When in doubt and nothing else works keep rates as low as possible, right BUBBLE ben!

Discussion in 'Economics' started by S2007S, Aug 9, 2011.

  1. S2007S


    Nothing like historical low interest rates for another 2 years, funny thing is a few years ago they said that they would be moving rates higher by 2010, then by 2011, never happened. It cant happen, every time BUBBLE ben bernanke comes out and says we are holding off on raising interesting rates, what he actually means is that the economy is still way too weak and it doesnt look like the economy is going to be improving anytime soon. So here is to another 3 more years of historical low interesting rates.

    Fed Plans to Keep Rates Low 'At Least Through Mid-2013'
    CNBC.com | August 09, 2011 | 04:05 PM EDT

    The Federal Reserve, acknowledging that the economy is much weaker than expected, hoped to reassure nervous markets Tuesday by saying it would keep interest rates exceptionally low "at least through mid-2013."

    Stocks initially plunged following the Fed statement but then gyrated as investors tried to assess what such a long extension of low interest rates would mean. The market finally staged an explosive rally in the final hour as the Dow closed up Over 400 points.

    Treasury bond prices also were volatile but finally ended higher. Gold soared further while the US dollar skidded.

    The Fed previously had said that it would keep rates low for "an extended period." The more explicit time frame is aimed at calming investors by giving them a clearer picture of how long they will be able to obtain ultra-cheap credit. Rates have been near zero since December 2008.

    Fed policymakers used significantly more downbeat language to describe current economic conditions. They said so far this year the economy has grown "considerably slower" than the Fed had expected.

    They also said that temporary factors, such as high energy prices and the Japan crisis, only accounted for "some of the recent weakness" in economic activity.

    Three officials, Richard Fisher of the Dallas Fed, Narayana Kocherlakota of Minneapolis and Charles Plosser of Philadelphia, voted against the move.

    "The committee currently anticipates that economic conditions—including low rates of resource utilization and a subdued outlook for inflation over the medium run—are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013," the U.S. central bank said in a statement. (Click here to read the full statement)

    Fed officials met against a backdrop of speculation that they would say or do something new to address a darkening economic picture.

    The stock market has plunged and government data have signaled a weaker economy in the four weeks since Chairman Ben Bernanke told Congress that the Fed was ready to act if conditions worsened.

    The economy grew at an annual rate of just 0.8 percent in the first six months of the year. Consumers have cut spending for the first time in 20 months. Wages are barely rising. Manufacturing is growing only slightly. And service companies are expanding at the slowest pace in 17 months.

    Employers hired more in July than during the previous two months. But the number of jobs added was far fewer than needed to significantly dent the unemployment rate, now at 9.1 percent. The rate has exceeded 9 percent in all but two months since the recession officially ended in June 2009.

    Fear that another recession is unavoidable, along with worries that Europe may be unable to contain its debt crisis, has rattled stock markets.

    The Dow Jones industrial average has lost nearly 15 percent of its value since July 21. On Monday, it fell 634 points—its worst day since 2008 and sixth-worst drop in history.

    The tailspin on Wall Street was further fueled by Standard & Poor's decision to downgrade long-term U.S. debt.

    Bernanke didn't speak publicly after Tuesday's Fed meeting.

    The chairman this year made a historic change by scheduling news conferences after four of the Fed's eight policy meetings each year, but Tuesday's wasn't one of them.

    Later this month at the Fed's annual retreat in Jackson Hole, Wyo., Bernanke will likely address the weakening economy, the S&P downgrade and the market turmoil.

    Earlier this summer, the Fed ended a $600 billion Treasury bond-buying program. The bond purchases were intended to keep rates low to encourage spending and borrowing and lift stock prices.
  2. will848


    Time heals all wounds...
  3. Time allows the disease to spread and worsen.
  4. Was he anticipating a question like: "Wh0 has the authority to relief you from your position, and replace you with one of the 1000s of able americans?
  5. What we're witnessing is the complete de-coupling of Wall Street and Main Street. Ultimately the markets will no longer reflect what's going on in the economy at all. It will just show how much money the money makers can make, and they'll all pat each other on the back all the way to the bank. Best you can do is piggy back on the lipstick piggy.
  6. USD/CHF fell from 0.76 to below 0.71 in 12 hours. This is a disaster.
  7. Frankly this was the best thing bernanke could have said today, atleast he didnt come out and say he was coming out with QE3, which was something that most traders i talk to thought was a foregone conclusion. You knew he was going to do something, lets just thank our lucky stars it was not QE3.
  8. 377OHMS


    Rates need to go up but the Whitehouse has gotten control of the Fed, it is no longer an independent entity, they only do what the President tells them to do.

    The economy will not begin to be restored until the Fed exercizes its independent role and adjusts rates for conditions.
  9. The right thing for an honorable Fed president to do given the state of market, economy and the dollar after trying his policies is to say something like: I resign.

    If he did, I would not be surprised if the market and the dollar stage a ferocious rally.

    A market rally with a collapsing dollar is not a market rally.
  10. dave74


    Be prepared for the final leg of this bubble, then get out.

    I'm gonna be in equities for the next year and a half, then dramatically scale down.
    #10     Aug 9, 2011