The markets genuinely liked what Fed Chair Ben Bernanke had to say yesterday in his press comments following the Fed rate meeting. A glance at that shows the Fed still thinks it has more ammo to throw into the fight against global economic collapse:
“Information received since the Federal Open Market Committee met in March suggests that the economy has been expanding moderately. Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated. Household spending and business fixed investment have continued to advance. Despite some signs of improvement, the housing sector remains depressed. Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However, longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up gradually. Consequently, the Committee anticipates that the unemployment rate will decline gradually toward levels that it judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The increase in oil and gasoline prices earlier this year is expected to affect inflation only temporarily, and the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate. “
While it’s taken as an article of faith that the “dual mandate” is important – maintaining high employment and providing for price stability. I continue to be bothered by the concept, however. The reason is simple: The Fed does not state anywhere in its missions (at least that I’ve seen) that it had any responsibility for maintenance of the soundness of money.
In a detailed discussion for Peoplenomics subscribers Wednesday, I reviewed some of the past performance of gold relative to major downturns in the economy and came to an interesting conclusion: It’s not time to sell gold now.
The watering down of the nation’s money has averaged 3.24 percent per year since 1913, and I see no end of the watering down in sight. Until the Chairman replaces the political agenda with monetary soundness first and foremost, I’m afraid gold and land with agricultural production value will continue to hold value as well as paper. Bonds are fine, at least for now, but in the end, paper is paper and I’m not a complete idiot. (Close only counts in horseshoes and hand grenades.)
The predictions that Bernanke made are pretty impressive…namely that the economy will grow between 2.4 and 2.9 percent in 2012. But, in one of our reality check moments, we have to wonder if that is simply due to pumping up the money supply massively, and what would the growth figure be on a constant dollar basis?
Notice the hot dog financial press isn’t delving into that one?
Don’t know if I mentioned this, but some pretty good people – not in politics, but with a fair amount of common sense – like Tony Robbins of motivational speaker fame, are now starting to talk about the real mess America is in. If you haven’t seen his video on point, I think this is a pretty good investment of 20-minuites of your time:
Word from SIGTARP
Yep, after all the MSMBS about how the TARP program was “free” and saved the world, we found the report from the Office of the Special Inspector General for the Trouble Asset Relief Program out yesterday to be a bit eye-opening – especially these notes from the Exec Summary:
“It is a widely held misconception that TARP will make a profit. The most recent cost estimate for TARP is a loss of $60 billion. Taxpayers are still owed $118.5 billion (including $14 billion written off or otherwise lost).
A significant legacy of TARP is increased moral hazard and potentially disastrous consequences associated with institutions deemed “too big to fail.” TARP’s legacy also includes the impact on consumers and homeowners from the large banks’ failure to lend TARP funds. TARP continues to be subject to criticism that TARP helped large banks but not homeowners.
In addition, after 3½ years, community banks have an uphill battle to exit TARP because they cannot find new capital to replace TARP funds. Finally, TARP’s legacy includes whitecollar crime that SIGTARP is uncovering and stopping.”
To be sure, a large number of readers were critical of my comments at the time that TARP was nothing more than a bankster-class hold-up of the taxpayers, but with a cost of $60 billion and IOU’s for almost $120-billion, I’d say our skepticism was correct and – like it or not – SIGTARP data concurs.
We been had. And since the bankster class has pulled off too big to fail once, we can almost certainly expect bigger BOHICA’s to come. See why I’m a little bit skeptical of Fed happy-talk?
Counterpoint? Sure: TSEC Tim Geithner’s talk at the Portland City Club here.
As Goes Fleet Street
While we’ve been watching the fall of housing prices back to 2002 levels, and wondering how long it’s going to take the US markets to fall down to 2002 kinds of levels, it’s interesting to note that the financial press is not making a bit hoopty about the fact that the Unemployed Kingdom has fall into a double-dip recession.
Meantime, we see this morning’s unemployment filings here in the US were about flat in the latest reporting week…
“In the week ending April 21, the advance figure for seasonally adjusted initial claims was 388,000, a decrease of 1,000 from the previous week’s revised figure of 389,000. The 4-week moving average was 381,750, an increase of 6,250 from the previous week’s revised average of 375,500.
The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending April 14, unchanged from the prior week. “
Tomorrow’s ring around the mulberry bush will feature advance GDP, employment costs and the another Michigan sentiment report.
Oil Versus Obama
I’ve mentioned before that the incumbent President seems not too well liked down here in the oil patch, from what I hear. And there’s a lot of attention being paid to the story that “EPA official’s ‘Philosophy’ on oil companies: ‘Crucify them…” is getting plenty of play.
I won’t go so far as to point you at the story about how Mitt Romney has “donors coming out of the woodwork” might be somehow related, but there is that lil possibility.
A Joseph Curl op/ed piece in the Washington Times wonders “Was Net Gingrich’s campaign the worst in history?” I think we already answered that one.
No, I have no idea why Gingrich is holding up on the formal announcement until next Tuesday…perhaps this is how political Alzheimer’s works on the American public. You know…the long good bye kinda thing?
On word that G’rinch will endorse Romney, I think it would be very stylish of Romney to decline, but I’m not holding my breath. It’s bound to be the same old people in the new old game come January next. The parties don’t matter anymore…it’s all for show and dough.
Speaking of which…You did see where more than 900 political jurisdictions are going to be having their votes counted by a Spanish company???
Not much of an America left if we can’t even count our own votes, if you ask me…but then again, you didn’t. We are sooooo screwed……
Iran: Attack or Counter?
There’s an interesting story in the Washington Times this morning that claims “Iran readying hacker attacks on U.S. infrastructure, specialists say.”
When a person reads a story like this, particularly those who are led blindly around by talk show hosts, immediately go into their predictable “Must strike now…” mode. But what if the intel is good, but interpretation backward? What if they are indeed getting a hacker crew together but would only launch if they are attacked first?
Or, has that already happened with Stuxnet, et al?
Meantime the Pentagon is reportedly setting up a new spy agency to deal with Iran.
Worth reading over at the UK Guardian site under their headline “Rupert Murdoch admits NoW Phone-hacking cover-up.“ But the real revelations feel like they are still to come, especially around the contact between the Murdoch folks and government officials in the BskyB story.
Battle in the Clouds
“Google Drive vs Microsoft SkyDrive” is a really good read over at Tech Radar.
I keep thinking about putting UrbanSurvival up on a cloud server (helps rankings) but it costs more. Where’s all this free lunch I keep hearing about from IT people?
More after this…