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Bernanke admits recession

Posted by patriot on April 2nd, 2008

In not so many words, of course:

Federal Reserve Chairman Ben Bernanke said Wednesday that the U.S. economy could shrink in the first half of the year - the closest that the nation’s central bank chief has yet come to proclaiming a recession.

In prepared remarks to the Joint Economic Committee of Congress, Bernanke said he also expects further rises in unemployment and says the economic outlook has worsened since the Fed’s economic outlook was released in January.

“It now appears likely that real gross domestic product will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke said.

When socialists take Wall Street

Posted by Charlie Kilo on March 31st, 2008

Via Inteldaily:

Wall Street, which historically has been a bastion of vehement opposition to government intervention in the so-called free market, now takes it as a matter of right that the U. S. government and its central bank (as well as the central banks of other countries) will come to its rescue. The principle invoked–if it can be called that–is that Wall Street’s institutions are too big to fail without causing a worldwide financial panic. This is an interesting form of extortion: “We’ll bring down the world economy unless you bail us out. Never mind that we paid ourselves huge bonuses using other people’s money while creating this mess.”

Read more

Fed changes announced

Posted by patriot on March 31st, 2008

Says CNN:

Among the plan’s biggest proposals is to provide additional powers to the Federal Reserve, which, along with the Treasury Department, has attempted to shepherd the nation through the housing crisis. Earlier this month, the Fed orchestrated a marriage between JPMorgan Chase (JPM, Fortune 500) and Bear Stearns (BSC, Fortune 500), which was on the verge of a collapse that could have caused shockwaves throughout the financial system.

Under the Paulson plan, the Fed would essentially serve as a financial markets moderator, stepping in if the nation’s markets were again threatened by an episode like the near collapse of Bear Stearns. Currently the central bank is responsible for setting the country’s monetary policy as well as acting as a supervisor of certain banks and all bank holding companies.

The article makes no mention of who must approve this new system of oversight, but one must assume that it will be sent to Congress instead of mandated through fiat executive order.

The proposal would also establish a new federal regulator for the mortgage industry, affecting both lenders and brokers, which now follow a patchwork of state regulations.

Paulson’s plan includes other bold moves, including bringing previously unregulated financial entities like hedge funds and private equity firms within the reach of federal authorities and federalizing the oversight of the insurance industry.

But it is cautious in not pushing for too much regulation, which could meet with criticism from Congressional Democrats.

As the article implies, Republicans will probably lap this one up like a thirsty dog. Ridiculous!

The mother of all bailouts

Posted by patriot on March 30th, 2008

Jim at the Survival Blog has a post discussing the latest “mothers of all bailouts”, using taxpayer funds to correct the mistakes of business owners and banking empires. One of the summary paragraphs reads:

All of these macro-level implications might seem fairly abstract, so let me put them in real world terms and take the risk of extrapolating on some trends that I’ve observed: There will be a recession, and it will be deep, and long-lasting. A recession will mean that there will be some big corporate layoffs. Be ready. There will be bank runs and banking “holidays”. Be ready. There will be huge flows of “bailout” funds that will effectively nationalize many industries. Be ready. There will probably be a stock market collapse. Be ready. There will be a further collapse in residential real estate that will make the recent declines seem small, by comparison. Be ready. Credit delinquencies and foreclosures (on car loans, home loans, credit card bills, etc.) will dramatically increase. Be ready. There will be a collapse of the commercial real estate market. Be ready. Even though the credit available for IPOs and private mergers and acquisitions has dried up, there will be news of some large and seemingly inexplicable acquisitions in the near future, all sanctioned by and in some cases, underwritten by, and even funded by, the Federal government. Be ready. There will be shortages of key commodities including fuel and food. Be ready. Strapped for cash, America’s highway, rail, water, sewer, telecommunications, and power infrastructures will degenerate. Be ready. There will be mass inflation of the US Dollar that will devalue any dollar denominated investments. Be ready.

In case you missed it, the main idea to glean from the article is to be ready. :)

Treasury handing more power to the Fed

Posted by patriot on March 28th, 2008

The NY Times details new powers the Treasury is hoping to hand over to the Fed:

The Treasury Department will propose on Monday that Congress give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.

The proposal is part of a sweeping blueprint to overhaul the nation’s hodgepodge of financial regulatory agencies, which many experts say failed to recognize rampant excesses in mortgage lending until after they set off what is now the worst financial calamity in decades.

The Fed’s role seems to be expanding as of late, going from banking oversight to a Wall Street stability operation

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