All Bases Covered
From across the web I saw many interesting and/or important stories today and so a recap is on hand. I apologise for the brevity of the posts lately, but I have been under time constraints from work and various errands the last 2 weeks.
I Told you So
Economic Disconnect has been perturbed by FED apologists who claim that the FED will navigate the waters of monetary policy without mistake. A while back (about 2 months) some were even making grumblings as if a FED rate hike was at hand in the near future. I savaged these types at the time, but I am not expecting an apology any time soon after this:
Fed May Not Increase Rates Until 2012, Bullard Says
The Bloomberg story recounts Federal Reserve Bank of St. Louis President James Bullard's contention that based on prior history, there is still room to run with ZIRP:
"If you look at the last two recessions, in each case the FOMC waited two and a half to three years before we started our tightening campaign,” Bullard said today in a speech in St. Louis. “If we took that as a benchmark, that would put us in the first half of 2012.”Mr. Bullard fails to describe the effects of those policies, but who cares about that anyway.
Bob Toll Knows Subprime
Quote of the day belongs to a villain of the housing bubble, Toll Brothers CEO Bob Toll:
"Yesterday’s subprime is today’s FHA,” Toll said today at a New York conference for builders sponsored by UBS AG. “It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money.”Now we could poke fun at one guy that is getting all kinds of breaks talking smack about another basket case institution, but that would be too much fun for a week day evening. I would just say for an industry Mogul to say something like this at this juncture of the fragile housing "recovery" means quite a bit.
Reduction of Deficit Spending, You are Doing it Wrong
Just after the president calls for less aggressive spending, here is how the US Senate reacts:
Senate health bottom line: $849 billion overhaul
This stuff writes itself!
As if Nothing Ever Happened
So you brought the US banking system to it's knees due to poor judgement, bad lending, and ridiculous leverage? What is your punishment? If you answered nothing at all, you are correct:
Wall Street on Track for Record in ProfitsNow one may wonder how on earth profits could be as high as the height of the credit bubble, but why question such things? As a parting kick in the groin:
Ten months ago, President Obama said a time would come for Wall Street to make profits and pay bonuses, but “now’s not that time.” But it appears that was exactly when Wall Street began to return to profitability.
In a report released Tuesday by Thomas P. DiNapoli, the comptroller of New York State, Wall Street profits in 2009 are on track to exceed the record set three years ago, at the height of the credit bubble.
“The national economy is slowly improving, but Wall Street has recovered much faster than anyone had envisioned,” Mr. DiNapoli said in a statement.As long as Wall Street is happy I guess the rest of us can bend over and kiss our own behinds. Your welcome for the bailouts by the way, fruitcake.
He Who Has the Control has the Power!
Courtesy of the classic film "The Neverending Story"
G'mork: Foolish boy. Don't you know anything about Fantasia? It's the world of human fantasy. Every part, every creature of it, is a piece of the dreams and hopes of mankind. Therefore, it has no boundaries.Now who would want to control our behavior?:
Atreyu: But why is Fantasia dying, then?
G'mork: Because people have begun to lose their hopes and forget their dreams. So the nothing grows stronger.
Atreyu: What is the nothing?
G'mork: It's the emptiness that's left. It's like a despair, destroying this world. And I have been trying to help it.
Atreyu: But why?
G'mork: Because people who have no hopes are easy to control. And whoever has control has the Power.
Calif. requires TVs to be more energy efficientNow I could accept helping energy consumption, but this kind of control creep extends very quickly into all kinds of areas in the name of various noble causes.
SACRAMENTO, Calif. (AP) - Power-hungry TVs will be banned from store shelves in California after state regulators adopted a first-in-the nation mandate to lower electricity demand.
On a unanimous vote, the California Energy Commission on Wednesday required all new televisions up to 58 inches to be more energy efficient beginning in 2011. The requirement will be tougher in 2013, and only a quarter of all TVs on the market currently meet that standard.
Macro Man has the FED Skewered
Today's MUST read come via Macro Man and his missive "The FED and Bubbles". While I hate to excerpt such a piece (there are plenty of charts and great insight) I have to share a point I have harped upon many times:
Still, if Kohn's claim that "our abilities to discern the "correct" values of assets is quite limited", how can the Fed fail to recognize that Nasdaq 1999-2000 was a bubble....This is a key point and it really blows the FED out of the water in their "Nobody Can See a Bubble" babble. read the whole thing.
...as was the 2003-05 housing market.....
...and oil last year.....
...but that a less than 10% decline in the value of the S&P 500 in the first few weeks of last year was sufficiently worrisome that it merited a 75 bps inter-meeting cut a mere 8 days before a regularly scheduled FOMC policy decision (which produced a further half-point cut.)?
Put another way, why does the Fed feel powerless to identify bubbles in real time, but is evidently highly confident in its ability to determine when asset prices have fallen below equilibrium?
Have a good night.