Two Day Fed Meeting Begins
Let's hope they get the communication thing down a bit better . . .
Tuesday, January 29, 2008 | 09:00 AM | Permalink
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It's all going to be based on CPI and GDP going foward as it relates to aggregate demand in the US. I think it's a stupid idea that Ben listens to the market. If he doesn't see Aggregate demand rise going foward, he will cut to zero bound regardless of what wallstreet demands. Housing is going to cause widespread deflation. I see him wanting inflation to a point with a falling dollar. Also wants secret helicopter drops probably as goverment buying bad bank loans. I don't think he is a chimp, but I am not sure his plan will work?
Posted by: ken h | Jan 29, 2008 9:55:41 AM
What is the plural of "apocalypse"?
Looking around at the news this morning, I get the distinct feeling I'm diagonally parked in a parallel universe....
Posted by: ajhmstilt | Jan 29, 2008 9:56:29 AM
Low interest rates will not be as stimulating as people envision - the cash position of most firms are already very strong, so cheap money isn't the answer. And since 70% of jumbo loans were basically lier-loans, how is housing going to be able to lead us out of this recession, like it has in recessions past? Autos are another bell-weather that isn't producing...Who/where is Goldielocks Knight in shining armor? Sell into the rally bulls...the gurus on tv, who suggest an up second half of the year, can't see the forest through the trees. Not unless the mean the second half of 2009?
Posted by: Justin | Jan 29, 2008 9:57:33 AM
Would it be unreasonable to suggest that most of the durable-goods number is because of the weak dollar, which means that those goods get shipped overseas, and therefore don't have the cascading effect - salespeople salaries, etc., to our local economy, as it otherwise would have? Does anyone know how/where to decipher this data?
Posted by: Justin | Jan 29, 2008 10:12:52 AM
Justin, cheap money is always the answer.
Posted by: kk | Jan 29, 2008 10:41:36 AM
I find it interesting to see (or at least I perceive) quantitative and qualitative changes in the posts on TBP over the last week. Maybe folks just feel like they've said all they have to say, or maybe BB has sufficiently/successfully knocked people a little off balance (is he really that clever?) so that nobody is sure what to think.
Posted by: zero529 | Jan 29, 2008 11:04:59 AM
Is the magazine cover indicator in play?
Posted by: Steve | Jan 29, 2008 11:10:43 AM
KK, your probably right, since we can't compete with chinese labor. Truth be told the U.S. is probably headed for a substantial structural shift.
Posted by: Justin | Jan 29, 2008 11:43:43 AM
zero529, I think most people are busy adjusting risk (I am). What Bernanke has to say is a blip in a very crowded radar screen. Not insignificant but only one blip.
Posted by: mhm | Jan 29, 2008 12:13:51 PM
Mauldin wrote last week that the Fed strategy likely was for a mega-cut 100bps or more - but they had to split it into two parts in order to avoid panicking the market. So 75bps last week, plus 25-50 tomorrow. The 75bps was by itself a record size cut.
If they go 50bps tomorrow we'll know that - after that disturbing first week of January - Bernanke then left the Fed Lair, went out on a scouting mission, glimpsed massive armies of deflation assembling below, and then scrambled back to headquarters with a full diaper.
Posted by: Roger Thatchery | Jan 29, 2008 1:21:29 PM
>>and then scrambled back to headquarters with a full diaper.>>
while making sure that said contents of diaper remain totally smeared against the people who could ill afford it now........the middle class.
Banks have a consequence?????
not in this market
Ciao
MS
Posted by: michael schumacher | Jan 29, 2008 1:30:25 PM
SO MUCH FOR AN INDEPENDANT FED THEORY-
Take this for whatever it's worth, from the insider-Washington website Swoop:
White House officials have told us that President Bush intervened forcibly to convince an initially reluctant Federal reserve to reduce interest rates. "There were some telephone calls from the White House to the Fed in which some very crude language was used."
I found this little gem over on the Daily Reckoning. read em and weep........
Posted by: TulsaTime | Jan 29, 2008 1:57:16 PM
No Justin,
I don't believe the interest rate cuts alone will do the trick. I do believe when combined with other things like the falling dollar, secret helicoptor drops, stimulus packages, and monoline buyouts..etc, it will.
I think Ben will do whatever it takes to avoid deflation. He wants some inflation to increase pricing.
I feel like some depreciation has to be allowed to unwind. Houses, cars, and other discretionary purchases have been TOO high compared to increases in wages due to the housing ATM. I don't see wages increasing. I am still confused on how he deals with all time energy.
A democratic big government and more taxes may be what the doctor ordered going forward. Spending in infrastructure and defense. I just don't see how it replaces the housing boom? What,...No more bubbles? Oil and gold don't produce jobs.
I am certainly an amature when it comes to these things so please point out flaws in my thoughts but what's the next boom going to be?
Posted by: ken h | Jan 29, 2008 2:20:05 PM
Priceless!!
Re rate cuts, Insana said today that the markets had been dictating FED policy since the 90s. Who knew?
Posted by: Pat Gorup | Jan 29, 2008 6:35:05 PM
DMR wtroe, "I think it is pretty clear which side of the inflation-deflation debate is winning."
Atually, there hasn't been much of a debate - just the informed, well-reasoned deflation minority opposed by a lot of Ben Steinery.
Posted by: Winston Munn | Jan 29, 2008 7:12:30 PM
