Fake Fed Statement Generator
While we await the Fed statement, my friend Paul, who has been stuck somewhere in Canada, has created the "fake Fed Statement generator."
Its classic econo-geek work by someone who appears to have gotten stuck in one too many airports:
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Release Date: October 30, 2007
For immediate release
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The Federal Open Market Committee decided to increase its target for the federal funds rate by 75 basis points to 5 1/2 percent. The Committee is desperately afraid that a more accommodative than usual stance of monetary policy, coupled with screwy underlying growth in analyst salaries, is providing marvelous support to economic activity. However, the relaxation of balance of payments concerns has moderated gold prices, moderated earnings upgrades, and lowered, generally speaking, debt markets. These developments, along with the uncertain stance of monetary policy and ongoing whizzy change in the price of Nebraska real estate, should foster decreased economic stability over time. Although the timing and extent of that decline remains uncertain, the Committee perceives that over the next five minutes or so the upside and downside risks to the attainment of sustainable growth are not balanced. The Committee believes that, taken together, the balance of risks to achieving its goals is weighted toward ass-kicking growth for the foreseeable future. |
Click Fed Chairman Bernanke |
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Awesome! Thanks for the afternoon laugh, Paul.
Wednesday, October 31, 2007 | 01:30 PM | Permalink
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Posted by: Isaac | Oct 31, 2007 1:39:01 PM
Helicopter Ben just came to the rescue again!!
Posted by: Joe Klein's conscience | Oct 31, 2007 2:24:29 PM
"increasingly, the only way the government can get new credit into the system is to buy the risk away from the market."
quote from minyanville's T. Harrison
Meet the new boss
Same as the old boss.
Ciao
MS
Posted by: michael schumacher | Oct 31, 2007 2:24:45 PM
FOMC cuts discount rate 25 basis points to 5.00%, cuts Funds rate 25 basis points to 4.50% as expected
FOMC vote to cut fed funds rate was 9-1, Hoenig preferred no change
Fed says will assess effects of financial, other developments on economy, will act as needed . . .says financial market strains 'have eased somewhat' . . . also says recent increases in energy, commodity prices could put renewed upward pressure on inflation. This rate cut, with Sept's cut, should forestall hit to economy financial turmoil, promote growth . . .
Fed sees intensification of housing downturn, pace of economic expansion to slow in near term due to intensification of housing correction
Inflation risks remain, will continue to monitor inflation carefully -- inflation, growth risks 'roughly' balanced
Posted by: beth | Oct 31, 2007 2:34:41 PM
the Fed doesnt like it "rough". any bets on how long it takes for Ben to get us back to his comfort zone of 1% short rates?
Posted by: scorpio | Oct 31, 2007 2:42:16 PM
It the Fed aimed to have no impact on the markets, they nailed it perfectly by balancing on the fence providing no indication of direction. "If inflation begins to take hold, we'll lean hawkish. If the economy shows more signs of sinking, we'll lean doveish. We'll let you know in six weeks. Thanks for showing up!"
Posted by: W.Edwards | Oct 31, 2007 2:45:35 PM
W: there is no combination of inflation news or dollar collapse that will get the Fed to raise rates, at all, before the election next fall. the only question is when they will stop cutting.
Posted by: scorpio | Oct 31, 2007 2:58:50 PM
No indication of direction?
They said "[higher energy prices etc. so]...the Committee judges that some inflation risks remain". Having said that, they cut anyway.
This further reinforces the notion that they're fully prepared to risk inflation even though there's no solid evidence of any meaningful slowdown.
Now we need treasury to reiterate its "strong dollar" statements. Maybe something like this:
"To further demonstrate the intrinsic value of the USD both at home and abroad, the USD will now be available in a new and improved two-ply form, with the 'full faith and credit' phrase replaced with 'pillowy softness'."
Posted by: Estragon | Oct 31, 2007 3:03:24 PM
After this morning's GDP used a .8 PCE figure, the Fed injects hawkish inflationary concerns in its statement.... go figure.
Posted by: Stuart | Oct 31, 2007 3:05:11 PM
come on heliben, we need more cuts..
Posted by: SAM | Oct 31, 2007 4:25:23 PM
For immediate release
The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 4-1/2 percent.
Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance. However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction. Today’s action, combined with the policy action taken in September, should help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and promote moderate growth over time.
Readings on core inflation have improved modestly this year, but recent increases in energy and commodity prices, among other factors, may put renewed upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.
The Committee judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Donald L. Kohn; Randall S. Kroszner;
Frederic S. Mishkin; William Poole; Eric S. Rosengren; and Kevin M. Warsh. Voting against was Thomas M. Hoenig, who preferred no change in the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 5 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Richmond, Atlanta, Chicago, St. Louis, and San Francisco.
Posted by: Ben Bernanke | Oct 31, 2007 4:26:53 PM
Inflation was low because oil prices surged
In GDP math, sometimes one plus one equals zero
By Rex Nutting, MarketWatch
Last Update: 1:56 PM ET Oct 31, 2007Print E-mail Subscribe to RSS Disable Live Quotes
WASHINGTON (MarketWatch) -- As odd as it sounds, the government reported that inflation was at a four-decade low in the third quarter, primarily because import oil prices rose so much.
If you don't understand that, welcome to the confusing world of national income accounting, where up sometimes is down, and where sometimes one plus one can equal zero.
The simple explantion:
Because of the way the government counts and reports the numbers, real-life inflation was understated and growth was overstated.
The economy didn't really grow 3.9%, and inflation really wasn't 0.8%. The numbers aren't as good as they look.
The complicated explantion:
When reporting on gross domestic product, the government counts up all the economic activity in the country, including consumer spending, business and residential investment, and government spending and investment. Then it adds all the exports, and subtracts all the imports. The final total is gross domestic product.
The fact that imports are subtracted is an important detail, so remember it.
Of course, all this counting is done in current dollars, the kind you and I have in our pockets, the kind that lose value every day to inflation. In order to gauge how much of the increase in spending and investment during a quarter was due to real growth and how much to inflation, the government deflates the total number of dollars by its estimate for how much prices rose.
In the third quarter, the government estimated that current dollar spending and investment increased at a 4.7% annual rate. After subtracting 0.8% for inflation, the real growth rate was 3.9% in the third quarter. See full story.
How does the government estimate inflation? The same way it estimates growth, by looking at individual price changes for consumer spending, business and residential investment, and government spending. Then it adds the price changes for exports and subtracts the price changes for imports.
It subtacts import price changes. Remember that.
Sometimes the mechanical formula produces some "quirky, nonintuititive relationships," said Shelley Smith, who's in charge of figuring the price index for the government's Bureau of Economic Analysis.
Most of the time, the government's formula doesn't produce any weird numbers, because the mathematical quirks all cancel each other out. But in the just concluded third quarter, it did produce quirky numbers that don't accurately reflect reality, even though they are correct from an accounting point of view.
Imported crude oil prices rose from an average of about $69 a barrel in the second quarter to $75 in the third, but wholesale gasoline prices fell by about 10 cents to $2.07 a gallon. Imported prices for energy rose, but domestic prices didn't.
In the government's accounting, prices of imported goods rose at a 10.3% annual pace in the quarter, but that increase was subtracted when figuring the economy-wide price index. Import prices subtracted 1.3 percentage points from inflation in the third quarter. With domestic prices rising slower than they had previously, it was enough to push inflation to four-decade low of 0.8%.
The accounting is right. But it's not reality.
Rex Nutting is Washington bureau chief of MarketWatch.
Posted by: Stuart | Oct 31, 2007 4:36:48 PM
Link still broken, correct link is...
http://paul.kedrosky.com/archives/2007/10/30/time_for_the_be.html
http://tinyurl.com/2hfxcr
the actual generator does not have a refresh button, so hit F5 or whatever is your refresh on your browser to see a brand-new statement instantly =)
Posted by: Dariin | Oct 31, 2007 11:12:54 PM
