What else can the Federal Reserve do to boost the economy? - Jun. 18, 2012

June 18, 2012

"The Fed's most recent forecasts suggest interest rates should stay "exceptionally low" until late 2014. Extending that language to say 2015 or later could spur economic activity by eliminating some uncertainty about future interest and inflation rates."

It's obvious where this is heading: The Federal Reserve Credit card (FedCard™).

Bad credit? No credit? No problem! The FedCard is yours.

Plus every time you use it, you earn points that you can exchange for valuable items. Like beard trimmers and such.

JC Penney President Mike Francis Came, Saw, Collected $10 Million, And Quit Nine Months Later | ZeroHedge

Maybe it means that the Fed doesn't think cutting rates further will stimulate the economy.

"Many are now walled off from the low interest rates engineered by the Federal Reserve"

this is BS conventional wisdom. UST sovereign debt issue is the tallest midget and there's nowhere else for the trillions of USDs to go.

According to the Fed's balance sheet, Fed holdings of UST has expanded $90B in the TTM. Big whoop compared to the $1.xT of total UST debt take-on.

Just throwing more money at people for borrowing is not a fix, not any more than the 2002-2007 credit event was a fix for the dotcom crash.

Short of actual CH-47s with money cannons, the Fed is powerless to put the economy on a better sustainable demand footing.

Congress is now 6 months from blowing up in terminal gridlock, though if the Rs can re-take the 1 1/2 branches it doesn't have I expect "interesting" things from them, in the Chinese sense.

CalculatedRisk wrote:

At some point it just unravels.

CR, in a sense Merkel is right, the only way out is full union within Europe, but it will not work if "union" is only a term for exploitative hegemony. Either the Europeans take responsibility for one another as one people - the US motto is "E pluribus unum" - or the unraveling will be chaotic if not bloody. Who knows what monsters may emerge from chaos?

So, the problems are:

plunging home prices
lost jobs
past overspending
bad luck

and the cure for this is more debt??? Well, slap me silly and gimme a triple leveraged facepalm.

Why don't they just say "forever" and not have to revisit this issue again?

"More debt!" would get us back to 2005-2006 good-times, yes.

Unfortunately, 2008-2009 would also come after that.

Ponzis gotta ponz, and actual nordic-style redistribution is bad yaknow.

The article makes my blood pressure go up: Last year, nearly 90% of all new mortgages originated went to households with high credit scores; before the financial crisis, it was about half

Well NSS, low interest rates don't benefit lower incomes. Next the Fed is going to realize that QE ultimately relies on trickle down.

Why don't they just say "forever" and not have to revisit this issue again?

FRED Graph - FRED - St. Louis Fed

Kinda like coming into LAX.

Fed wasn't concerned when they helped push the mortgage debt.

His salary of $7.50 a day

fwiw, Henry Ford's $5 is $110 today, $14/hr.

"The newest workers earn about $14 an hour"

WORKING FOR LESS; Two-Tier Pay Now the Way Detroit Works - NY Times

100 years -- feel the progress.

The Fed does have considerable regulatory authority over bank lending practices. They spend so much time with those interest rate hammers that they forget they also have scalpels.

The Federal Reserve Bank of San Francisco: Economic Research, Educational Resources, Community Development, Consumer
and Banking Information

KarmaPolice wrote:

"They handed us checks and said 'you have to leave. You don't have a job here anymore,'" Soto told me this week. After participating in an organized work protest, the 2007 Employee of the Year of 363 North Belt's cleaning crew was told to go home."

It's not illegal if no one enforces the law.

Comrade Troyski wrote:

"The newest workers earn about $14 an hour"

Can't buy a new car with those wages.

some investor guy wrote:

You can buy a used car, probably a factory certified off lease vehicle.

At higher interest rates.
Earn less - pay more.

josap wrote:

Comrade Troyski wrote:

"The newest workers earn about $14 an hour"

Can't buy a new car with those wages.

I bet lots of finance managers can get it out the door for you.

Down here we have one of those you pay you drive on every other corners. I think they actually make weekly payments there. I doubt many ever pay them off before they get repossessed and "sold" again.

But of course the Fed is a bunch of banks. Why would they regulate themselves?

lawyerliz wrote:

Dammit Jim, what the interest rate is doesn't matter IF YOU CAN'T GET A LOAN!!

That's totally false. There's nothing wrong with the credit market that price won't fix. The only reason credit would seize up is if any one person or entity ever became so large they were the market. Oh... wait.

The Fed can't create jobs. Congress could create a jobs program, like the WPA, for the 99ers, and that's what you would need, just to stop things getting any worse. But Congress is too busy kissing Jamie Dimon's ass to do anything. So instead, you get a huge underemployed pool of casual labor and people working under the table to supplement welfare, SNAP, etc.

With fabricated bank, Chinese man sets new standard for fakery - The Globe and Mail

Jun. 18 2012

"In a China awash with fake iPhones, pirated DVDs and knockoff Louis Vuitton bags, rice trader Lin Chunping took fakery to a whole new level: He invented a U.S. bank and claimed he bought it.

The little-known businessman shot to fame in January when state media reported that he had taken over Delaware-based Atlantic Bank. The unprecedented acquisition brought him praise: His hometown gave him a prestigious political appointment and state media called his business experience “legendary.”

The only thing that may have been legendary is Lin’s audacity. Not only did he not buy Atlantic Bank in Delaware for $60-million as he claimed, but there is no Atlantic Bank in that state.

Chinese reporters could not locate an Atlantic Bank or a bank registration by Mr. Lin in Delaware. He’s under arrest for an unrelated fraud and has been forced to give up his municipal-level appointment to the Chinese People’s Political Consultative Conference, the government’s top advisory body..."

$110. per day is $90. after minimal taxes, forget health insurance.

90X5= 450 wk = $1800 mo.
less rent, utilites, food, phone = $1300. if rent isn't too high.
So you have $500. for everything else.

Car at $20K high interest loan will run about $350. mo, then add gas, insure and maint.

Avoiding decisions rewarded. What else is gonna happen? No yerpeean can make a blood sweat & tears speech?

The euro has become a doomsday machine.

We wait.

CalculatedRisk wrote:

Alphaville jokingly calls Hilsenrath "Fed wire" because he gets so many Fed scoops

Probably not as many as Goldman Fucking Sachs and JP Fucking Morgan.

Home front: biggg turtle evicted. A/c crisis. Fixed I think. Too much watermelon for the fridge? Must chop in pieces.

No way can I pickup women in SF with that table.

Only thing that will do is Ipad3 with custom Luis Vuitton man-case.

You can chop it up into cubes and put it in a sealed container in the fridge. I usually cut up a half at a time and just put plastic wrap on the half you don't cut up.

.I'm thinking more Star Trek

"The euro has become a doomsday machine"

Insightful. Thinking about whether it is true, or merely sounds cool.

lawyerliz wrote:

Avoiding decisions rewarded. What else is gonna happen? No yerpeean can make a blood sweat & tears speech?

Liz, we've moved so far off the bubble that there are respected economists who insist that $1.4T deficits are austere. THere remains no politician left with the backbone to suggest we only eat what is set before us.

lawyerliz wrote:

Also productivity needs to go down & wages go up!!

You mean, not having a nation where one half of the work force does the work of two people and the other half are unemployed?

Live long and prop it up sir

Whiskey wrote:

one half of the work force does the work of two people

Over the last 30 years what I can do now, alone in a few hours a day, used to take 3 people all day to do.

Whiskey wrote:

You mean, not having a nation where one half of the work force does the work of two people and the other half are unemployed?

And the other 2/3s are part-timers.

scone wrote:

But Congress is too busy kissing Jamie Dimon's ass to do anything.

Dimon buys Congress with money he gets at a discount at the Fed.

lawyerliz wrote:

Home front: biggg turtle evicted.

Noooooo!!!!!!!

At work, I was doing the work of 10 people, but I forced myself off of a big project, so now I'm only doing the work of three people.

Turtle just put on the other side of the fence.

1 currency now -yogi wrote:

Dimon buys Congress with money he gets at a discount at the Fed.

and that's why Bernanke has a tougher time in front of congressional committees than Dimon did.

The Fed's long term objective is 4.5% growth in nominal income, which consists of the sum of a 2% inflation target and 2.5% growth target, a rate the Fed believes is consistent with its mandate for long run price stability and maximum employment. Over the near term, given the level of resource slack in the economy, the Fed estimates that a faster rate of growth of 6% over each of the next two years is consistent with its mandate for price stability. The Fed pledges to continue low rates, or undertake additional balance sheet actions as necessary, in order to achieve these near term and medium term objectives.

oh well, i can dream, right?

Murse jokes marked the pinnacle of Exurban Nation before it spiraled into obscurity. Just sayin'.

85 degrees while I was biking on Saturday Gnome. Hit 103 later in the day

poic wrote:

Tablet, tablet No one 17 and under admitted

Almost fanatical interest in it for this price.

Commoditization has arrived in spades.

lawyerliz wrote:

Turtle just put on the other side of the fence.

Nooo!!!!!!!!

                                              
                                                    
      || turtle

Grooooooaannnnnnnnnn

well, the watermelon/ripening discussion was interesting
personally, it don't thin being attatched to the stem has much to do with ripening past a certain point

Well it was ripe & delish. The stem was easy to separate. I wonder how long they stay nice until they rot?

lawyerliz wrote:

I wonder how long they stay nice until they rot?

Probably not long. Sugar/fluid/heat.

Rob Dawg wrote:

Ever wonder why modern watermelons are more round than the oblong of your youth?

Easier to pack & ship?
They are smaller now too.

i wonder if the seeds would grow?

Hell yes punish the savers and give the margin to the debtors!

Say, does the US have any obligations? .....oh, never ming

US Labor Department announces guidance to state Unemployment Insurance agencies on implementing short-time compensation or 'work sharing' - MarketWatch

The Fed could open its own appraisal business and instruct its appraisers to hit the number every time.

It's beginning to look more and more likely that inflation is the only way out of the European predicament, through ECB bond purchases, but Germany will revolt at the mere possibility. So is there no way out? The sun will rise tomorrow, and there will be a way out, but hardly anyone will be pleased with it.

If all else fails, we can always go back to honesty.

Comrade Kristina wrote:

Down here we have one of those you pay you drive on every other corners. I think they actually make weekly payments there. I doubt many ever pay them off before they get repossessed and "sold" again.

Bleeding the serfs dry is a time honored tradition of enlightened capitalism.

Tomorrow is arriving at the same pace that yesterday is leaving.

Jackdawracy wrote:

Tomorrow is arriving at the same pace that yesterday is leaving.

Somebody in one of the Lewis Carroll's books said: You get jam every other day - jam yesterday and jam tomorrow.

I've been wearing one cuff link, as of late.

Jackdawracy wrote:

I've been wearing one cuff link, as of late.

Any chance you're a one-armed bandit?

azurite wrote:

while omitting to pass on any of the cost savings to the customer.

Costs more to have a person check you out at the store.
Margins are very, very tight here for groceries. There are stores with no self check outs - you pay more. There is one that has 90% self check out, you pay less.

The grocery store is more and more this way. I wonder where all the profits that come from all this added productivity went?

Comrade Kristina wrote:

I wonder where all the profits that come from all this added productivity went?

Increases in health care costs?

I have an entire set from back in the late seventies or early eighties. Mom used to get them for me when I was a kid.

There's Elvis, somebody was just asking about you the other day.

Jackdawracy wrote:

There was no 'self serve'.

It was widespread, but people didn't talk about it much back then. Social mores and all.

scone wrote:

Increases in health care costs?

Walmart tends to rely on the gov't as much as possible when it comes to health care for the lower level workers, doesn't it?

I'm pretty certain we have discussed all these events long ago and actually already knew this was coming. There is not much left to discuss at this point. The Oligarchs screwed the pooch just a bit too far this go round. There will be repercussions and ramifications for this.

Awesome!

Time to go write more letters. Thinking about expanding to dog food companies. That could last me awhile. Later.

Comrade Kristina wrote:

somebody was just asking about you the other day

I, for one, was wondering if he had burst into flames.

Pfft, it's not like they aren't muppets anyway.

you'll have to be strong to survive

azurite wrote:

Walmart tends to rely on the gov't as much as possible when it comes to health care for the lower level workers, doesn't it?

The question is, where is the money going in the grocery store business in general, since it's pretty low margin. What's implied, is that health care costs have risen so high, so fast, it eats up the cash, even when a lot of the workers aren't getting benefits.

azurite wrote:

Walmart tends to rely on the gov't as much as possible when it comes to health care for the lower level workers, doesn't it?

Yes, the pay is low enough the employees qualify for SNAP and sometimes state Medicade.
They do offer coverage, however it costs the employee far too much for them to sign up.

McDonalds offers catastrophic only, at a pretty high cost to the employee.

Moore's Law at work:

ISC 12: IBM Power on Top; Nvidia-Intel Face Off Looms

Lawrence Livermore Laboratory's Sequoia system, based on IBM's BlueGene/Q computers and IBM's Power CPUs, now bests other supercomputers by a huge margin. The computer produced 16,324 teraflops (16.32 quadrillion floating point operations per second) on the Linpack benchmark, well more than the previous best score from the "K computer" at Japan's RIKEN Advanced Institute for Computational Science, based on Fujitsu SPARC64 processors.

The Sequoia system has 1,572,864 cores, each running at 1.6 GHz, as compared with the second-place K computer, which has 705,024 cores running at 2.0 GHz, and now produces 10,510 teraflops on the same test. Of course, it's not just the cores and the speeds of the individual processors, but also the way the cores are connected with one another that allows for the performance.

Jackdawracy wrote:

Money Ain't Debt (MAD)

But if it moves, it can leave a debt hole behind.

Wanted: Debt or a Lie

McDonalds offers catastrophic only, at a pretty high cost to the employee.

actually, it's worse than that, McDonald's offered non-catastrophic only:

NACS Clarifies What McDonald's Health Care Exemption Means - Foodservice - CSNews - FoodService

To allow credit to pass to ordinary folks instead of hedge funds and share buyback programs would risk inflation.

Credit 2001-2007 was used to replace wages.

We lost track of that since the consumer credit take-on was also creating these wages via FIRE employment and the stimulated demand.

To get organic demand we'd have to tax the out of the wealthy to get money back in the paycheck economy.

The system isn't currently configured to go with that policy though, to put it mildly.

azurite wrote:

That may be the implication but I wondered if that is, in fact, what's happening. Especially if most of the employees have minimal to no health insurance/health care coverage as a benefit of their employment.

That's the impression I get talking to small businesspeople here, that the increase in health care costs is so fast they can't keep up. If the increase is faster than growth, you can't easily catch up at all.

Healthcare costs to rise 7.5 percent in 2013: report
| Reuters

I wonder where all the profits that come from all this added productivity went?

Haves and have nots: America's rich get richer

REBear wrote:

When is next coordinated central bank action?

London Olympics: Synchronized Liquidity Event.

Hell yes punish the savers and give the margin to the debtors

one man's savings is another man's debt, and what cannot be repaid will not be repaid.

sleep well.

Was eating Chinese food for lunch in the City of Angles today and the conversation the next table over was a couple of Angle-enos discussing whether they could get a HELOCopter loan on one of their homes that the guy said he owed $690k on.

REBear wrote:

When is next coordinated central bank action?

Sounds like everyone is long with the reflation trade.

scone wrote:

That's the impression I get talking to small businesspeople here,

That's small business people & from what I've seen where I am, TASS when it comes to providing health care for themselves and their employees. Here, some of them are hoping/pushing for the state health insurance exchange to make a difference (favorable) for their costs.

Since we were talking grocery stores, I was thinking of chains like Safeway, Walmart, etc. Big enough to have real bargaining power plus seeming to provide fewer & fewer benefits (including health insurance coverage) & greater sharing of health care costs over time to lower level employees. Not the upper management "talent", I suppose.

Comrade Troyski wrote:

and what cannot be repaid will not be repaid..

That's probably true for Corzine, for the less well off it's probably wage garnishments w/the potential for having a bench warrant issued if they happen to miss one debt-related court hearing/date. Ch. 7 bankruptcy doesn't help much if you have no way of avoiding accumulating additional debt (medical or other) after you discharge what debts you can.

Modern day WPA + reality show would be a huge hit. Maybe we could do online wagering for over/under (in weeks) how long each character will last before quitting.

CCC workers got $30 a month, $25 of which went back home to their families.

Do you think that'd work today?

azurite wrote:

Since we were talking grocery stores, I was thinking of chains like Safeway, Walmart, etc. Big enough to have real bargaining power plus seeming to provide fewer & fewer benefits (including health insurance coverage) & greater sharing of health care costs over time to lower level employees. Not the upper management "talent", I suppose.

Maybe if all the grocery stores got together in one big pool, they would have more bargaining power. But since they don't offer realistic bennies to all their employees, each individual pool is much smaller than it would be otherwise. So there's a bad feedback loop.

Jackdawracy wrote:

Do you think that'd work today?

In 2012 dollars: About $500/wk. Sure.

I'm in training for the punlympics, hope to mettle.

Sending $430 back to the family each month to support it's meth habit?

lawyerliz wrote:

RE that was Snark

I doubt it. He has a history.

Ether and/or.

scone wrote:

Maybe if all the grocery stores got together in one big pool

Walmart has 2.1 million employees, or did in 2010. Just in the US, I think. I would think that would give them some bargaining power, it sure seems to have it when it comes to dealing w/its suppliers. Could it be that its execs & board members & just don't think that's a good use of corporate income? Walmart Employs 1% Of America. Should It Be Forced To Pay Its Employees More? - Business Insider

Because they figure there are plenty more potential low level employees out there so who cares if some leave because they become ill? And of course the workers have no bargaining power.

edit to add: time for a walk.

pavel wrote:

exploitative hegemony

at this rate pavel wlll soon be handing out copies of the socialist worker on street corners.

Sending $430 back to the family each month to support it's meth habit?

Unbiased characterization of the working poor?

"one man's savings is another man's debt"

this is a librul lie. we can all be moral and frugal savers if we believe in god, capitalism, and dave ramsey.

Then: Brother can you spare a dime?

Now: Big Brother can you spare a veritable shitlode of dimes?

"And Gas Wars!"

Cut down on the gluten in your diet.

plus nose clip.

Jackdawracy wrote:

Do you think that'd work today?

it would if we had silver coinage

Mercantilism doesn't work. Someone should tell the Germans.

Jackdawracy wrote:

I heard figure skating is now being judged by Standard & Poors.

Didn't Arthur Andersen used to audit the NBA draft lottery?

First indication I had that it might be crooked.

volker the viking wrote:

it would if we had silver coinage

Take home of a silver dollar per day still isn't minimum wage. NTTAWWT.

mexico has a lot of silver.

Comrade Troyski wrote:

So Foxconn workers gross $345/month, ~$2/hr.

It takes 4 Foxconn workers to do what one USA worker did/does. Doubling that wage will kill China.

Biderman On Europe: "Germany Must Say No To Greece, Spain, & Italy" | ZeroHedge

Credit divide and conquer.

Jackdawracy wrote:

That silver/bronze bimetallic 10 peso coin from 1993 was worth around $2 in face value then, and is about 70 cents now.

The melt-down value is around $7 currently~

Like these?
145 Mexican Pesos - 5 & 10 Peso Coins - $10.37 US Face Value 6/13/12 | eBay

How about a credit score jubilee?

Everyone's credit score goes back to 800 and we start over.

RockyR wrote:

A "full European Union" will never happen.

Never is a long time. Considering how close Napoleon, among others, came...

The Great Divide.

The Great Divide-By-Zero

Outsider wrote:

How about a credit score jubilee?

How about a class action slander/libel suit of the big 3? I bet their paperwork is almost as good as a sub-prime lenders.

Outsider wrote:

Everyone's credit score goes back to 800 and we start over.

and CD rates go back to 8% ?

A couple trillion x zero sounds impressive enough.

I remember on this blog there was discussion that with "everyone" having low credit scores, credit score requirements would be relaxing.

I don't think that's happened.

It's ruins.

Outsider wrote:

credit score requirements would be relaxing.

I don't think that's happened.

Risk off/risk on. You can probably get a loan. But the rate is going to sting a bit.

Rajesh wrote:

Is the Greek economy small enough to drown in a bathtub yet?

One more round of austerity ought to do it...

Greek Party Leader Seeks Austerity Deadline Extension - WSJ.com

China Medical Slumps After Bondholders Ask for Liquidation - Bloomberg

China Medical, a Cayman Islands-registered company, raised $110 million in its U.S. initial public offering in August 2005. The Nasdaq stock exchange said March 14 it was delisting the company’s ADRs, according to a statement from the bourse.

The company defaulted on the interest payment due Dec. 15, 2011, for its 6.25 percent convertible bonds which mature in December 2016, according to data compiled by Bloomberg.

The liquidation filing was not available yesterday as the court system in the Cayman Islands was closed for a public holiday.

The Real Job Creators: Consumers - Forbes

What's this!?!?

Second and more fundamentally, no matter how much you lower costs, if you don’t have more customers, you won’t hire more workers. If the demand for goods and services stays where it is today and we only cut industry taxes and regulations, there is absolutely no reason to think that firms would expand employment. Rather, they would continue to produce at the same level and simply earn higher profits. On the other hand, if we leave taxes and regulations untouched but increase demand, entrepreneurs will happily add workers. And that is the root of the problem today. The bottom line, lost on Mr. Romney and many others, is that the real job creators are consumers. The direct route to reducing unemployment is boosting demand, not reducing costs.

Am I to understand that Barley saw a panther!?! that is astounding

Suicides, Arrests Show Trouble at Korean Savings Banks - Bloomberg

Mounting loan defaults related to property in South Korea’s sluggish real-estate market following the global financial crisis in 2008 led to capital and liquidity shortages.

To survive, savings banks started selling customers subordinated bonds that had low priority for repayment in the event of default. The bonds became popular, particularly among the elderly living on interest payments. The yields, as much as 10 percent annually, were almost double the savings account rates at national banks.

As much as 10%, wow!

The Financial Services Commission began suspending operations of savings banks that had inadequate capital in January last year. The first closures led to bank runs at other lenders, leading to more shutdowns.
...
In addition to investigating bankers, prosecutors have widened their probes to include government tax and regulatory officials, accounting firms, politicians and lobbyists. About 200 people have been indicted through February, according to the latest tally announced by the special investigations team at the prosecutors’ office.

Notice how nobody has ever mentioned CR's 'pick em' Facebook tomfoolery on here?

As if it doesn't matter 1 iota...

A month ago, a very hep 24 year old told me FB was like so over, friends of his were trying to delist themselves en masse.

Jackdawracy wrote:

were trying to delist themselves en masse.

Trying.

So can somebody tell me what happened today - one paragraph? I was busy - got home and the world didn't end - EU still there not much seemed to change.

@GSElevator

1: People who are in position to, or smart enough to solve the European debt crisis don't have the time to debate it on Facebook.

whiskey wrote
When I heard there was going to be a daredevil in Niagara Falls, I thought they meant someone who intentionally wandered a block off of the tourist area at night.

seems the Senecas are gonna use some of the $$$$ they've been holding back from Albany to put a huge video outdoor advert atop the Casino "so folks from Canada can see it better"
(you have to know that it's the only tower standing in a mile square vacant parcel that some connected developer has been sitting on for the past twenty years to understand why that just makes my )

Whiskey wrote:

Oh, and this is all they do.

Mickey needs a pink slime app to compete...

dryfly wrote:

So can somebody tell me what happened today - one paragraph? I was busy - got home and the world didn't end - EU still there not much seemed to change.

Yep, I took a look at 11650 Hwy 116 and think it's a solid buy at $800k but not a steal. Spent a little time talking to the old cowboy with the listing (6th generation Guerneville native, champion Cow Roper) and ended up driving down the coast a ways to look at another listing of his. A 5500 sq ft recreation of a classic Victorian on 298 acres in Northwest Marin for just under $3MM. I have never seen finer materials and workmanship.3871 Tomales Petaluma Rd 94971, MLS #21129412. If I had a first born son I'd be thinking hard. Oh, Greece? The Germans say they'll consider spitting on it first if the Greeks play nice.

Jackdawracy wrote:

What could one do about the European financial situation or escalating violence in the ME, other than just sit tight with plan g?

we need a diamond bug