Free Republic

Federal Reserve is losing control. They cannot keep interest rates low forever. Nobody can. And when rates rise, the results will be devastating In the 1979 film Apocalypse Now, Colonel Walter E. Kurtz (played by Marlon Brando) utters, “the horror, the horror,” on his deathbed. He might as well have been talking about the U.S. dollar. Central banks maintain a nation’s currency. As the world’s largest central bank, the United States Federal Reserve, or “Fed,” sets the rate of interest in worldwide lending. It also has major influence on monetary policy. For instance, the Fed’s $85 billion per month in...

August 17, 2014 DailyWealth Dr. Steve Sjuggerud writes: A new record was set in Germany yesterday... The interest rate on a 10-year government bond in Germany fell below 1%. This number is shocking... Interest rates have never been this low in German history. What does it mean? Why would people agree to lend money to a government for 10 years with almost no return on that money? What is the message that we should take from this? Aren't things supposed to be getting back to "normal"? And doesn't "normal" mean something like this: By 2020, the Federal Reserve has short-term...

US banks are steeling themselves for the possibility of losing as much as $1tn in deposits as the Federal Reserve reverses its emergency economic policies and raises interest rates. JPMorgan Chase, the biggest US bank by deposits, has estimated that money funds may withdraw $100bn in deposits in the second half of next year as the Fed uses a new tool to help wind down its asset purchase programme and normalise rates. Other banks including Citigroup, Bank of New York Mellon and PNC Financial Services have also said they are trying to gauge the potential effect of the Fed's exit...

The issue plays into the president’s agenda of protecting students and providing an affordable college education — issues the administration also hopes will drive Democrats to the polls in November. The financial industry is clashing with the Obama administration over forthcoming regulations that are intended to protect college students from excessive bank fees. Still in its early stages, the proposal would extend the Education Department’s regulatory authority to deposit accounts opened under arrangements between universities and financial firms that adopt “campus cards,” critics say. The agency reasons that its jurisdiction includes those accounts, since they often serve as receptacles for...

The European Central Bank launched a raft of measures on Thursday to fight low inflation and boost the euro zone economy, cutting rates, imposing negative interest rates on its overnight depositors and offering banks new long-term funds. The ECB cut all its main rates to record lows in a drive to fight off the risk of Japan-like deflation and bring down the euro's exchange rate. For the first time, it will charge banks 0.10 percent for parking funds at the central bank overnight. It stopped short of large-scale asset purchases known as quantitative easing for now, but ECB President Mario...

Long-term bonds are tumbling and interest rates are spiking after a 30-year Treasury bond auction saw weak demand. According to Bloomberg, 30-year Treasury bonds sold at a yield of 3.440%, which was much higher than the 3.392% expected by analysts. The bid-to-cover ratio, a measure of demand, was low at 2.09. Analysts were looking for a ratio of closer to 2.36. The results of the auction came out at 1:01 p.m. ET, which was when prices plunged.

For three decades, the U.S. middle class enjoyed a rare financial advantage over the wealthy: lower mortgage rates. Now, even that perk is fading away. Most ordinary homebuyers are paying the same or higher rates than the fortunate few who can afford much more. Rates for a conventional 30-year fixed mortgage are averaging 4.48 percent, according to Bankrate. For “jumbo” mortgages—those above $417,000 in much of the country—the average is 4.47 percent. …

Confirmation that governments are squandering money on ill-advised programs fueled by the easy-money policies of central banks worldwide became all-too-evident earlier this week when a European business leader responded to a question I posed at a press briefing here in Washington, D.C.

(Reuters) - The Federal Deposit Insurance Corporation sued 16 of the world's largest banks on Friday, accusing them of colluding to suppress interest rates. The lawsuit, filed in the federal district court in New York, was the latest to accuse financial institutions of conspiring to manipulate Libor, or the London Interbank Offered Rate. The FDIC said the defendants' conduct caused substantial losses to 38 banks that the U.S. regulator had taken into receivership since 2008, including Washington Mutual Bank and IndyMac Bank.

Catball wrote:Can anybody out there tell me the difference between the tea party and the taliban. No this is not a joke. Seriously, the tea party wants to destroy the american government. The t-party crew walked into a church and killed a doctor because they like what he was doing. That was in Wichita,KS. The t-party does want to dismantle our government. They don't want women to have any rights. M. Bachmann said you should be submissive and do whatever they want you to do. They want rich white men & women to take over the country. They don't care...

Banks Warn Fed They May Have To Start Charging Depositors Tyler Durden 11/24/2013 15:24 -0500 The Fed's Catch 22 just got catchier. While most attention in the recently released FOMC minutes fell on the return of the taper as a possibility even as soon as December (making the November payrolls report the most important ever, ever, until the next one at least), a less discussed issue was the Fed's comment that it would consider lowering the Interest on Excess Reserves to zero as a means to offset the implied tightening that would result from the reduction in the monthly flow...

President Barack Obama will nominate Federal Reserve vice chair Janet Yellen to succeed Ben Bernanke as chairman of the nation’s central bank, the White House said Tuesday. Yellen would be the first woman to head the powerful Fed, taking over at a pivotal time for the economy and the banking industry. … Yellen emerged as the leading candidate after Lawrence Summers, a former Treasury secretary whom Obama was thought to favor, withdrew from consideration last month in the face of rising opposition. Yellen, 67, would likely continue steering Fed policy in the same direction as Bernanke. A close ally of...

Former Fed vice chair Kohn specifically mentioned by presidentWASHINGTON (MarketWatch) -- President Barack Obama suggested he has more than just two candidates under consideration to replace Fed Chairman Ben Bernanke, lawmakers said Wednesday after meeting with the president. The conventional wisdom had been that the race for the job had narrowed down to former Treasury Secretary Larry Summers and Fed Vice Chair Janet Yellen. Obama went up to Capitol Hill for closed-door meetings with Senate and House Democrats to discuss his new push to spur Congress to act on measures to boost the economy. But lawmakers wanted to talk about...

In the summer heat of the election last year, Congress passed a one-year extension on keeping the interest rate for federally subsidized Stafford loans for college students at the artificially low rate of 3.4 percent — and the sand finally ran out on that temporary stopgap today, hiking the rate up to 6.8 percent. Republicans have been proposing to link students loan rates to the freer financial-market benchmarks instead of allowing Congress to arbitrarily determine what they deem to be an appropriate rate, while Democrats are looking to keep the interests rates as low as they in their infinite wisdom...

<p>Did you actually think that mortgage rates were going to stay at all-time lows forever? Federal Reserve Chairman Ben Bernanke was able to grossly distort the market for a while by buying up massive amounts of government bonds and mortgage-backed securities, but there was no way in the world that the market was going to stay that distorted forever. It simply does not make sense to give American families 30 year mortgages at a fixed interest rate of less than four percent when the real rate of inflation is somewhere around eight to ten percent and the mortgage delinquency rate in the United States is 9.72 percent. If we actually did have "free markets" and they were behaving rationally, mortgage rates would be far, far higher. Well, now that the Fed has indicated that they are going to be starting to "taper" QE at some point, bond yields have skyrocketed and this is rapidly pushing up mortgage rates. According to Freddie Mac, we just witnessed the largest weekly increase in mortgage rates in 26 years. Sadly, this is only just the beginning. Unless the Federal Reserve intervenes, mortgage rates are going to continue to try to revert to normal.</p>

The 441 TRILLION Dollar Interest Rate Derivatives Time Bomb By Michael Snyder June 24th, 2013The Derivatives Time BombDo you want to know the primary reason why rapidly rising interest rates could take down the entire global financial system? Most people might think that it would be because the U.S. government would have to pay much more interest on the national debt. And yes, if the average rate of interest on U.S. government debt rose to just 6 percent (and it has actually been much higher in the past), the federal government would be paying out about a trillion dollars a...

The debacle ignited by the Federal Reserve this week invites this question: What would have happened had Chairman Bernanke refrained from saying anything? He held on Wednesday one of his press conferences, announcing that, as the Associated Press put it, the Fed would likely slow its $85 billion-a-month program later this year and end it next year if the economy continued to strengthen. The stock market collapsed, and the value of the dollar soared — to more than a 1,300th of an ounce of gold at last check — and alarm is spreading. Well, let it not be said that...

U.S. Treasury Bond Market Implosion Has Officially Begun Interest-Rates / US Bonds June 21, 2013 - 06:02 PM GMT By: Graham Summers The QE Infinite parade officially ended yesterday when Bernanke hinted at tapering QE later this year or in mid-2014. I first warned about this in mid-May writing, "If Bernanke is going to step down (as hinted by his decision to skip out on the Jackson Hole meeting) he’s not going to want to leave with the Fed going at QE 3 and QE 4 full throttle. Instead his best bet would be to take his foot off the...

EL-ERIAN: The Fed Better Be Right About The Economy Mohamed El-Erian, ContributorJune 20, 2013REUTERS/Frank Polich Virtually every segment of the fixed income, equity and commodity markets sold off viciously this afternoon on the back of the Fed statement and Chairman Ben Bernanke’s subsequent remarks. In the process, liquidity evaporated in certain places causing even more disorderly price moves. The immediate trigger for this afternoon’s market debacle was heightened concern that the Fed intends to reduce its support of the economy, undermining the markets’ notion of the “central bank put.” And in reacting to signs that the Fed may gradually take...

STOCKS CRUMBLE AND RATES SURGE AFTER BERNANKE SPEAKS: Here's What You Need To Know Sam Ro June 19, 2013 It's the day everyone's been waiting for: Fed day. First, the scoreboard: • Dow: 15,112.1 -206.0 -1.3% • S&P 500: 1,628.9 -22.8 -1.3% • NASDAQ: 3,443.2 -38.9 -1.1% And now, the top stories: • The Federal Reserve wrapped up its two-day Federal Open Market Committee (FOMC) meeting and published its market-moving statement and updated economic forecasts at 2:00 p.m. ET. • The big takeaways were that the Committee saw "further improvement" in the labor market and said downside risks to the...