Fed to keep rates low and brainwaves lower
Not surprising after yesterday's Dow beating, and S&P spanking, that the Fed rose to the occasion to save the US. Concluding there is further risk of economic deterioration (welcome to the planet), the Fed decided to really shake things up and try something different this time.
a) It will force member banks to divert the excess $1.6 trillion of debt they have stored on the Fed's book to pay for the creation of 3.2 million jobs.
b) It will revert the mortgage backed securities it's holding back to the banks it bought them from, even if those banks have to take a loss, to clear the slate. It will also remove all risk guarantees.
c) It will force banks to stop mortgage loan losses on their books through making them work immediately with individual borrowers to reduce loan principal and payments to a level more comparable to the current market, not the one the banks inflated with toxic assets scooping up fraudulent loans on over-valued properties.
d) It will cease current and future QE programs in order to stop cheapening the value of the dollar, and stop giving the Treasury a place to park the debt it creates, while Washington argues about how to cut the debt.
Just kidding. The Fed's going to keep rates around zero forever (or for the foreseeable future) and reinvest any proceeds of the assets it's holding into buying more of them, and keep the Treasuries it has, yet beckon Washington to find ways to cut the debt. And, since so far nothing it's done has helped the Main Street economy, it will keep right on doing it.
Reader Comments (5)
Sorry, Nomi, a, b, c, and d make waaay too much sense, therefore, are not even to be considered. I'm losing hope that anyone in DC (with a very few exceptions) are heeding the massive outrage of the public over the crap the banksters have done/ are doing, and the demands for jobs. Economy 101 - people with jobs pay taxes - the more jobs, the more taxes - the more taxes, the more it stimulates the economy. I'm NOT an economist, but this seems crystal clear and I can't get my head wrapped around the fact that hardly anyone in DC 'gets it'. Instead, the idiots want to balance the budget on the backs of the same taxpayers that were unwillingly forced to bail out the banksters, except now there are less taxpayers to gouge because the banksters are hoarding all their loot so private industry (job creators) can't get a loan to expand. It just goes round and round with the public being told, "Grab your ankles 'cause here it comes, somemore."
Local banks, credit unions where I live have plenty of money available to loan, and a fairly low rates. But nobody's buying the loans. Same with small/medium business: they aren't selling much product, so they'll do no hiring. Meanwhile the gov't, far from balancing budgets, keeps on spending trillions that's not there and the Fed keeps printing. Result: biflation - deflation in heavy producer goods + inflation in day-to-day consumables. Face it: 25 years of open borders sweatshopping, killing real working class demand, + 25 years of free trade job outsourcing, killing real middle class demand, have turned the entire US economy into a multi-level debt Ponzi. It can only collapse.
I agree, it's kind of a question of when, not if.
I have a question for you. though I don't know much about economics, I been following this "sub-prime"mortgage scandal. The more I learn about it, the more I regret thatI don't work at firms like "Goldman Sach's" or that I wasn't in the position to make some money off of all that investment speculation. Easy Money. Woking for the right people, and if you had the know how. One could easlily make lots of money. Ms. Prins were in the position to do that , why didn't you capilize on this housing boom like your firiends in Goldman Sachs did? Do you have any regrets?
Also should I change my opinion, about these investment banker, and Mortgage people , and People in the White house that helped make the "Sub-Prime" crash a reality? Rather than treating people like Robert Rubin, or Larry Sanders as criminals, Barack Obama , saw fit to use these people as "advisors "in his presidential campiagn , then gave them posts in his cabinets? Now Obama wants to do something about the Jobs probelm in the U.S.. Are these guys criminals? What about the C.E.O, of Goldman Sachs, he seems like an nice fellow,but instead of treating these guys like that criminals...maybe Obama is at least partially right in courting these Wall street types. maybe there can help the nation get out of the doldrums that were in? Hell why not vote that Goldman Sach , C.E.O was Vice President or something?
Your "Pillage" book is excellent. No voter should be allowed to cast one more vote without getting a "C" or better on a basic "Pillage" outline test!
Anyway...clearly this is a bit of a class warfare time. The middle class and lower classes must breathe deep and SHUT WALLSTREET DOWN plus...and why not? - - RING IN every legislative office [that's House and Senate folks!] in their respective state...RING IT IN with Protest! Load...furious! Demand an immediate end to the elite rich Pillage of America. Get ready. There needs to be a mass movement to Halt the Payment of ANY TAXES until Glass Steagall is back on the books and a full JOBS Bill is passed. Let them begin to hear the MASSES are not ASLEEP anymore! Thanks! Chris Barrett