For the first time in over a year the Fed raised interest rates, and, unsurprisingly (although it will inevitably ‘surprise’ Wall Street analysts, they are ‘surprised’ if the sun rises!) the dollar also…(ahem) rose as well. (I saw a graph… it didn’t rise much!) Like most ‘economic indicators’ the ‘rises’ have been limited to the hundredths of a percent, literally not enough to lift the results out of the ‘margin of error’ for these dubious measurements.
But what the hey, there’s no law against investors being both stupid AND crazy…
The rest of us aren’t ‘blameless’ either, who do you think is picking up the tab for these idiots crazy bets? Yeah, I’m looking at you…not that there is anything you can do about it. Just saying, ya know?
Which brings us where good citizen? Just what is causing that loud sucking sound? Correct me if I’m wrong but there seems to be some confusion as to what the ‘name of the game’ is. You can’t escape the true purpose, which is survival…but for some bizarre reason, the most successful survivors are parasites! (Who ironically claim to be ‘rugged individualists’ who ‘earn’ every penny they steal…from you! If you got a dope slap for every time these losers hosed you, your head would cave in!)
Um, tonight’s offering provides a poignant example of just how ‘fucked up’ it is to let a few (investors) decide the future of the (unrepresented) masses…
Fed Rate Move Sends Dollar Higher
By SEWELL CHAN
Published: February 19, 2010
WASHINGTON — The Federal Reserve’s decision to raise the interest rate it charges on short-term loans to banks reverberated in the financial markets Friday, sending overseas stock indexes lower and giving fresh momentum to a recent rise in the dollar. [Yeah, right!]
The Fed took the move to normalize lending after holding interest rates to extraordinary lows for more than a year to prop up the financial system. [Which did what, exactly?] But the decision, announced after the close of equities markets in New York, sent Asian shares lower, with the Nikkei 225 index in Tokyo dropping nearly 2 percent, and both the Kospi index in Seoul and the Hong Kong’s Hang Seng indexes showing similar declines.
The reaction in Europe, however, was much more muted, with the major indexes in Frankfurt, London and Paris regaining lost ground in afternoon trading. Shares in Europe turned positive after a report from Washington that indicated only a slight increase in consumer prices in January. In fact, excluding food and fuel costs, prices actually fell 0.1 percent [Note the decimal and mind the ‘margin of error’!] — the first [Possible, but not necessarily factual] decrease since 1982. Wall Street, which has gained more than 2 percent for the week, is also expected to open slightly lower.
The move also helped propel the dollar’s recent rise even further, reaching $1.35 to the euro, its strongest level against that currency in nine months. [Flipping that rock over, we can be thankful these ‘ups and downs’ haven’t [yet] started to gyrate wildly…as they eventually will when their value falls into serious doubt.]
While the central bank had signaled its intentions to take such a step, the timing was a surprise. The announcement was made in a carefully worded statement that emphasized that the Fed was not yet ready to begin a broad tightening of credit that would affect businesses and consumers as they struggle to recover from the economic crisis. [Um, should such ‘warnings’ be necessary in a properly organized society? I think not!]
But while the move will not directly affect home mortgage, credit card or auto loan rates, it was a clear sign to the markets, politicians in Washington and the country as a whole that the era of extraordinarily cheap money necessitated by the crisis was drawing gradually to a close. [Go ye not gently into eternal damnation…cheap money that benefited so few!]
The Fed’s board of governors raised the discount rate on loans made directly to banks by a quarter of a percentage point, to 0.75 percent from 0.50 percent, effective Friday.
It also took two steps to begin unwinding its efforts to keep the banking system functioning after the real estate bubble inflicted huge losses that were amplified by sophisticated bets made by Wall Street. [Isn’t it bizarre that Wall Street was able to pay out huge bonuses both before AND after the collapse of the Housing Bubble?]
Given the slow and uneven nature of the recovery, an unemployment rate close to 10 percent and fears of a new wave of mortgage defaults, particularly in commercial real estate, few economists expect the Fed to begin a campaign of broader interest rate increases quickly or sharply. The central bank reaffirmed last month that the key short-term interest rate it controls would remain “exceptionally low” for an “extended period,” language it has used since March. [Left unexplained is how this will benefit either society or the economy…it’s been two years now and the ‘recovery’ is still ‘invisible’ (although some would say it is ‘imaginary’…)]
While borrowing by banks from the Fed’s discount window has already fallen to more historically normal levels from its peak in October 2008, many small and medium-size businesses still find it difficult to obtain loans, a major concern of the Obama administration and Congress. [ALL of the money in our economy is ‘borrowed’ into existence, if commercial entities can’t borrow money, there can’t be any kind of ‘recovery’ happening.]
Randall S. Kroszner, an economist at the Booth School of Business at the University of Chicago and a former Fed governor, said after the announcement: “This is a technical change that makes sense as a precondition for other changes, but is not a precursor of short-term change.” [Read that again…does it make any sense? No, and it isn’t just you or me…it’s ‘babble’.]
Having taken a baby step toward a return to normalcy, the Fed’s chairman, Ben S. Bernanke, now faces a delicate dance in the months ahead. [Um, Bobo was just ‘re-appointed’ and it’s likely he will ‘outlast’ the current incumbent in the White House. Will the next idiot our evil overlords parade before us re-appoint him again? Who knows? If nobody ‘charges the Bastille’ between now and then, probably! Look at how long they let the last idiot hang around…]
The central bank will try to drain from the financial system some of the money it created to keep banks and the economy afloat over the last two years. And at some point it will begin putting upward pressure on interest rates by raising its benchmark fed funds rate, the rate at which banks lend to each other overnight. [Provided, of course, our economy survives that long…if it doesn’t, there won’t be a treasonous ‘central bank’ to worry about.]
Uncertainty surrounds the timing and sequence of those steps. Mr. Bernanke is scheduled to present the Fed’s semiannual monetary policy report to the House on Wednesday and the Senate on Thursday — testimony the markets will watch closely. [Don’t you just love the suspense? Like their boy is going to do something ‘shocking’ or ‘out of character’ that they won’t know about long in advance…and you can almost count on such a profitable opportunity occurring.]
As part of the changes disclosed Thursday, the Fed announced that the typical maximum maturity for primary credit loans, in which banks borrow from the discount window, would be shortened to overnight, from 28 days, starting March 18. [What a ‘shocker’, the ‘overnight rate’ will return to being ‘overnight’ and not a whole month…how will the crooked bankers ever manage that?]
The Fed also raised the minimum bid rate for its term auction facility — a temporary program started in December 2007 to ease short-term lending — to 0.50 percent from 0.25 percent. [Geez, why isn’t the media making a big deal about the ‘DOUBLING’ of this key interest rate? Oddly enough, depending on where you look, some are.]
The central bank took pains to reiterate that it was not moving in a sudden new direction.
“The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy,” the Fed said in its statement. [So what are they saying? This won’t affect the average household because the average household is already carrying far more debt than is advisable? The businesses without customers aren’t good credit risks? Ironically, none of that has changed over the past two years, despite pissing away a trillion dollars in stimulus spending, never mind the multiple trillions spent propping up the ‘unproductive’ banking sector…]
Despite that attempt at reassurance, there were some early signs after the announcement that investors were already beginning to anticipate broader interest rate increases. Stock futures fell in after-hours trading; yields on 10-year Treasury notes rose about seven basis points, or seven-hundredths of a percentage point, to 3.8 percent.
The discount rate applies to loans the Fed makes for very short terms, to sound depository institutions, as a backup source of financing. [Given the scale of foreclosures, how ‘sound’ do you suppose our ‘depository institutions’ are? Chances are excellent that both depository and their ‘investment banking’ counterparts would be flat broke if forced to accurately report their financial standing…]
The Fed’s action represents a widening of the spread between the discount rate and the upper end of the target fed funds rate. The two rates typically move in lockstep, and were a percentage point apart before the crisis. [Understand that during this period of, er, ‘excessively low’ interest rates, (free if you were ‘properly connected’) the stock market has rallied over 4,000 points…for essentially no good economic reason. Whose money do you suppose funded this ‘recovery’…the ONLY visible sign of ANY economic recovery? Making the already rich, richer did what for the economy?]
In an effort to encourage banks to come to it for funds to maintain their stability during the crisis,[The ONLY thing that restored ‘stability’ to the banking system was the resumption of the suspension of honest accounting standards!] the Fed sought to make borrowing from the discount window more attractive than usual — and to reduce the stigma associated with borrowing from the Fed. As the fed funds rate went as low as it could go, the Fed reduced the spread between the two rates to half a percentage point in August 2007 and then to a quarter point in March 2008.
When the target range for the fed funds rate was lowered to zero to 0.25 percent in December 2008, the discount rate dropped to 0.50 percent, its lowest level since World War II.
In testimony Mr. Bernanke submitted to Congress on Feb. 10, he said that “before long, we expect to consider a modest increase in the spread” between the two rates. [Eight days later and here we are!]
And on Wednesday, the Fed released minutes from the discussion of its main policy-making arm, the Federal Open Market Committee, at its last meeting, on Jan. 26-27. Those minutes showed a consensus that it would “soon be appropriate” to begin widening the spread.
Laurence H. Meyer, a former Fed governor who runs a consulting firm, Macroeconomic Advisers, said the Fed had done its best to send clear signals.
“If the markets respond to this on Friday, it will reflect a total lack of comprehension of what the chairman said,” Mr. Meyer said. “Don’t they understand the meaning of soon?”
The Fed said banks should use the discount window “only as a backup source of funds.” [Thought experiment time! Take what you know about ‘money and markets’ and compare that with the ‘chuckleheads’ who attained degrees in finance…then consider how these same assholes drove the global economy off of a very visible cliff! Then begin to wonder just how ‘qualified’ these people are to be making decisions that effect the future of our species…]
And it left open the possibility of widening the spread further in the future, saying it “will assess over time whether further increases in the spread are appropriate in view of experience” with the new half-point spread. [As Mr. Roberts pointed out last night, it doesn’t matter where they set interest rates, it won’t effect the ‘real economy’ either way.]
While liquidity for banks has been nursed back to health, many other sectors remain in a parlous state. [Comatose is likely much closer to the mark…]
Dennis P. Lockhart, president of the Federal Reserve Bank of Atlanta, said after the announcement that along with the increase in the discount rate and the phasing out of special loan programs, the Fed would complete its purchase of $1.25 trillion in mortgage-backed securities by the end of March. [Now you all know this takes these exceeding reckless securities and converts them from being bad bets owned by investors into bad bets owned by you and me, the US taxpayer!]
“All of this is happening because stress in the financial system has abated,” he told the Augusta Metro Chamber of Commerce in Georgia. [Don’t let the shit-weasel sandbag you, the stress in the financial system is being abated BECAUSE the taxpayer is taking it in the jugular for the MBS mess!]
He added: “My point is that the public and markets should not misinterpret today’s move. Monetary policy, as evidenced by the fed funds rate target, remains accommodative. This stance is necessary to support a recovery that is in an early stage and, in my view, still fragile.” [How about ‘non-existent’, Chucklehead?]
Bettina Wassener contributed reporting from Hong Kong and Javier Hernandez from New York.
For a ‘parting shot’ or another ‘sidelong glance’ at our depraved, predatory society we have this article which should really focus our attention on the motives of the ‘investor class’ slime.
Just how far has our society sunk when the investors among us take to funding ‘for profit’ prisons?
Although some would say it speaks volumes about what we’ve become that such a venture has successfully evaded public debate for more than a decade.
Truly, the inmates have overrun the asylum…
Be afraid good citizen, be very afraid.
Thanks for letting me inside your head,
Gegner
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