Seriously! What in God's name is he thinking...???
WASHINGTON (AP) - Federal Reserve Chairman Ben Bernanke said Monday that further interest-rate cuts are "certainly feasible," but he warned there are limits to how much such action would revive an economy likely to stay weak well into next year.
No, Ben! We don't need LOWER interest rates... we need HIGHER interest rates - or at least STABLE interest rates. The artificially low interest rate policy of the Bush administration coupled with dangerously loose lending standards, coupled with the administration's bailout policies are what got us into our present economic predicament in the first place!
No, Ben! We don't need a WEAKER dollar... we need a STRONGER dollar - or at least a STABLE dollar. Lower interest rates will put downward pressure on the dollar. A lower dollar is inflationary. Oh... and since we're in a recession... such flawed policy could well lead to stagflation. (Does anyone care to relive the days of the Misery Index?)
From a monetary perspective, it was the weak dollar policy of the Bush administration which served as the underpinning for the world oil prices increases we've seen over the past four years. Oh, certainly, production capacity and refining capacity bottlenecks - basic supply vs. demand issues - had and have a large part to play in the oil price equation, but the fundamental monetary phenomenon at play was and is that when you have a dollar denominated commodity and a falling dollar and at the same time a tight supply vs. demand balance... sellers must ask higher prices (and get them!) just in order to stay even when it comes to purchasing power as measured in incoming dollars.
The Fed's key interest rate now stands at 1%, a level seen only once before in the last half-century (1958). To help lift the country out of a recession that started in December of last year, many economists predict Bernanke and his colleagues will drop the rate again at their next meeting on Dec. 15-16.
Hell... why not just drop it down to zero?! Why not drop it to negative zero - PAY people to borrow money?! Heck, while they're at it, the Treasury can send each and every American a "stimulus" check for $1,000,000! Problem solved! We'd all be instant millionaires!
(Jeez... I hesitate to actually post the above "proposal" here on a public blog; one of these clowns in Washington might stumble across the posting and think it's a great idea!)
Oh, my God... I'm not so far off the mark...! Check this additional Barnanke brainstorm out...
The Fed, for instance, could buy longer-term Treasury or agency securities on the open market in substantial quantities, he said. This might lower rates on these securities, "thus helping to spur aggregate demand," Bernanke said.
"Buy?" With what...?!?! We're deficit spending already!!! We're deeply in debt! The federal government - not to mention states, cities, other municipalities - presently has unfunded future liabilities on the books approaching $50 trillion dollars!!! It's not enough that we owe China approximately $585,000,000,000... yes... five hundred and eighty-five billion dollars already?!?!
"Spur demand?" Demand for what...?!?! Yet more debt...?!?! More unfunded liabilities...?!?! My God... Bernanke is out of his mind!!!
We're in trouble folks. The inmates are running the asylum. And let's not forget... while I damn the Bush administration to Hell for their fiscal mismanagement, what we're seeing is the ultimate in "bipartisanship." Bush, Reid and Pelosi - all on the same page with regard to "stimulus" checks and bailouts. McCain and Obama - likewise. If anything the Democrats favor even higher spending, more programs, larger government.
I see troubled waters ahead - perhaps a return to stagflation, at "best" a long lasting recession. Stipulating that in many ways Bush and the Republicans steered the Ship of State into dangerous waters, I'm afraid Obama and the Democrats are going to order "ahead, full speed" and ram us straight into a metaphorical iceberg.
I pray I'm wrong...
5 comments:
I would like to get paid to borrow money. It would come in handy for Christmas! I could use it to buy you a flat screen TV.
With regard to our debt, why not look at it from the flip side. Those who own our debt have a lot to lose if we go under. It is not in their interest for us to go under, since basically, it is unsecured. They cannot put a lien on our country. Worst case scenario, we default - bad for us, but worse for them. Remember when Japan was buying up America? How'd that work out for them? By all accounts, our recession did not last as long as theirs. They had to sell their American assets at fire sale prices. What do you think?
re: Maria; December 2, 6:10 am
I told you what I think. (*SHRUG*)
And to reiterate... I hope I'm wrong.
I hope you're right, that this recession won't last 15 years. (*SHRUG*)
So... let me get this straight... (*SCRATCHING MY HEAD*)... your fallback position is that the United States can always just default on our debt.
Hmm. O.K. And what happens then...??? Lay it out. I'm listening. (*SHRUG*)
In fact, if I'm following your logic Obama's actual PLAN should be to increase borrowing as far as we can possibly do so and then default. After all... as you say... what are our creditors going to do about it - place a lien on us? And as with chess, if you're correct and such an action would hurt them more than us, why not make the trade - a pawn for a rook so to speak. (*RUEFUL SMILE*)
God bless you, Maria; your... err... logic... leaves me with much to ponder.
(*GRIN*) (*WINK*)
BILL
At least you'll have a soundtrack for this thread, Bill:
http://www.youtube.com/watch?v=7aItpjF5vXc
(*GRIN*)
Well... err... thanks, Mad! I freely admit... I had never heard that... err... song (???)... before.
(*WINK*)
Hey... let me ask you... aside from you and me, out of a nation of over 300,000,000 people... how many give a damn that the politicians are destroying our country?
I fear my oft-volunteered predictions of the country starting to come apart at the seams - literally - sometime between 2035-2045 are far to optimistic.
BILL
File Under: Insanity On Top Of Insanity
http://online.wsj.com/article/SB122826619188174465.html
-- What do you do if you've spent your career encouraging mortgage loans to people who can't repay them? Barney Frank's answer is to grill federal officials on why they aren't preventing foreclosures. Infuriated at the difficulty of modifying mortgages, the Beltway crowd doesn't understand that such contracts weren't designed to let people live in houses they can't afford. --
Oh... they understand. They just disagree. Play by the rules, don't play by the rules; act responsibly, act irresponsibly; it's all the same to the politicians.
-- ...FDIC Chair Sheila Bair...outlined her ballyhooed plan to prevent an estimated 1.5 million foreclosures by the end of 2009. She plans to accomplish this feat by modifying more than two million loans... --
Hold on to your wallets folks - not that it'll do you any good. (*SHRUG*) The government is going to throw good money - OUR money - after bad no matter what we the taxpayers say. (*SHRUG*)
-- The live-fire test has been going on at failed lender IndyMac Bank since August....IndyMac wounded itself with sloppy underwriting and then was wounded further when Senator Charles Schumer released letters warning that "the bank could face a failure." A subsequent wave of withdrawals killed IndyMac, and the FDIC took over. The FDIC soon launched a program to modify IndyMac's troubled mortgages, and this is now the basis for what Ms. Bair would like to do nationwide. Marketwatch.com recently reported on the FDIC's experience at IndyMac as well as industry-wide data from Lender Processing Services, which manages payments for much of the banking industry....Three months into the IndyMac experiment, the FDIC has modified all of 5,400 delinquent loans. It's too early to tell how many of these borrowers will default again, but since even the modified monthly payments consume 38% of borrowers' pretax income, expect a lot of failures. The FDIC uses a re-default rate of 40% in its models....LPS says more than 50% of loans typically go delinquent again after modification. --
So in plain English, 40%-50% of these "modifications" will be for naught - a waste of time, energy, and money. Great. Our tax dollars at work. Makes you proud, huh? (*SNORT*)
-- To roll out its plan nationwide, the FDIC wants to offer private loan servicers a new incentive to modify troubled loans. The private firms would do the same thing the feds have been doing at IndyMac, except they would move the monthly payment down to 31% of pretax income, instead of 38%. The FDIC would pay servicers $1,000 for every loan they modify, and taxpayers will share the losses if loans re-default. --
Yep. You read that right. So for every 10 "modifications," four or five will end up being for naught, YET... in 100% of the "modifications" $1,000 of our taxpayer dollars will go for what amounts to corporate welfare (to the bank). This is insane!!!
-- To get to 31%, lenders could offer borrowers lower rates, longer terms or even "principal forbearance." This means that part of the original loan would be converted to an interest rate of zero, and it would not have to be repaid until the home is sold or refinanced -- or the loan matures. In other words, the borrower gets lower payments now but may have a problem again later if home values don't rise and he needs to sell. Other modifications might create a lower interest rate now that rises over time, again squeezing borrowers at some future date. Sound anything like "subprime" loans? --
Yep. Sure does. (*SIGH*)
-- Under the FDIC plan...[t]he FDIC is still assuming a 33% re-default rate, even at the lower debt-to-income ratio. All of this is why the White House estimates Ms. Bair's plan could cost as much as $70 billion next year - not $24 billion. --
Let's see... 70 minus 24 equals... $46 BILLION over budget - before the plan even goes into effect!!!
Folks. These are the people running our economy!!! Running it into the ground!!!
We are so screwed.
BILL
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