above 16 percent, Fed officials expect wage pressures to remain very low for quite some time. [What these shitheads aren’t saying is the also expect defaults to remain ‘elevated’ for the foreseeable future as well…]

Largely because of the fall in oil prices earlier this year, the government’s Consumer Price Index has actually edged down over the last 12 months. The Fed’s preferred measure of inflation, which excludes the volatile prices of food and energy, has declined to an annual rate of 1.8 percent. Fed officials expect that rate to decline more over the next year, possibly below 1 percent. [Isn’t that fucking ‘amazing’ good citizen…CPI inflation ‘excludes’ both food and fuel when they are going up but ‘capture’ these items when they fall! It’s a fuckin’ miracle I tell ya!]

Ian Shepherdson, a forecaster at High Frequency Economics, said the private credit markets were still so weak that the Fed might cause problems if it stopped its bond-buying spree. [Weirdly, they can’t keep it up forever either…so something’s gotta give…]

Mr. Shepherdson noted that one key measure of the money supply, known as M-2, had actually been actually been edging down despite the Fed’s huge purchase programs. Because the Fed has been creating money to pay for its purchases, its efforts should cause the money supply to increase. The declines in M-2, he said, indicate that private credit is falling faster than the Fed’s lending has been increasing. [Show of hands now, how many of you fools think that’s a ‘good thing’?]

“If the Fed was to stop buying assets, M-2 would drop sharply because private credit has been falling,” Mr. Shepherdson said. “I just wonder whether they have the stomach for that kind of contraction.”

Bizarrely, it ain’t the rich that will find themselves crushed by the ‘credit contraction’, their money is ‘insulated’ from the ‘source’. The ‘source’ will take the hit and fold up like a wet cardboard box…millions more workers will hit the streets and ‘pandemonium’ will reign!

This certainly won’t make a ‘pretty picture’…but it is what it is.

They’re trying to do a ‘controlled burn’…it will be interesting to see if they can pull it off.

Naturally, the crucial ‘center’ continues to hold, the public suspects nothing, although little announcements like this one here threaten to pop that bubble.

Thanks for letting me inside your head,


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