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February 3, 2006

Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06.

If it ain't broke, the Fed will fix it... and good!

August 29, 2006

December 5, 2006

March 28, 2007

The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.

The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.

July 21, 2007

My guess is that if there is an interest rate change, a cut is more likely than an increase.

August 11, 2007

September 11, 2007

It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.

September 18, 2007

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October 25, 2007

November 28, 2007

"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said. "Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

http://www.reuters.com/



The key variables to be watching at this point are real estate prices and the inventory of unsold homes.I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."FED VICE CHAIRMAN DONALD KOHN

December 11, 2007

Somehow the Fed misses the obvious.





December 13, 2007

"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's Economy.com. "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]

January 7, 2008

January 11, 2008

January 13, 2008

“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch . “ Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009. ”

January 17, 2008

The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.

January 22, 2008

Step back... and don't be so anxious to raise rates at the first sign of economic improvement

Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

[from The Christian Science Monitor The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.This is death by a thousand cuts.A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK ]:The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...What should the Federal Reserve do now?