Monday, October 5, 2015

Befuddled Fed

The question for me is why am I still covering this rank rot?

"Federal Reserve aims to prevent crises, but how is a thorny issue" by Binyamin Appelbaum New York Times  October 05, 2015

The 2008 financial crisis convinced most people in the world of central banking that it would be a good idea to try to prevent that kind of thing from happening again. But policy makers have made little progress in figuring out how, a troubling reality highlighted at a conference at the Federal Reserve Bank of Boston. 

Dodd-Frank, WTF?

The Fed has committed itself to so-called macroprudential regulation, meaning it is focused on the stability of the financial system as well as the health of individual companies. But senior Fed officials at the conference described that as more of a goal than an achievement.

“While the use of macroprudential tools holds promise, we are a long way from being able to successfully use such tools,” said William C. Dudley, president of the Federal Reserve Bank of New York.

The importance of prevention has only increased, because the Fed’s ability to respond to a crisis has diminished. The Dodd-Frank Act prevents it from repeating some aspects of its 2008 actions. And the Fed expects interest rates to remain below historic norms for the foreseeable future, leaving less room to cut rates, long its first line of defense.

Look at this. The Dodd-Frank fraud and failure has actually hurt the effort to prevent banks from $crewing us all over again. Talk about being a banker's mouthpiece!!

I'm sorry, folks, but I simply can no longer take reading this slop, if for no other reason than my good health.

“If you ask people who is responsible for financial stability they would say the Fed,” said Donald Kohn, a former Fed vice chairman. “But the Fed doesn’t really have the instruments. It doesn’t really have the tools. And I think this is a dangerous situation if people perceive that it has the responsibility and it doesn’t have the tools.”

The basic problem is crises are hard to predict. A 2012 study by the International Monetary Fund said about one-third of credit booms ended in crashes. And even in retrospect, researchers found it hard to identify warning signs.

Look at this apologetic and excu$ing slop for their recklessness and looting schemes. We dunno! Then why am I reading this $hit?

Eric S. Rosengren, the Boston Fed president, argued in a paper that financial stability should join inflation and employment as explicit objectives of monetary policy. Moreover, he and his coauthors presented evidence the Fed already treats financial stability as a goal.

End print.

Seven years after the peak of the 2008 crisis, the Fed has not been able to drive unemployment or inflation back to normal levels. The unemployment rate is 5.1 percent — a level usually associated with a robust economy — but that figure overstates the current health of the labor market. Prices, meanwhile, rose just 0.3 percent in the 12 months ended in August, far below the 2 percent level the Fed would like to achieve to support healthy spending and investment.

So popping bubbles probably means curtailing some beneficial booms, too.

“We’ll have to make a choice about how much growth we are willing to give up in good times to limit the likelihood of a future financial crisis,” said Loretta J. Mester, president of the Federal Reserve Bank of Cleveland.

Some officials, however, argue a more drastic shift may be necessary. They want the Fed to use its most powerful tool — raising and lowering interest rates. The Fed might curb speculative excesses by raising interest rates. Or, it could soothe fragile financial markets by holding rates steady, as it is doing now, or by cutting rates, as it does during downturns.

Janet L. Yellen, the Fed’s chairwoman, has generally resisted this suggestion, arguing in a 2014 speech that monetary policy should remain focused on moderating inflation and minimizing unemployment. Raising interest rates to limit speculation in a particular area is the rough equivalent of weeding a garden with a bulldozer. Yellen has suggested she would consider it only as a last resort.

But Fed vice chairman Stanley Fischer said at the Boston conference that the use of monetary policy for such goals deserves consideration. “There may be times when adjustments to monetary policy should be discussed as a means to curb risks to financial stability,” he said.

Jeremy C. Stein, a former Fed governor, has argued that the broader effects of raising interest rates actually numbers among its virtues, because it potentially enables the Fed to discourage risky speculation it has not even managed to identify.

They showed that the movement of the Fed’s benchmark rate tracks discussions of financial stability at Fed policy making sessions.

Others, however, said it was not clear that raising rates was a more effective means of addressing risks to the financial system than sensible regulation.

“I’m a skeptic,” Kohn said. “I think that monetary policy, changes in interest rates, are likely to be not very effective in damping a lot of these cycles.”

The current discussion is largely framed by the details of the last crisis. Mark Gertler, a professor of economics at New York University, said he saw little reason to think the Fed could have curbed the rise of housing prices in the years leading up to the 2008 crisis by raising interest rates more quickly. He noted that Britain had higher rates than the United States and just as severe a housing bubble.

Instead, Gertler said: “We can certainly imagine that some kind of restrictions on the subprime market might have been a more effective way to contain this mess.”

Nellie Liang, director of the Fed’s office of Financial Stability Policy and Research, presented a study showing that changes in interest rates have a limited effect on credit booms in the early stages, and then even that fades away. That suggested that macroprudential measures had a role to play.

But the skeptics held sway.

Luc Laeven, director general for research at the European Central Bank, provided a fitting, if disheartening, summary of the conference. 


“Both monetary policy and macroprudential policy are not really very effective,” Laeven said.

He added a plaintive question. “Do we have other policies?”


Blah, blah, blah. I'm sorry, I don't speak banksterspeak.

Related: Fed to F**k Us All

The $ign language I understand, and I offer that salute here:

"Former Federal Reserve chairman Ben Bernanke says that some Wall Street executives should have gone to prison for their roles in the financial crisis that gripped the country in 2008 and triggered the Great Recession. Billions of dollars in fines have been levied against banks and brokerages since the meltdown, which was in large part triggered by reckless lending and shady securities dealings that blew up a housing bubble. But in an interview with USA Today, published Sunday, Bernanke said individuals also should have been held accountable. ‘‘It would have been my preference to have more investigations of individual actions, because obviously everything that went wrong or was illegal was done by some individual, not by an abstract firm,’’ he said. Asked if someone should have gone to jail, he replied, ‘‘Yeah, I think so.’’ He did not name any individual he thought should have been prosecuted and noted that the Fed is not a law-enforcement agency. Bernanke is promoting his 600-page memoir, ‘‘The Courage to Act: A Memoir of a Crisis and Its Aftermath,’’ which is scheduled to be published Monday. He began the book after leaving the Fed in 2014. It details his take on the crisis, in which the government took over the mortgage giants Fannie Mae and Freddie Mac and provided hundreds of billions of dollars in aid to the biggest financial institutions. He writes that the taxpayer-provided bailouts were hugely unpopular, but argues they were necessary to avoid an economic catastrophe." 

Someone also prepare a cell for him, please.


Ominous Opening to October

Mixed Me$$ages

I'm sick of them, sorry.

US stocks survive barrages as selloff low becomes rally point 

Low is high, down is up, peace is war, freedom is $lavery, aaaaaaaaagggghhhhh!!!!!!

China weighs on developing East Asia, World Bank says

US and 11 nations close to accord on trade pact

Yeah, that corporate monstrosity will fix everything.

For state’s Gateway Cities, a long-awaited rebound

Yes, just stay positive and think like an owner!

(Is that why I'm thinking of suspending publications at this blog for an indefinite period?) 

State’s rainy day fund has dwindled over past decade

How can that be when we have an economy that.... never mind.

Group effort helps city tackle homelessness

How can that be when we have an economy that.... never mind.

As long as they stay out of the way of the tourists (that was the tone of the article above), and the Globe has important people discussing the issue this week.

Sorry for zipping through those stories, but it is time to park this post.


They gave me a parking ticket, can you believe it?

Markets snapshot: S&P 500 rises a 5th straight day

"Deal reached on Pacific Rim trade pact" by David Nakamura Washington Post  October 06, 2015

ATLANTA — President Obama hailed the completion Monday of a historic 12-nation Pacific Rim trade deal that he said ‘‘reflects America’s values’’ as his administration turned quickly from the global negotiating table to selling the deal on Capitol Hill.

It does reflect AmeriKa's values in that it is a gift to multinational corporations, and why do you have to $ell $omething that $hould $ell it$elf? That befuddles me.

Obama pledged that the Trans-Pacific Partnership, the largest free-trade accord in a generation, would open new markets for US goods and services and establish rules that give ‘‘our workers the fair shot at success they deserve.’’

That's what the corporate lackeys called presidents have said about all the disastrous deals that benefited a few from their cla$$, that's it.

But in a sign of the tough fight ahead to win final ratification from Congress next year, lawmakers from both parties lambasted the pact as falling short, raising the prospect that the White House could lose support from allies who had backed the president’s trade push earlier this year.

Orrin Hatch is unhappy, and I love bipartisanship!


The United States, where the 2016 presidential campaign is underway, is not the only nation with a turbulent political climate. Canada’s prime minister, Stephen Harper, who backed the deal, is facing a tough reelection vote this month, and the opposition party has said it won’t be bound by the terms of the deal. Leaders of Australia, New Zealand, and several other countries made tough compromises that face stiff opposition at home.

On the US campaign trail, Senator Bernie Sanders, Independent of Vermont, who is seeking the Democratic presidential nomination, slammed the deal, saying, ‘‘Wall Street and other big corporations have won again.’’ Republican front-runner Donald Trump has consistently criticized big trade deals, and Democrat Hillary Clinton has hedged on the TPP deal, despite having supported it while serving as Obama’s secretary of state.

‘‘I’ll leave the presidential politics to someone else,’’ US Trade Representative Michael Froman said during a news conference in Atlanta. ‘‘Our job is to reach agreement and explain it fully to the American public.’’ 

Then why was it negotiated in secret with certain parties kept out of the loop?

Obama must wait at least 90 days after notifying Congress of the deal until he can sign it and send it to Capitol Hill, and the full text of the agreement must be made public for at least 60 of those days. Under the terms of ‘‘fast-track’’ trade legislation approved by Congress in the spring, lawmakers will not be able to amend or filibuster the pact.

Then vote it down. I know there will be lobbyi$ts paying visits and making but threats, but.... vote it down.

Capitol Hill staffers said votes in the House and the Senate are unlikely before mid-April, at the earliest. A reshuffling in the House Republican leadership after the announced resignation of Speaker John A. Boehner, Republican of Ohio, could introduce additional uncertainty.

While the GOP has been more supportive of Obama’s trade agenda, some conservatives have opposed a pact negotiated by a Democratic White House.

Opponents in Obama’s own party have vowed to turn the trade deal into a political issue in an attempt to block it.

‘‘That’s perfect timing because a presidential election year is the best opportunity to shine a light on all the bad trade provisions in this deal,’’ said Representative Rosa L. DeLauro, Democrat of Connecticut, a critic of the deal. The administration ‘‘is supposed to be fighting for the American public, not high-priced lobbyists, but, unfortunately, this administration’s approach has been the exact opposite.’’

Look, it's another in a long line of broken promises or false friend fronts this guy has put up. I'm over the disappointment and expect such things now.

The pact, negotiated for eight years, is a multiple-chapter pact that addresses tariff reductions for agriculture and automobiles, intellectual property rights for pharmaceutical drugs and movies, the free flow of information on the Internet, wildlife conservation, online commerce, and dispute settlements for multinational corporations. 

In other words, it is going to have vast implications.

Negotiators were under mounting pressure to close the gaps on several issues.

Whenever anything is urgent or the pre$$ure is on, I say BRAKE!!!!

Efforts to reach final consensus during the last negotiating round, in Maui in July, broke off in the face of deadlocks over dairy tariffs, rules governing where automobiles are manufactured, and market protections for next-generation biologic drugs.

US officials described marathon talks in Atlanta that stretched deep into the night. But members of Congress warned that pressure to close a deal could lead to bad compromises. Hatch is reportedly upset over terms that govern how long pharmaceutical companies will maintain market exclusivity on genetically engineered drugs.

Yes, the pharmaceuticals are already complaining, and part of the deal looks like drug price controls for Obamacare with foreign suppliers. That means health, safety, and quality issues.


Other lawmakers hailed separate portions of the agreement, including new labor standards to protect workers and a last-minute provision that would not allow cigarette companies access to a new international dispute settlement panel.

Oh, yeah, I'm sure this thing is great for workers. 

Fact is, all these trade deals $crew workers. The "free market" means production flows to the lowest wage, least regulated nations.

Critics of such panels, including Senator Elizabeth Warren, Democrat of Massachusetts, have charged that the pact will allow large corporations to sue TPP member nations for lost profits if they change their public health laws or other regulations.

Why not just turn over the state treasuries to them all and save time and aggravation?

Officials in Atlanta said the agreement will pay long-term dividends, deepening multilateral relations in a way that develops common interests and reduces volatility in global markets.

Have you seen the stock market the last month or so? 

Yeah, these deals really reduced volatility!

The pact represents the largest US trade deal since the North American Free Trade Agreement with Canada and Mexico in 1993.

Working on even bigger one with Europe.