You have to feel for Bernanke. It must suck waking up every morning to this mess.
That said, it's time for him to man-up and RAISE THE F*CKING RATE!
And he knows it.
And people paying $5 a gallon (should) know it.
And Wall Street knows it.
And poor Americans living in or visiting Europe know it.
He just doesn't want to do it before the election, since it's his job to get incumbents re-elected, not do what's best for America.
Check out this video. And coming November if not sooner, get ready for the rate hikes.
Bear Realities: Fed Rate Hike Could Aid Ailing Market, says Schwab's Sonders
June 30, 2008
Isn't it kinda odd that Wall Street and America would be BETTER off if Ben Bernanke and the Fed would actually RAISE rates?
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He just doesn't want to do it before the election, since it's his job to get incumbents re-elected, not do what's best for America.
_______
No, it's his job to do the bidding of the Big Banks, Wall Street, and certain political powers. Nothing less, nothing more. The Big Banks, Wall Street, and political powers don't always know what's best, even for themselves.
But in the end, you can bet Big Banks will win and the little guys will get screwed. You can take THAT to the bank.
I stand corrected. The Fed has a dual-mandate that HP'ers are very familiar with
1) Protect the banks
2) Protect the incumbents
Raising rates in this job market? Wages are going down not up, risk for wage inflation is negligble. The Fed should stay put until the next leg down and then maybe decrease the rate further. I say this as a saver who looses purchasing power by the day, but also as a worker who doesn't want to loose his job.
The job of the Fed:
1) protect the financial system to keep credit available for good investments
2) keep general price changes in a corridor from 0% to low digits to keep the trust in the fiat currency
3) support growth of the economy
Ah keith, contact tech support :
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Not to mention the Fed Bank is majority owned by foreigners. Man, people have their heads up their a**.
Greenspan is probably kissing bens ass behind the scenes.Is greenspan still giving bullshit speeches about economics? How about the moron from china who paid a couple million to have lunch w/ buffet.
Actually, America would be better off if Bernanke and the Fed would just drop dead and let the market set interest rates.
Inflation is coming (and is here unofficially), rate hikes are coming and high interest rates are coming.
It will absolutely kill housing prices. Think how much less can be afforded at 12% mortgages.
There are ETFs that bet on rising rates if you want to take this bet.
I am a long time HPer and once again I am shocked at Keith's limited knowledge of the Credit Market. If the Fed started raising rates they would end up lowering them faster then they rasies within 1-2 months. OTC derivatives are interest sensitive and they are about to cause a White Squall to the affect that has never been witnessed. Keith get a grip and do more research.
Bernake doesn't have the balls to raise rates right now.
Instead they'll offer us another stimulus check to counteract all the inflation in food and energy.
Bernake is a coward!
Jymkata
George Carlin tells it like it is:
http://www.youtube.com/watch?v=kJ4SSvVbhLw&feature=related
Oh, so NOW it's time for him to raise the rates! Come on man! The rates should never have been lowered in the first place.
Of course the rates shouldn't be where they are at right now but it is the function of the market to set rates not some douchebag stuffy academic.
And to what can we attribute this worshipping of the rich and powerful? Who can we give credit for the slavish devotion to the top 10%? Which group of people has waged a campaign against the commoners? What political party ushered in an age of greed and the encouragement of self-interest? What ideology believes the wealthy need to be protected and nurtured, that they are already burdened too heavily with taxation and the creation of an economy? Who cut the taxes for the wealthy and the corporate for decades? Which political party is full of phrases like "A poor person never gave me a job"?
Any guesses, brainstems? Any idea whose ideology have us this plutocracy? Any ideas at all?
I'll be better off! so start raising. I look forward to 12% CD Rates..
Da Da Da Da Du Du "Volcker Time"
Another myth about 9/11 truth is that it is promoted by kooks when in reality it is supported by architects, engineers, government officials, intelligence analysts and many of the families of victims of 9/11:
Architects and Engineers for 9/11 Truth on Canadian Television
Who do you believe? The flimsy story promoted by the Bush Administration and Bush "science" or the above and the overwhelming evidence that proves those towers were destroyed by controlled demolition?
Seriously people. It is so obvious - even without looking at the overwhelming evidence that those towers were destroyed "explosively". Where did the energy come from to pulverize everything including the concrete to dust if according to the official story those towers were brought down by gravity?
It does not make one iota of sense!
There were EXPLOSIONS in those buildings! We have many eyewitness accounts on video saying that they heard explosions that match the pattern of detonators that are used in controlled demolition.
We have molten metal in the base of all three towers that collapsed that stayed molten for weeks. That's not jet fuel people! It's thermite used in controlled demolition.
Seismic records show large explosions occuring before the collapse of the towers.
Do you like being ignorant? Investigate 9/11 NOW!!
If it's just a "conspiracy theory" then it should be simple for you to counter the claims and evidence presented. If not, then it is you that believes in a false "conspiracy theory" - the theory that some third world arabs with box-cutters could overcome the greatest defense and intelligence complex in the world and bring down three steel-structured skyscrapers with two planes!
Wake the f up!!
Stocks end mixed, capping the worst June for the S&P 500 since the Great Depression, amid record oil prices and economic jitters
i say raise the rates.
I have stated before, that if the Fed raised rates .25 tomorrow morning, oil would drop $20 in one hour. A .25 increase would not put much of a dent in anyone's ARM or credit card payment, so the drag on the economy would be about nill. BUT - in the longer range, after they do this, the slowing economy (that is a euphemism for CRASH) will bring inflation down, and we may see disinflation. . .talk about disinflation - have you priced SUV's on Craigslist recently??? How about used boats, used jet-skiis, used ANYTING. . .it't not only houses going down in value.
bitterrenter - I can't explain it, but I like it when you call me a 'brainstem'.
LOL out loud.
9/11 Truthers are conspiracy theorists.
Bullsh*t!
Patriots Question 9/11
The thing is if he raises, he kills the market. If he kills the market, then the boomers will have absolutely nothing for their retirements (not that they will have any SS but at least they will have investments). If the boomers do not get all that they think they deserve, they will revolt. So, eesentially, teh plan is to take care of the boomers and screw everyone else (especially the following generations).
While there are many similarities between this time and the 70's, there is also a big difference:
In the 70's, America was net creditor.
Today, America is net debtor.
Since inflation rewards debtors and punishes creditors, the pressure to inflate by the Fed will intensity. The fact that higher oil and food prices are being blamed on "speculators", as if speculators have never existed for the last 5,000 years and have chosen this moment to wreak havoc in the markets, shows that the Fed is not really serious about the source of the problem, namely the Fed.
Most people simply cannot tolerate a higher Fed funds rate and many more people than now would simply stop paying their mortgages and let the value of the MBS behind it fall to zero. This will intensify the squeeze on the banks' balance sheets and force them to curtail lending. Bernanke has made it clear that he will call in his fleet of helicopters to prevent this if necessary, dollar be damned.
The Fed has a choice, it can either have its left arm cut off or its right arm cut off. Of course, they'd rather keep both, but when it comes to brass tacks, they side with Wall Street and give them as much credit as they need to bail out their bad investments. Main Street, as always, will be left holding the bag.
How do you know that the dollar isn't trading at it's real value? If so raising the rate wouldn't effect it long term, but could help freeze up credit conditions.
The hard truth is that maybe the dollar was too hight to support our debit driven ecconomy. Maybe US inflation is due to the account decifits we've had for a generation.
Personally, I'm still on the deflation side of the argument. Did you see the spike today in overnight LIBOR rates?
BWA HA HA HA HA HA
Bailout bill is signed, sealed delivered.
So long renters. Enjoy the shithole 1 bed 1 bath
for the 136th week in a row bitter renter idiots wins the STUPIDEST HPER OF THE WEEK award.
Congrats.
"Actually, America would be better off if Bernanke and the Fed would just drop dead and let the market set interest rates."
That would be too easy and work too well.
bitterrenter:
You can go get your kum-ba-ya-ya's out somewhere else. Show proof that you are wealthy and yet give the majority to those who have their hand out, and you have some gravitas. Other than that, you are just a poor loser who wants me to fill your outstretched hand.
My dad used to say you can fill one hand with wishes and the other with sh!t and see which one gets filled first.
Having a brainstem is still better than you, sir. This is not a slam against all the hippy leftover-baked Dems, just you.
Bitterrenter,
"Which group of people has waged a campaign against the commoners?"
The ultra-rich and ultrapower 0.01%. They do it by pretending to be friends of the poor, then take resources away from the top 20% that would have gone to hiring the remaining 80%, and pay it to the ultra-rich instead in the form of government contracts. Read this article on "The Hamilton Curse":
http://www.lewrockwell.com/dilorenzo/dilorenzo136.html
"Hamilton championed the creation of a large national debt for the sake of having a large national debt. The reason he gave for this was that the owners of the debt would be the more affluent people of the country, who would then be tied to the government and always be supportive of it, just as welfare recipients are today. They would be sure to support future tax increases, he reasoned, to ensure that they would not be shortchanged on their principal and interest."
In other words, socialism is designed to be socialism for the rich . . . just like the robbing of dollar value to bail out big banks their billion dollar bonuses, just like the daily robbing of the poor of their job opportunities so that a few well connected can be paid very handsomely.
BTW, Hamilton wanted to establish a powerful central government in the US, with essentially a king at the head of it. He was also the embodiment of banking interest. Coincidence? No.
America would be better off if he (bernanke) only let his fat cat banking buddies fail!!(http://www.oftwominds.com/blog.html)
-JDF
There is no incumbent. Bush is not running.
the only way to offset the damage already done is with double digit rates, which would of course create a whole new set of problems.
and with the new IMF audit of the entire US financial system it's pretty safe to say the age of the Dollar will soon be over (2010 to be exact)
"America would be BETTER off if Ben Bernanke and the Fed would actually RAISE rates?"
I doubt it.
Secretly, the Fed is happy to see the inflation we have now. That's because it delays deflation for a few more years.
More trouble for CFC. Is BofA sure they want CFC?
http://tinyurl.com/46pfwa
WOW I wish the idiot bailout cheerleaders would ACTUALLY READ THE DETAILS of the bailout plan--assuming they KNOW HOW to read.
They might not be cheering the $8000 credit for first time buyers (aka CURRENT RENTERS).
They might find out the bailout is for ONLY 400,000 homeowners, not every idiot with a set of keys. Probably needs-based. PROBABLY NOT YOU, CLUELESS.
Going to cost taxpayers (that IS you, fools) 300 BILLION. That's $750,000 per saved home. Sound like a good use of money, fellow citizen? Sound like "smaller government" to you?
And you should see some of the FINE print in the bill LOL. Orwell, anyone?
Higher Fed rates? BRING 'EM ON. It's time I got back into stocks.
I used the first fed CUT as a very profitable sell signal in the stock market (just like the last time, in 2001) and strong hold signal for commodities.
Fed's always chasing.
I'll consider the first rate increase a great time to switch back.
"BWA HA HA HA HA HA
Bailout bill is signed, sealed delivered.
So long renters. Enjoy the shithole 1 bed 1 bath"
Your mama
ACTUALLY READ THE DETAILS of the bailout plan
And don't forget the 1.5% "insurance" premium per year to the govt--that's $4500 a year from a homeowner with a 300K loan. Yikes.
And you then get to share any future capital gains with the government.
Sounds like a NEAT way to get a lower/middle class TAX INCREASE through during a recession, and get SOME idiots to think it's a GOOD thing LOL.
Poor brainstems. Still convinced that conservatism will show them the way out of the woods. Still convinced that the poor with their "outstretched hands" are the enemy, the group making them miserable, the ones responsible for the housing pain.
Must be quite the dichotomy (look it up, brainstems) to be hurting and not being able to blame those truly responsible for their misery.
That must be why I enjoy coming here and reading brainstem after brainstem complaining about the system they helped create, that they voted for and that they support.
Thanks, brainstems for making my time spent here so enjoyable.
xoxo,
BR
Looks like I'm not alone in the deflation camp"
[Bill] Gross expects housing prices to fall a further 10 percent by January, by then a ``Japanese-style deflation will be in full stride.'' Home prices in 20 metropolitan areas fell the most on record in April, from a year earlier, according to an S&P/Case- Shiller home-price index released on June 24.
Wall Street and America would be better off without the FED.
It's interesting how with inflation at least 5% a year, the government is taking an extra 5% of everyone's incomes with this hidden tax and nobody really notices. Am I missing something?
Sonders in the video said "Nothing terribly unique about this environment in terms of what investors aughta do." So the DOW losing +1000 points in a month and housing prices declining is a normal thing.
Oh and she said the market always anticipates a recession. The market was buying up Bear Stearns and other banks this time last summer in the beginning of a housing recession.
How typically and unwaveringly bullish from a Wall Street person. It's like reading one of those god awful investment magazines like "Money" or "Fortune." The house is burning down, but lets keep trying to build it up.
OLD VERSION:
The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.
The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.
Come winter, the ant is warm and well fed. The grasshopper has no food or shelter, so he dies out in the cold.
MORAL OF THE STORY: Be responsible for yourself!
---------------------------------------------
MODERN VERSION:
The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.
The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.
Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while others are cold and starving. CBS, NBC, ABC, PBS, and CNN show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food. America is stunned by the sharp contrast.
How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?
Kermit the Frog appears on Oprah with the grasshopper, and everybody cries when they sing, 'It's Not Easy Being Green'.
Jesse Jackson stages a demonstration in front of the ant's house where the news stations film the group singing, 'We Shall Overcome'. Jesse then has the group kneel down to pray to God for the grasshopper's sake.
Nancy Pelosi and John Kerry exclaim in an interview with Larry King that the ant has gotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant to make him pay his fair share.
Finally, the EEOC drafts the Economic Equity and Anti-Grasshopper Act retroactive to the beginning of the summer. The ant is fined for failing to hire a proportionate number of green bugs and, having nothing left to pay his retroactive taxes, his home is confiscated by the government.
Hillary Clinton gets her old law firm to represent the grasshopper in a defamation suit against the ant, and the case is tried before a panel of Federal judges that Bill Clinton appointed from a list of single-parent welfare recipients.
The ant loses the case.
The story ends as we see the grasshopper finishing up the last bits of the ant's food while the government house he is in, which just happens to be the ant's old house, crumbles around him because he doesn't maintain it.
The ant has disappeared in the snow.
The grasshopper is found dead in a drug-related incident and the house, now abandoned, is taken over by a gang of spiders who terrorize the once peaceful neighborhood.
MORAL OF THE STORY: Be careful how you vote in 2008.
What happens when he raises rates and inflation just continues to build anyway? The real panic
A rate increase would and it will cause and speed up the housing market collapse. I am a certified appraiser in NJ (I know, I know what you thinking) who has followed this blog for years, let me tell you how bad it is in some of the poor areas that I cover: Elizabeh City, Newark and Paterson, in these areas I have seen an unprecidented increase in the number of short sales, over 50%of the lisings in these areas are short sales or soon to be foreclosures. The increase in the mortgage rates will simply collapse markets! "The banks are in trouble -- I don't know how they bought all that garbage."
What were they thinking!
Bitterrenter,
"Must be quite the dichotomy (look it up, brainstems) to be hurting and not being able to blame those truly responsible for their misery."
Tell me about it, how do you feel seeing your retirement funds going down 1000+ points in a month, with the banks that you work for leading the way down? Tells us all about it, BR, is that BankRepresentative?
For what it's worth, I have been shorting the market since DJIA was over 13000 (when SPX was close to 1440), only recently closing short positions after SPX came in the vicinity of 1300 (corresponding to roughly DJIA 11500). You can verify my posts on this topic in the past month and half, posted in almost real time as the indices moved.
FED raising the short term rates would probably lead to:
(1) dollar appreciation against other currencies;
(2) halt commodity price inflation as monetary inflation gets stopped;
(3) making treasury instruments, especially long bond, rise; i.e. interest rates at the long end fall.
(4) as treasury long bond rates come down, so will rates on 30-yr mortgages.
In other words, it's the exact medicine that's required to get mortgage conversion to 30-yr fixed rolling. While the current low short-term interest rate policy is helping the banks digest the piles of junk paper issued in the past few years, it is also killing new loan origination due to high 30-yr fixed rate. Banks are not writing new HELOC's or low rate ARM's any way, so the low short-term rate is not helping loan originaation at all. When banks already anticipate higher rates in the future and worry about loan repayment at turn-over at that future date, FED's low short-term interest rate is not being passed onto borrowers.
Of course, Bernanke is far too mired in the old Philips-Curve nonsense to see this problem.
Anon 3:15am,
Thanks for the info from the front lines. The conventional modern central banking methodology, namely, keeping interest rate artificially low, and letting time heal the losses at the too big to fail banks unfortunately is exactly what brought us:
1. the Japanese 18yr long depression, and still counting; before that:
2. the decade of 70's stagflation in the US; and before that:
3. the long "great" depression of 17 years, from 1929 to 1946.
Recessions (then called "depressions") before modern central banking tended to be rapid and short. Asset prices drop quickly enogh to a level where bargain hunters can step in and bid up the market again, then the business environment improve quickly.
Low short-term interest rate is not helping spending at all when banks are not lending out based on those low short-term rates because they are afraid of default. What's needed is a higher short term rate, and lowe long term rate, so that current homedebtors can quickly make a decision on either:
(1) refinance into favorable 30-yr full amortized mortgages at a decent rate; that will get the bank mortgage lending loan origination restarted. or
(2) abandon the house. Rent a comaparable one for much less. Then there's much much more money left over for the family every month to spend.
Yes, many banks that misbehaved will be bankrupt . . . and new banks will take up their place in the market. Yes, some savers will lose part of their deposits, but their remaining deposits at surviving banks would get higher interest return and not be robbed blind by FED-engineered inflation. Such bankruptcies will make savers care about which bank they park money with, hence instill banking discipline.
In modern central banking, instead of those natural check-and-balances from savers to banks to borrowers, with descipline every step of the way, the central bank:
(1) holds itself out as the guarantor of depositors while robbing them through monetary inflation;
(2) holds itself out as savior of homedebtors while in fact shackling them to way too large a housing payment, hence the homedebtors have no money to spend for anything else.
Big bankers are the ultimate beneficiary in this game as they no longer have to worry about market descipline . . . take all the big risks for the big bonuses, and never have to worry about the downside risks associated with any those big gambles. The process also stymie the emergence of new banks.
BTW, BR, you don't seem to understand the meaning of the word "dichotomy." You must have seen the word in another post of mine. The word means bifuration and contrast . . . as in: the dichotomy between Democrats vs. Republicans is a false one; they all want to loot you.
The word you are looking for is "irony," as in: it's an irony that you call other people "brainstem." It's also an irony that you are telling other people to look up the meaning of the word "dichotomy" assuming they don't know.
Bitter Renter,
Why is it that I can imagine you saying 'brainstems' with a heavy lisp accompanied with a flicking of the wrists?
You really remind me of one of those bitchy gays who have their ears plugged so they can't hear their own incessant whining.
-Mike
Yes, Reality, we know how you timed this whole thing so perfectly! Amazing creature that you are!
Must be the libertarian in you that gives such powers of prescience!
I bow to your powers, Oh Mighty One!
PS. I shared your story of savvy investing with Bigfoot and Amelia Earhart when we had tea with the Queen today. They were duly impressed!
MIke buddy,
No, no lisp here. I "pass". Like most gay men do.
Just like your ideological view of the world, your concept of gay men is outdated and based on ignorance.
But I would expect nothing more from a brainstem.
Just raise the damn rates!
Gentle Ben is waiting until next Spring before raising rates for a reason. But it doesnt stop the banks from raising their rates.
Housing and the stock market is going to crash regardless. No one can get approved for a house loan, and the stock market will not see new highs - only lower lows because of spiraling down economy.
Wait until Q3 2008.
Paul Volker is on Obama's advisory pannel. If Obama makes it to the Crack House, then Mr. Volker may very well replace Mr. Hellicoper. Then history would write how Volker saved the dollar twice in his lifetime.
Bitterrenter,
Here's the link to my post on May 21st, almost six weeks ago :
https://www.blogger.com/comment.g?blogID=18675105&postID=1590145978755203147
a quick excerp:
"Still think we are range-bound for now, between 1340 and 1440 on the S&P500, with a non-insignificant chance of a drastic downside risk to 1200's . . ."
It was a follow-up to a post three days earlier suggesting the stock market is range-bound for the summer, spelling out the details. At the time, SP500 was close to 1440. Each SPX point corresponds to roughly 9-10 Dow points.
"Must be the libertarian in you that gives such powers of prescience! "
No, it's the other way around: insightful people who do not count on government coercion to make their living tend to become libertarians, as they gain insight on how the government really works.
Reality darling,
Market stagnation during the summer is no secret. The book Riding the Bear is all about that. Then there's the old adage "Sell in May, Go Away".
Of course, that tactic hasn't been the best with recent anomolous years. And timing is notoriously risky (except for the libertarians, they're always spot-on!).
Bottom line: you discovered nothing new.
Even a socialist like me knows that.
Hey Bitterrenter, don't you have to be in a Pride Parade somewhere, interrupting the traffic and life of hardworking people, while you all dance shirtless on top of trucks?
Bitterrenter,
"Market stagnation during the summer is no secret. The book Riding the Bear is all about that. Then there's the old adage "Sell in May, Go Away". Of course, that tactic hasn't been the best with recent anomolous years."
In other words, you are presenting two contrary predictions at the same time . . . really useful! BTW, In case you didn't notice, I predicted a decline early in the summer, then a rally late in the summer into Labor Day. I most certainly did not recommend getting back in in the fall as in "sell in may and go away" implies.
"And timing is notoriously risky (except for the libertarians, they're always spot-on!)."
Market timing the full time job of your colleagues at the trading desks.
"Bottom line: you discovered nothing new."
I'm sure there are other people, perhaps even some at the banking institution that you work for, who hare figured out this year's time line, even if they haven't designed it to begin with. I'm just more inclined to share my hunches, without the burden of having to pretend being stupid like you do.
Yeah, that said, well, NOTHING.
If you have nothing to say, why the long, boring posts?
Bitterrenter,
Go read the post again. If you still find nothing is said there, go back and read yet again, until you understand what was said. If you can't find anything in there after 5 readings, it's time for you to sign up at the community college for reading comprehension calsses. LOL.
BR, by the way, it's another Irony (not dichotomy) that after making so many self-contradictory posts you are accusing my post of saying nothing.
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