â¢Fed Officials Question Durability of U.S. Expansion, Discuss Aid Increase http://www.bloomberg.com/apps/news?pid=20601087&sid=auEbCSyVRaxY Fed Officials Question Expansionâs Durability, Discuss More Aid Share | Email | Print | A A A By Craig Torres Oct. 15 (Bloomberg) -- Federal Reserve policy makers doubted the durability of the recovery and for the first time signaled they were open to boosting purchases of mortgage bonds to further prop up the housing market. Some Federal Open Market Committee members argued that expanding their purchases above $1.25 trillion might help to âreduce economic slack more quickly,â according to minutes of the Federal Open Market Committeeâs Sept. 22-23 meeting released yesterday in Washington. Policy makers considered a relapse into recession a bigger risk than a near-term rise in prices, the minutes show. They predicted âcautiousâ consumer spending, business investment and hiring. If those conditions persist into 2010, the Fed may extend the housing-debt purchase program beyond its current March 31 end-date, economists said. âThere is going to be a lot of slack in the economy for an extended period of time,â said Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. âThis may mean the Fed will revisit its decision on whether to continue with its mortgage-backed security purchases next year.â In the September meeting, Chairman Ben S. Bernanke and his fellow policy makers decided to slow purchases of mortgage securities to avoid disrupting the housing market while extending the duration of the program by three months. The Fed is also buying $200 billion of housing agency debt. At the same time, policy makers repeated their pledge to keep interest rates low for âan extended period.â The Fed has made the purchase of securities a leading monetary policy tool. Economic Projections Central bankers in last monthâs meeting raised their economic projections based on improved housing markets, stabilizing consumer spending and a recovery in growth outside the U.S., the minutes said. Even so, âmany participants noted that the economic recovery was likely to be quite restrained,â the minutes said. âCredit from banks remained difficult to obtain and costly for many borrowers; these conditions were expected to improve only gradually.â Policy makers noted the housing market and retail sales got a boost from government incentives such as an $8,000 tax credit for first-time home buyers and âcash for clunkersâ program, which ended on Aug. 24. âSome of the recent gains in activity probably reflected government policy support, and participants expressed considerable uncertainty about the likely strength of the upturn once those supports were withdrawn or their effects waned,â the minutes said. Retail Sales A report from the Commerce Department showed today that retail sales fell 1.5 percent in September, less than economists forecast, after the auto-purchase incentive program expired. The decrease followed a 2.2 percent gain the prior month. Sales excluding automobiles climbed 0.5 percent, more than projected. any exit plan.â The Standard & Poorâs 500 Index increased 1.75 percent yesterday to 1,092.02 in New York, while the Dow Jones Industrial Average rose above 10,000 for the first time in a year, closing at 10,015.86. Treasuries fell and the Dollar Index slid to the lowest level since August 2008. Home sales have stabilized, in part because of the Fedâs mortgage-bond purchases and the government tax credit, which is set to expire on Dec. 1. Sales of existing U.S. homes dropped 2.7 percent in August, the first decline since March. Largest Buyer The U.S. central bank is the largest buyer of securitized mortgages issued by Fannie Mae and Freddie Mac, purchasing 79.5 percent of new issuance in August, according to the Mortgage Bankers Association. Fed purchases of mortgage securities have helped push down interest rates on mortgages, making it cheaper for Americans to buy a home. Rates on a U.S. 30-year mortgage averaged 4.87 percent in the week ending Oct. 8, according to Freddie Mac. Thatâs down from 5.15 percent in first week of March, just before the Fed said it was increasing its purchases of mortgage- backed securities. Home prices rose 0.8 percent in June, the first increase on a seasonally adjusted month-over-month basis since May 2006, according to an S&P/Case-Shiller index tracking values in 20 metro markets. âThey donât want to undermine the market value of homes,â said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. âEven if the risks of another downturn are slight, the cost of that outcome is prohibitive.â Economistsâ estimates of how much the Fedâs retreat from the mortgage-bond purchase program will raise borrowing costs vary from a quarter-point to more than a percentage point, said Julia Coronado, senior economist at BNP Paribas in New York. âBig Questionâ âThe big question here is, where are mortgage rates going to go if and when the Fed walks away?â said Coronado. âThere are people on the committee that are unsure. They are worried about the sustainability of the recovery.â FOMC members âdiscussed the importance of maintaining flexibility to expand the asset purchase programs should the economic outlook deteriorate or to scale back the programs should economic and financial conditions improve more than anticipated,â the minutes said. Policy makers in recent speeches have been debating the timing and conditions for an exit from the central bankâs unprecedented intervention into the economy. Governor Kevin Warsh said Sept. 25 interest rates may need to rise âwith greater forceâ than usual, while New York Fed President William Dudley said Oct. 5 the recoveryâs pace âis not likely to be robustâ and inflation risks are âon the downside.â Leading Overhaul Separately, Fed Governor Daniel Tarullo, who is leading an overhaul of the Fedâs bank examinations, told a Senate subcommittee today that U.S. banks face the risk of further âsizableâ credit losses. âWhile there have been some positive signals of late, the financial system remains fragile and key trouble spots remain,â Tarullo, 56, told the Subcommittee on Financial Institutions. He added that it will be some time before the banking industry will âfully recover and serve as a source of strength for the real economy.â To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net Last Updated: October 15, 2009 00:00 EDT
i was just thinking that if the government is involved so much in the market it is effectively becoming more and more command based. i know that is pretty obvious however it would indicate that the people who advocating a free market are in actual fact omitting it is failing by using these methods. is that correct?
As famously said, our government is in the business of privatizing profits and socializing losses. This is also known as screwing over taxpayers and future generations (tax and spend; corporate welfare; violent governmental sins).
You can track corporate financing of campaigns, and increased monies flowing to politicians from the private sector, with the number of politicians corrupted and giving the big bird to the U.S. citizenry. Corpocracy, not democracy...that's what we have.
Worse. We also have the Oligarchial (that a word?) arrogance, greed, and hubris of OBAMA AND CONGRESS!! (Andrew Jackson would START A WAR against them [Fed, too] if he were alive today!)
And nothing is going to change..... http://www.zerohedge.com/article/ba...ions-they-are-trying-roll-back-existing-regul The returns from Corp. lobbying have higher rates of return than the actual core businesses of the larger corporations....Corp.s can spend a few million....and reap $billions.... And the masses cannot afford to enter the lobbying market.... This is called legal largess.... Also....the people on the govt. side that have the higher positions can use a $150,000 position to lever a multi-million $ actual position....such as many of the so called currently serving "White House" advisors.... I have mentioned what will provide public remedy many many times..... The two most important components for many many reasons.... 10% State....5% Fed Consumption Tax by state mandate.....removes the lobbyist system ...to be 100% replaced by the state's legislatures....which will also limit expenditures and increase amounts receivable....no other taxes....eliminates the IRS....and will quickly create a much needed fast abundance of new business valuations on both business/bank books....to replace the current busted loans.... A de-fragmented non-gameable non-taxable worldwide direct access electronic exchange....to be governed electronically.... Eliminates the failed and bloated SEC....will create TRUST....and much needed more efficient capital worldwide to propel innovation in the fastest manner possible....meaning expediting the sustainable bankable valuations....whose cumulative values could dwarf the busted bank loan portfolios.... The current admin. however ....prefers to pony the unborn....with the lobbied losses of the banks.... Now one can understand why I mince no words when I call the current set of politicos......FUCKING IDIOTS.....now one could add the word TRAITORS....or TREASONISTAS.....vs the US public....
Here's Something Interesting Wall Street Smarts By CALVIN TRILLIN NY Times: October 13, 2009 âIF you really want to know why the financial system nearly collapsed in the fall of 2008, I can tell you in one simple sentence.â The statement came from a man sitting three or four stools away from me in a sparsely populated Midtown bar, where I was waiting for a friend. âBut I have to buy you a drink to hear it?â I asked. âAbsolutely not,â he said. âI can buy my own drinks. My 401(k) is intact. I got out of the market 8 or 10 years ago, when I saw what was happening.â He did indeed look capable of buying his own drinks â one of which, a dry martini, straight up, was on the bar in front of him. He was a well-preserved, gray-haired man of about retirement age, dressed in the same sort of clothes he must have worn on some Ivy League campus in the late â50s or early â60s â a tweed jacket, gray pants, a blue button-down shirt and a club tie that, seen from a distance, seemed adorned with tiny brussels sprouts. âO.K.,â I said. âLetâs hear it.â âThe financial system nearly collapsed,â he said, âbecause smart guys had started working on Wall Street.â He took a sip of his martini, and stared straight at the row of bottles behind the bar, as if the conversation was now over. âBut werenât there smart guys on Wall Street in the first place?â I asked. He looked at me the way a mathematics teacher might look at a child who, despite heroic efforts by the teacher, seemed incapable of learning the most rudimentary principles of long division. âYou are either a lot younger than you look or you donât have much of a memory,â he said. âOne of the speakers at my 25th reunion said that, according to a survey he had done of those attending, income was now precisely in inverse proportion to academic standing in the class, and that was partly because everyone in the lower third of the class had become a Wall Street millionaire.â I reflected on my own college class, of roughly the same era. The top student had been appointed a federal appeals court judge â earning, by Wall Street standards, tip money. A lot of the people with similarly impressive academic records became professors. I could picture the future titans of Wall Street dozing in the back rows of some gut course like Geology 101, popularly known as Rocks for Jocks. âThat actually sounds more or less accurate,â I said. âOf course itâs accurate,â he said. âDonât get me wrong: the guys from the lower third of the class who went to Wall Street had a lot of nice qualities. Most of them were pleasant enough. They made a good impression. And now we realize that by the standards that came later, they werenât really greedy. They just wanted a nice house in Greenwich and maybe a sailboat. A lot of them were from families that had always been on Wall Street, so they were accustomed to nice houses in Greenwich. They didnât feel the need to leverage the entire business so they could make the sort of money that easily supports the second oceangoing yacht.â âSo what happened?â âI told you what happened. Smart guys started going to Wall Street.â âWhy?â âI thought youâd never ask,â he said, making a practiced gesture with his eyebrows that caused the bartender to get started mixing another martini. âTwo things happened. One is that the amount of money that could be made on Wall Street with hedge fund and private equity operations became just mind-blowing. At the same time, college was getting so expensive that people from reasonably prosperous families were graduating with huge debts. So even the smart guys went to Wall Street, maybe telling themselves that in a few years theyâd have so much money they could then become professors or legal-services lawyers or whatever theyâd wanted to be in the first place. Thatâs when you started reading stories about the percentage of the graduating class of Harvard College who planned to go into the financial industry or go to business school so they could then go into the financial industry. Thatâs when you started reading about these geniuses from M.I.T. and Caltech who instead of going to graduate school in physics went to Wall Street to calculate arbitrage odds.â âBut you still havenât told me how that brought on the financial crisis.â âDid you ever hear the word âderivativesâ?â he said. âDo you think our guys could have invented, say, credit default swaps? Give me a break! They couldnât have done the math.â âWhy do I get the feeling that thereâs one more step in this scenario?â I said. âBecause there is,â he said. âWhen the smart guys started this business of securitizing things that didnât even exist in the first place, who was running the firms they worked for? Our guys! The lower third of the class! Guys who didnât have the foggiest notion of what a credit default swap was. All our guys knew was that they were getting disgustingly rich, and they had gotten to like that. All of that easy money had eaten away at their sense of enoughness.â âSo having smart guys there almost caused Wall Street to collapse.â âYou got it,â he said. âIt took you awhile, but you got it.â The theory sounded too simple to be true, but right offhand I couldnât find any flaws in it. I found myself contemplating the sort of havoc a horde of smart guys could wreak in other industries. I saw those industries falling one by one, done in by superior intelligence. âI think I need a drink,â I said. He nodded at my glass and made another one of those eyebrow gestures to the bartender. âPlease,â he said. âAllow me.â Calvin Trillin is the author, most recently, of âDeciding the Next Decider: The 2008 Presidential Race in Rhyme.â
i guess the real question is why is there not another andrew jackson instead of bushes clintons etc. do you think there will be one.
I don't think there will be one. For one thing, Congress has "made the rules" such that they are VERY well insulated from anyone being able to upset their apple cart. I believe the ONLY chance we have is for 100 million Americans to finally "get it", and march on Washington for a coup d'etat. I doubt we'll see such a thing... certainly not in time, sadly. Unfortunately, we've come to learn that our American government is just as greedy and corrupt as any 3rd world dictator we've looked down our noses at. Libertad referred to them as "Treasonistas".... I wholeheartedly agree.