Our Awful Situation

Archive for the ‘Federal Reserve’ Category

Ron Paul is helping Glenn Beck get closer to the truth

Posted by Charlie Kilo on May 21st, 2008

Glenn Beck keeps getting closer and closer to the truth. I fear for him:

Higher Gas Prices Eat Up Much of Stimulus Check

Posted by Charlie Kilo on April 29th, 2008

Its like trying to use a garden hose on forest fire:

In the 11 weeks since President Bush approved tax rebates aimed at averting a recession, energy prices have risen so much that the country is now spending about $250 million more per day on gasoline.

As the U.S. Treasury races to get the rebates to households, beginning this week, it faces an uphill battle against inflation that is blunting the benefits of the $152 billion 2008 stimulus package.

There is a lot riding on what consumers do with these rebate checks.

Depending on how much is promptly spent — and on what — it could mean the difference between the U.S. economy eking out marginal growth in the coming months or slipping into a deep recession.

Panic Time at the Fed

Posted by Charlie Kilo on April 17th, 2008

Forbes:

U.S. Treasury Secretary Henry Paulson’s blundering is becoming more breathtaking with each passing week. At the end of March he rolled out a grand plan to crown the Federal Reserve as the nation’s new financial stabilizer. The Fed a stabilizer? That’s who created the financial mess we’re in.

If this wasn’t bad enough, Secretary Paulson then donned his cheerleader’s uniform and encouraged Beijing to let the Chinese yuan appreciate against the greenback. All the while favoring in this fashion a debasement of the U.S. currency, Paulson proclaimed that we should remain calm and confident because the economic fundamentals are sound. He reminds me of the stockbroker who performed a valuable service to his partners by always being wrong.

When the Fed Goes into the Investment Business

Posted by Charlie Kilo on April 13th, 2008

“The power to determine the quantity of money… is too important, too pervasive, to be exercised by a few people, however public-spirited, if there is any feasible alternative. There is no need for such arbitrary power… Any system which gives so much power and so much discretion to a few men, [so] that mistakes - excusable or not - can have such far reaching effects, is a bad system. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic - this is the key political argument against an independent central bank.”

-Milton Friedman

From TheNewAmericanEmpire:

In so doing, the Fed has nationalized a portion of the portfolio of Bear Stearns, and become an “investor of last resort” rather than a “lender of last resort”, besides facilitating the take-over of this investment bank by JP Morgan Chase. A private company, BlackRock Financial Management, was also hired to administer the new Delaware-based corporation and will attempt to liquidate the acquired securities gradually over time. The Fed could then recuperate part or all of its non-recourse “loan” to JP Morgan Chase, and would retain any excess amount on its unusual “investment”, in the event there is a profit.

There you have it. For the first time since its creation in 1913, the Fed has turned itself into a government of the banks, and has invested risky public capital in a business that was in need to be saved quickly from bankruptcy and liquidation. Thus, the Fed has not only decided that it is its duty to solve “liquidity crises”, but also “solvency crises” in the regulated and non-regulated banking sector. In other countries, such public investments to resolve a solvency crisis are decided and handled by the Treasury and the Government, and are later voted into law. Even in the U.S., that is the way the Resolution Trust Corp. was created by the Reagan administration in the late 1990’s. In fact, the current banking crisis is very reminiscent of the U.S. Savings and Loan crisis of the 1980’s and 1990’s, although this time the banking crisis is much more severe and much more widespread.

Greenspan: no regrets

Posted by patriot on April 9th, 2008

Alan Greenspan says that he doesn’t regret a single decision, and that he’s being unjustly blamed for things he didn’t do. Um, ok…

For much of his 18 years atop the world’s most-influential economic institution, Greenspan was lionized for the economy’s performance. Now, he notes, he’s being second-guessed for it.

“I was praised for things I didn’t do,” Greenspan said during one of three interviews at his sun-drenched office in downtown Washington. “I am now being blamed for things that I didn’t do.”
…
Greenspan says he doesn’t regret a single decision. The criticisms that get under his skin are those from friends and former colleagues, many of them respected economists who backed his policies at the time but now say, in hindsight, that the calls were wrong. “I do take it seriously if my peers think I have misstated the facts,” he says. “But where’s the evidence? Too many people make accusations by assertion. I think it’s improper.”

Fed panics, looks for new plays

Posted by patriot on April 9th, 2008

They’re running out of ideas, people:

The Federal Reserve is considering contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail.

Among the options: Having the Treasury borrow more money than it needs to fund the government and leave the proceeds on deposit at the Fed; issuing debt under the Fed’s name rather than the Treasury’s; and asking Congress for immediate authority for the Fed to pay interest on commercial-bank reserves instead of waiting until a previously enacted law permits it in 2011.

Fed admits the obvious

Posted by patriot on April 8th, 2008

Well, duh. Oh, but they call it a “downturn” instead of a recession Good play on words.

Some members of the Federal Reserve are worried about the possibility of a “severe and protracted downturn” in the U.S. economy that could last into next year, according to the minutes of the central bank’s latest meeting released Tuesday.

The Fed said its staffers now expect the nation’s gross domestic product (GDP) to shrink in the first half of this year, the clearest signal yet from the central bank that its members think the economy could be close to entering a recession — if it hasn’t already. Many Fed policymakers indicated that a downturn in the economy in the first half of the year “now appeared likely.”

John McCain and Alan Greespan: Chums

Posted by patriot on April 8th, 2008

Greenspan plans to vote for McCain, who wants Greenspan on his team to fix the economic problems we face. News flash for McCain: this guy is the main cause behind our economic problems!

Former Fed Chairman Alan Greenspan is supporting John McCain’s White House bid, CNN has confirmed.

“I am a Republican and expect to vote for the Republican candidate, but I am not involved in politics,” Greenspan said in a statement issued to CNN by his office.
…
“I support John McCain, who I know very well and who I respect a lot,” he told El Pais.

McCain has previously indicated he will seek Greenspan’s council on economic issues should he win the presidency. At a campaign event in South Carolina last fall, the Arizona Republican even said he would take him “alive or dead.”

“If he’s alive or dead it doesn’t matter. If he’s dead, just prop him up and put some dark glasses on him like, like ‘Weekend at Bernie’s,”‘ McCain joked. “Let’s get the best minds in America together and fix this tax code.”

Federal Reserve: subject of many conspiracy theories

Posted by patriot on April 7th, 2008

The Fed’s actions clearly lead people to question its mandated mission and wonder what it’s up to:

Given the fact that it is the target of more than a few conspiracy theories since it was created in 1913, the Federal Reserve System, more commonly known as the “Fed,” in media and finance parlance, could be acting with a bit more prudence during these dark economic times. But no, it’s gone ahead and damned the depression by doing what the New York Times described as the “unthinkable”: bailing out Bear Stearns while giving away hundreds of billions to banks and other institutions whose labyrinthine securitization of our debt economy started this whole mess in the first place.

In other words, rewarding the criminals and screwing the victims.

That kind of behavior is only going to make the conspiracy theorists even cozier. When you already think the Fed has made a serious living from doing everything from transferring public wealth to private hands to signing off on the assassination of John F. Kennedy, you’re not going to start thinking better of them when they offload billions onto Bear Stearns, which is a securities firm and not a bank at all. You’re not going to get the opposition to stop parroting the usual party lines about the Fed being a privately owned bank that screws Americans by charging interest or compromises the overall interests of the United States by unconstitutionally printing up money like it was going out of style. You’re only going to further invigorate them.

That, my friends, is known as reality.

Chaos on Wall Street

Posted by patriot on April 2nd, 2008

Chaos seems to be the right word:

What in the world is going on here? Why is Washington spending billions to bail out Wall Street titans while leaving struggling homeowners to fend for themselves? Why are the Federal Reserve and the Treasury acting as if they’re afraid the world may come to an end, while the stock market seems much less concerned? And finally, what does all this mean to those of us who aren’t financial professionals?

Okay, take a few breaths, pour yourself a beverage of your choice, and I’ll tell you what’s happening - and what I think is going to happen. Although I expect these problems will resolve themselves without a catastrophic meltdown, I’ll also tell you why I’m more nervous about the world financial system now than I’ve ever been in my 40 years of covering business and markets.

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