Whining Babies do not make good FED Policy
I do not agree with the stance to reduce interest rates taken by the FED. I think they should have stayed pat. I do understand that with the current administration so close to corporate America they had to give something to the whining crybabies on CNBC. For some reason they associate Wall Street’s gains with Main Street economy. Unfortunately this is not true otherwise I would not have anything to write about on my blog. Wall Street is still at historical highs while the economy is in the tank due to the disastrous policies of Reaganomics forced on the American workers for the last 30 years.
I am impressed. The FED did not do exactly what the financial institutions wanted. The FED did cut rates in the face of skyrocketing inflation but it was not enough. The market sold off. We should remember that the market is within 5% of all time high levels. The problem is not the sell off. The problem is that these bubbleheads have euphoric predictions for 2007. If the market does not meet their forecasts they lose credibility. Poor babies!
The FED put together a worldwide program to increase liquidity to solve a problem created by bad speculative investments made by the greedy financial institutions. How else could they justify paying some Knumbnutt CEO $200 million? The FEDs program primarily creates a temporary bailout by worldwide governments to allow the financial institutions time to get their books in order and buy back this crap.
Wall Street is in an uproar! “THEY KNOW NOTHING!” is shouted by monkeys who think the FED’s job is to protect financial institutions from their bad investments. Traders across the board are calling for Bernanke to resign. How dare he not do exactly what they wanted? The financial institutions have criticized the timing of the announcements. This clearly indicated that the Fat Cats in Wall Street think that the FED is at their beckon call.
I think the FED was too lax and should not have eased. I have called for the elimination of the FED. I have done this because I do not think that the working Joe should be guaranteeing Wall Street’s $100 million dollar salaries. With this premise, if the FED must remain, we need a Bernanke who can think of ways to save Wall Street’s buttes without destroying the dollar and sending inflation to 1500% a year.
I am impressed. The FED did not do exactly what the financial institutions wanted. The FED did cut rates in the face of skyrocketing inflation but it was not enough. The market sold off. We should remember that the market is within 5% of all time high levels. The problem is not the sell off. The problem is that these bubbleheads have euphoric predictions for 2007. If the market does not meet their forecasts they lose credibility. Poor babies!
The FED put together a worldwide program to increase liquidity to solve a problem created by bad speculative investments made by the greedy financial institutions. How else could they justify paying some Knumbnutt CEO $200 million? The FEDs program primarily creates a temporary bailout by worldwide governments to allow the financial institutions time to get their books in order and buy back this crap.
Wall Street is in an uproar! “THEY KNOW NOTHING!” is shouted by monkeys who think the FED’s job is to protect financial institutions from their bad investments. Traders across the board are calling for Bernanke to resign. How dare he not do exactly what they wanted? The financial institutions have criticized the timing of the announcements. This clearly indicated that the Fat Cats in Wall Street think that the FED is at their beckon call.
I think the FED was too lax and should not have eased. I have called for the elimination of the FED. I have done this because I do not think that the working Joe should be guaranteeing Wall Street’s $100 million dollar salaries. With this premise, if the FED must remain, we need a Bernanke who can think of ways to save Wall Street’s buttes without destroying the dollar and sending inflation to 1500% a year.
Labels: CEO Pay, Class Warfare, Corporations, Corruption, Great Nation, Reaganomics, US Poverty
posted by Small Business USA at 3:26 PM
8 Comments:
It's interesting to read your views on the FED, but disturbing to read in the newspaper that the FED decision will reverberate and affect economic/monetary policy in other countries. In Australia, the Reserve Bank was hell bent on raising interest rates in the new year but now the news is that this will not happen. Of course I'm glad that interest rates won't be going up. Disturbing to know that bad policy in the USA can affect me so directly.
Lexcen I think you are seeing the correlation of a change in what makes a strong economy. While I do not know much about your Mr. Howard I have the perception that he has implemented "Reaganomics on steriods". Today that policy is known as Supply Side Economics. The difference between Supply Side Economics and the economic policies we know is that the economy is measured by consumption and not by the creation of equity. This makes the economy a hostage of consumer sales.
Why is this important in the relation between the US and Australia?
The US is still the number 1 consumer in the world. The greater a country implements supply side economics the more the number 1 consumer will influence their local economy. Inflation is rampant in the US. Today's data (always understated) is showing an 8% annual inflation. Look for tightening of interest rates in all supply side economies.
Interesting series of posts, David. I laughed at your description of Mr Howard.
There are a few differences between the US and Australia. The Australian Reserve Bank is genuinely independent, and has an anti-inflation charter. The Australian budget remains in surplus, while the national Government has zero debt.
On the other side of the ledger, we have been incredibly lucky as a country because of the resources boom. A major complaint about the Howard Government, one that I agree with, is that we have not taken sufficient advantage of this to invest in the longer term.
There are, of course, similarities to the US position. Levels of personal debt are very high and growing. The gap between rich and poor has widened, with a significant and growing underclass concealed in part by the way statistical averages are used.
Again this affected the election. The impact of higher food prices, rents and mortgage payments played out in the electorate in a way that the Government failed to recognise because it was in some ways blinded by its own rhetoric.
I must say that I am worried about the US economic position. The very long period of Australian economic growth since the bottom of the last recession in 1991 blinds us, I think, to some of the economic dangers we face. The past can be misleading, but I keep thinking of the end of the sixties when an apparently secure period of growth came to such a juddering halt.
I would feel a lot more comfortable if we had done more to prepare for an economic deluge.
Jim Your last line sums up my position. "I wish we had done more..." The US could be in the enviable position of Australia if we think more about value instead of short term [power, earnings, gratification].
The moderates have been overrun by the extremes and we a paying the price. Inflation is a function of money supply [strange how supply and demand always comes back into the picture no matter what the model].
Australia can easily find itself in the position of the US if it does not carefully weigh short term gratification against long term growth.
My perception of Howard is that he is starting a process similar to what Reagan did in the early 80s in the US. In the US this resulted in what we have today. Australia (depending on the size of the economy and the amount of equity built) could find itself at a future date exactly where the US is today, Stagflation, without any real mechanisms available to fight it.
David, still on holidays and have yet to read your latest posts. The stagflation word is being used in Australia at the moment, with the new Government emphasising the need for good economic management.
One point about Australia is that as a small or mid-size economy, we simply cannot operate independently of the rest of the world.
Jim If they new govt has the same economic policies as the old you are in for a long, long, long period of "correction".
The US is going to have several years of difficulty while we digest the exagerations and dislocations resource utilization.
That may be true, David, although I would (I thibnk( still argue that a budget surplus plus zero Government debt makes things a bit easier.
That said, the structural imbalances remain.
Jim - It is always better to start from a strong position but economic cycles are represented by relative speed of change. A long term depression can have little affect on the population if the rate of change is very slow. A fast acceleration can be perceived as a recession if the speed is very fast (relative wealth effect).
My point is more about the long term consequences of policies that create dislocations and inefficiencies.
An example is the latest data about jobs in the US. The new economy is looking for locksmiths, mailmen, and other similar blue collar jobs while the population is creating $100k debts to get university training in technology, science and math.
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