Ben Bernanke
-
Election 2012 Means the Real Bernanke Bombshells Won't Fall Until December
If you were expecting big news from this week's Fed meeting it looks like you are going to be in for a long wait. This week's FOMC meeting was business as usual.
There was no change in interest rates, no change in the determination to keep rates low into 2015 and no change in the Fed's latest solution, otherwise known as QE infinity.
The truth is the real bombshells won't likely start until the Fed's next meeting in December. By then, the landscape could be completely changed.
With Election 2012 still at stake, it's who controls the Oval Office that matters most when it comes to Fed policy.
You'd never know that if all you did was watch the debates.
Ben Bernanke may well be the second most powerful person in the country, yet his name was never mentioned-not even once. Remarkably, monetary policy was completely absent from the debates.
Election 2012 and the Fed
That's true even though the two candidates differ substantially when it comes to the Federal Reserve.
For instance, Mitt Romney has repeatedly said he would not reappoint Ben Bernanke when the Fed chairman's current term ends in January 2014. Conversely, President Barack Obama has indicated his support for Bernanke and his easy money policies.
For that matter, Bernanke himself is in an open question. He may retire in January 2014 no matter who wins Election 2012.
However, at the December meeting one major thing will have changed: the time horizons of both investors and policymakers.
To continue reading, please click here... -
Ben Bernanke's Misguided Focus on Housing is Like a Bad Joke
It's a little early for April Fools, but Ben Bernanke might just be a prankster at heart.
I say this because he recently told the Economic Club of Indiana in Indianapolis that the Fed's plans for QE3 would help create more economic activity and higher home prices. Then he added, almost as an afterthought, that this would help many more savers than it would hurt.
I was waiting for the punch line...or the laugh track...or maybe an old bada-boom from Paul Schaeffer's band offstage. Only it never came.
It's like he was making a bad joke, "but QE is good for savers. No, really! I swear..."
Why the Fed chief keeps linking housing prices to savings and, by implication, to an economic recovery defies logic.
No matter how hard he tries, he can't solve our nation's economic woes by making the same mistakes all over again.
Part of the reason housing blew up in the first place is that people began to view rising home prices as personal ATM machines. Now Bernanke is simply putting a new face on the same monster.
Think about it...
We already have a multi-year oversupply in homes on the market and ridiculous amounts of construction are still going on in parts of the country where there are quite literally no buyers. If you've been to Las Vegas or parts of Florida you know exactly what I'm talking about.
How many homes do we really need at a time when values remain 30%-50%, and in some places even 70% below their peak?
Certainly not the millions of new homes that Bernanke thinks we do while unemployment remains high and actual buying power has been dramatically reduced.
And millions of strapped American families two paychecks away from bankruptcy surely don't care.
Bernanke's False Bottom
Now I know the media is very excited about recent data showing a recovery in housing prices, but let's take a deep breath. Seasonal demand accounts for a good portion of the bump. So does bargain hunting.
This suggests a new round of speculators has entered the game -- and those folks are buying with cash, making mortgages irrelevant.
As a result, prices are being bid up even though overall demand remains relatively constant.
Then there are the banks. All of them claim they want to lend money, yet find every excuse not to. While they will claim otherwise, practically speaking they're saying one thing and doing another.
This, too, speaks to a massive disconnect.
To continue reading, please click here... -
QE3 and Low Interest Rates Help Savers? Bernanke Thinks So
U.S. Federal Reserve Chairman Ben Bernanke wants you to believe his cheap money, low interest policies like QE3 actually have benefits for savers.
America's savers, many of whom are retired or nearing retirement, would beg to differ.
You see, low rates at the Fed - which has pledged to keep its interest rates near zero at least through 2015 - means low rates on conventional savings vehicles like bank accounts, certificates of deposit, and money market funds.
Those rates affect $10 trillion in savings-like products, costing savers billions of dollars.
For example, if a saver had $100 in a savings account in 2008 that paid 0.35% interest, she'd have just $102 today. But with inflation, $100 worth of goods in 2008 now costs $107.
That's a loss of 5% in four years, the sort of math that eats away at a retiree's standard of living.
And the rates of 2008 look fantastic compared to what's available now.
The Fed's actions have pushed down interest rates to microscopic levels. The average savings account interest rate has fallen one-third in the last year alone, to 0.08%.
The average yield on five-year CDs last month dropped below 1% for the first time ever. Back in 2007, five-year CDs provided a yield of 4%.
And yet in a speech he gave at the Economic Club of Indiana on Monday, Bernanke said his policies are helping savers.
Here's why.
To continue reading, please click here... -
We're Deep In The March Toward Economic Socialism
Have you noticed that the world is on a creeping - some (that would be me) would say cascading - slide into socialism?
It started with one giant step in the direction of economic socialism.
Economic socialism is specifically the shared risk the public has been yoked into pulling on behalf of banks.
The unmistakable and indelible footprints of socialism's latest forward march have been made by collectivist central bankers, pushed forward (at least that's the direction for them) by their constituents, the bankers of the world.
The bankers' jackboots are filled with stinking feet itching from the fungus of greed. And sadly, the sole of those boots bears the unmistakable "Made in America" stamp.
What's flooded into all those succeeding footprints is the stagnant future we all face. The march towards global hegemony of bankers' birthrights makes that evident.
It's not ironic that bankers espouse capitalist, free-market doctrines, but under cover of their ostensible handlers - their central bankers - prosper and propagate behind a Marshall Plan whose manifesto is socialized risk; it's sickening.
The moral hazard of socialized risk, of economic socialism, is unfettered.
The United States let the biggest banks in America get bigger. We let them bridle us, saddle us, and ride us into the ground. And they are all bigger now.
How can there be any free market discipline if there is no free market? How can moral hazard be corralled if there are no fences around the risks banks are allowed to take, given their size and power?
We're facing QE4ever (that's quantitative easing) on account of the banks being subject to lawsuits and an attack on their capital.
Oh, you didn't get that?
Here's the real reason we have stimulus to the nth degree here in America...
To continue reading, please click here... -
Fed Meeting Today: Are You Ready for QE3?
Investors have prepared for the Federal Open Market Committee (FOMC) meeting today and tomorrow to end with the announcement of a third round of quantitative easing (QE3) - and that's a good bet to make.
Today's Fed meeting will likely end with more of the same information we've been hearing for months from U.S. Federal Reserve Chairman Ben Bernanke. It's been a year and a half since Bernanke first announced that short-term interest rates would remain near zero "for an extended period." That language will likely stay the same tomorrow, and the policy timelines could be drawn out even longer.
There is also no doubt that QE3 or some other meaningful economic stimulus measure is on its way.
Maury Harris, an analyst with UBS, declared in a recent note to clients that, "We now anticipate an announcement of another round of quantitative easing at the FOMC meeting on September 13th. We expect the easing will take the form of a six-month program of at least $500 billion, primarily focused on Treasuries."
Harris also added that, "We also expect the FOMC extends their rate guidance into 2015."
Click here to continue reading...
-
Could QE3 Really Do Less for the Economy Than the iPhone 5?
Investors are eagerly waiting to hear if U.S. Federal Reserve Chairman Ben Bernanke will announce QE3 this week. Bernanke speaks Thursday at the conclusion of the two-day Federal Open Market Committee (FOMC) meeting and many expect him to announce some form of stimulus to revive the struggling U.S. economy.
But there's another huge event scheduled this week, one that could provide a tool other than printing money for boosting U.S. gross domestic product (GDP).
Believe it or not, analysts at JPMorgan Chase & Co. (NSYE: JPM) estimate that the Apple iPhone 5, expected to be unveiled tomorrow (Wednesday) afternoon and on sale by the end of this month, will raise GDP by 0.5% in the fourth quarter of this year.
Money Morning Chief Investment Strategist Keith Fitz-Gerald appeared on Fox Business' "Varney & Co." program Tuesday morning to discuss the possibility of this iPhone effect and what it implies.
-
QE3 Risks: Why this Harvard Economist Fears More Stimulus
High U.S. unemployment and slowing economic growth have stoked hopes of a third round of quantitative easing, or QE3, from the U.S. Federal Reserve. Fed Chairman Ben Bernanke hinted that more was on the way - although failed to indicate when - in a speech Friday at the Jackson Hole, WY, economic symposium.
Bernanke repeated the Fed's recent stance that current economic conditions are still "obviously far from satisfactory" and more help would be coming "as needed."
Interest rates remain near zero, but the Fed maintains that it still has plenty of ammo in its arsenal to boost the economy. The Fed apparently doesn't want to do too little now while the economy faces high unemployment and some inflationary pressure.
On the other hand, doing too much could - if Fed policies interfere with Congress' ability to act down the road -lead to a backlash against the Fed's power.
And the farther the Fed goes with monetary stimulus measures, the deeper that problem becomes.
That's why Harvard economist Martin Feldstein is afraid of QE3. He thinks adding to the billions of dollars already committed to quantitative easing programs will hurt us more than it helps.
Click here to continue reading... -
QE3 Still on Table, Bernanke Says in Jackson Hole Speech
The Federal Reserve is looking at more action to prop up the lagging U.S. economy, including a third round of quantitative easing (QE3), Fed Chairman Ben Bernanke said in a speech today (Friday).
Much of the speech, delivered at the Fed's annual retreat at Jackson Hole, WY, made a case for the effectiveness of the central bank's easy-money policies since 2007, including "nontraditional" actions such as QE1, QE2, and Operation Twist.
The Fed chairman said that the stimulus purchases "have provided meaningful support to the economic recovery while mitigating deflationary risks."
And in a hint to expect more of the same -- namely, QE3 -- Bernanke said that the costs of such policies, "appear manageable, implying that we should not rule out the further use of such policies if economic conditions warrant."
Bernanke also voiced concern over the sluggish economic recovery, and in particular the "painfully slow" improvement of the U.S. unemployment rate, which has changed little in 2012.
That's the sort of bad economic news that has pushed the Fed to take action in the past.
-
Stock Market Today: Markets See-Saw on Bernanke Speech
-
Today's FOMC Meeting Too Early for Action
There is little doubt that the struggling U.S. economy could use some goosing, and the U.S. Federal Reserve is in a position to deliver a good boost.
But, a move isn't likely at the conclusion of today's (Wednesday) Federal Open Market Committee (FOMC) meeting.
While a fresh spate of data suggests new steps from the central bank are warranted, many economists warn that the economy doesn't need immediate action - especially since the prior moves from the Fed haven't been very effective.
Growth has clearly slowed and unemployment remains elevated, but the sluggish pace of the U.S. economy may not be slow enough to compel the Fed to make an impactful move today, and any Fed decisions will be pushed to later in the year.
Today's FOMC Meeting: Not Ready for QE3
The U.S. Commerce Department last week reported that the U.S. economy grew at a paltry 1.5% annual rate in the second quarter, down from 2% in the first. Plus, the Labor Department reported initial jobless claims ticked up in the latest week while the unemployment level remains at a sickly 8.2%.
Fed chief Ben Bernanke maintains that his team is prepared to take further action if unemployment stays high, but he remains vague on what action might be taken.
With the reeling recession in Europe and a slowdown in stalwart China, global growth has been severely dented and is weighing on the U.S. economy. Those factors increase the odds of a third round of quantitative easing (QE3), but the Fed may not pull the trigger Wednesday.
To continue reading, please click here...
