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In its December 16 statement, the Fed announced that it intended to maintain it zero-rate policy for an "extended period" and that it would end its purchase of $1.25 trillion mortgage-backed securities and $175 billion of agency debt "by the end of the first quarter of 2010."
From the Board of Governors of the Federal reserve System, December 16:
"In light of ongoing improvements in the functioning of financial markets, the Committee and the Board of Governors anticipate that most of the Federal Reserve’s special liquidity facilities will expire on February 1, 2010,... These facilities include the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility. The Federal Reserve will also be working with its central bank counterparties to close its temporary liquidity swap arrangements by February 1. The Federal Reserve expects that amounts provided under the Term Auction Facility will continue to be scaled back in early 2010. The anticipated expiration dates for the Term Asset-Backed Securities Loan Facility remain set at June 30, 2010, for loans backed by new-issue commercial mortgage-backed securities and March 31, 2010, for loans backed by all other types of collateral."
Get it? The Fed is winding down its lending facilities. By March 31, 2010, the mortgage monetization program will end, long-term interest rates will rise and housing prices will fall. When the Fed withdraws its support, liquidity will drain from the system, stocks will slide, and the economy will head back into recession. Obama's second blast of fiscal stimulus--which is a paltry $200 billion dollars---won't make a bit of difference.
"Hard landing, here we come!" Bernanke is planning to tighten the noose and bring the country to its knees. Watch as the FOR SALE sign goes up across the USA.
or is the fed lying again?
http://zerohedge.blogspot.com/2009/0...at-2pm-on.html
in part:
LiveLeak has caught a scary moment of previously undisclosed insight by Paul Kanjorski where he reveals some facts that have not been captured by the media previously. At 2 minutes and 20 seconds in the video below, Democratic Representative Kanjorski explains how the Federal Reserve told Congress members about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occurred over the period of an hour or two. And it gets worse. Kanjorski paraphrases the following disclosure by Bernanke and Paulson:
On Thursday (Sept 18), at 11am the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn't be further panic out there.
Get it? The Fed is winding down its lending facilities. By March 31, 2010, the mortgage monetization program will end, long-term interest rates will rise and housing prices will fall. When the Fed withdraws its support, liquidity will drain from the system, stocks will slide, and the economy will head back into recession. Obama's second blast of fiscal stimulus--which is a paltry $200 billion dollars---won't make a bit of difference.
Yawn. Yes the FED is planning on winding down its program, but it will do it in an orderly fashion and if the private markets don't pick up it will provide additional liquidity.
What exactly is the point of posting one negative post after another while ignoring any other developments? How are you going to use this information to your advantage?
i am trying to point out that the fed is doing the exact OPPOSITE of what it needs to do. what they are doing is bailing out the lenders while keeping the debt overhead in place. you can't solve a debt problem by subsidizing more debt.
michael whitney sums it up here:
There is no sign that Mr. Obama’s economic advisors, Treasury officials and heads of the relevant Congressional committees recognize the need for a write-down. After all, they have been placed in their positions precisely because they do not understand that debt leveraging is a form of economic overhead, not real “wealth creation.” But their tunnel vision is what makes them “reliable” to Wall Street, which doesn’t like surprises. And the entire character of today’s financial crisis continues to be labeled “surprising” and “unexpected” by the press as each new surprisingly pessimistic statistic hits the news. It’s safe to be surprised; suspicious to have expected bad news and being a “premature doomsayer.” One must have faith in the system above all. And the system was the Greenspan Bubble.
So the government tries to recover the happy Bubble Economy years by getting debt growing again, hoping to re-inflate real estate and stock market prices. That was, after all, the Golden Age of finance capital’s world of using debt leverage to bid up the book-price of fictitious capital assets. Everyone loved it as long as it lasted. Voters thought they had a chance to become millionaires, and approved happily. And at least it made Wall Street richer than ever before – while almost doubling the share of wealth held by the wealthiest 1 per cent of America’s families. For Washington policy makers, they are synonymous with “the economy” – at least the economy for which national economic policy is being formulated these days. http://www.counterpunch.org/hudson02172009.html
i think there is a real risk that this could end badly for people who are not informed. i also think that there is a real risk of increased military escalation as these oligarchs lose control over the wealth redistribution plan. if you see smoke, you would be remiss not to point it out.
Last edited by floridasandy; 12-24-2009 at 05:20 PM..
Once upon a time there was a country facing serious economic difficulties, heavily reliant upon imported goods and imported energy. Its leadership had pursued economic policies that had debased its currency, and worldwide economic difficulties had made its domestic situation even worse.
Then came a charismatic candidate who promised to improve the economy, to subsidize and protect the large domestic corporations of the country, to build wonderful highways and make affordable cars available to almost everyone, to promote a "mutually beneficial" relationship between big business and government, and engineer a return to economic good times--if only he could be elected. He was, and he made good on most of his promises. He also started a World War, killed several million of his own countrymen, and committed suicide after turning his country to mostly rubble. His name was Adolf Hitler, and he actually was elected in 1933.
There are some really scary parallels between 1932 Germany and 2009 America. We are making a lot of the same mistakes. Let's hope we don't get the same results.
what you don't seem to understand is that it is now even more likely to collapse. more people are losing their jobs now, so they are even more unlikely to repay the banks, and the government is incapable of propping it up forever, (at some point the bond market rebels). what the government has done is to shift the debt load onto the taxpayer, and tacked on increasing interest payments to these debts, which pulls any money away from new business creation- which would get more people back to work.
i think things are so bad now that the government is actually out in the open with the schemes as they run out of time. the bonuses are accelerating and the fraud is accelerating, and clearly there is a reason for this.
what you don't seem to understand is that it is now even more likely to collapse. more people are losing their jobs now, so they are even more unlikely to repay the banks, and the government is incapable of propping it up forever
Yeah....I guess you don't get the money the FED is pumping into the mortgage market is created out of thin air. Whether it gets paid back or not is pretty much irrelevant.
Additionally the job losses have nothing to do with the FEDs or governments programs. The stimulus program as resulted in less job loses, not more. The point is not to "prop it up forever", rather to prevent deflation and keep the economy afloat while it adjusts. That can take years, but its not "forever".
Deflation will cause the debt to grow in real terms even if it is stagnant in nominal terms. That is the problem when people think about this, they are only thinking in nominal terms. Deflation + high debt = major depression. The FED has to prevent deflation at all costs.
the fed has been incompetent at doing its job so far, so good luck with that!
as for "job creation", the vast majority of this stimulus has been directed at the financial sector - a complete waste of money, supporting a segment of the economy that never deserved to be bailed out.
Nonetheless, the US taxpayer has spent massive sums, committed to promises worth even more and may ultimately owe debt in the double-digit trillions when all is said and done. Nice of them to spend so generously, wouldn’t you say?
Although the stimulus has been fantastic for the stock market, it has generated very little benefit for “Main Street”. To make matters worse, the effects of the stimulus packages have already started to wear off. (chris martenson)
Last edited by floridasandy; 12-26-2009 at 05:22 AM..
the fed has been incompetent at doing its job so far, so good luck with that!
In your opinion....but what does that matter?
How are you going to use this information to your benefit?
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