Free Republic

The Damage Bernanke Has Done To Every Major Asset Class Since May 22 Matthew BoeslerJune 25, 2013 When Federal Reserve Chairman Ben Bernanke failed to rebuff a suggestion during his May 22 congressional testimony that the central bank could begin tapering back bond purchases in September, the stock market finally began to stumble. A rapid rise in U.S. Treasury yields had caused volatility in global markets since the beginning of May, but it wasn't until Bernanke's testimony that equities started to show weakness. Since then, equity investors around the world have faced increased volatility thanks to concerns that slowing of...

Changes In Troubled China Peter Coyne June25, 2013. “When will America’s economy finally stop limping along?” asks Steve Hargreaves this morning for CNN Money.Next year, 2014, he says with a degree of confidence we find puzzling at bestAccording to Hargreaves, “economists foresee a convergence of several factors that could finally kick this recovery into high gear.” Those factors include: a patchwork of federal tax hikes and so-called spending cuts, rebounding home prices adding to consumer confidence and coming clarity over how the Dodd-Frank financial reform and Obamacare laws will affect businesses. Because as all “economists” know… economic growth comes...

Has the Great Financial Crisis Finally Arrived? Stock-Markets / Credit Crisis 2013 June 23, 2013 - 05:33 AM GMT By: Graham Summers The technical damage from yesterday’s bloodbath was severe. Spain, which lead the “Europe is saved” party from the lows last year has just taken out its trendline. So much for the “crisis is over” proclamations. We’re heading back down in a big way. The S&P 500 has also taken out its trendline. QE Forever is dead and buried. What will hold the market up now? Copper is indicating that the entire post-2009 “recovery” is ending. We’re moving back...

KRUGMAN: The Fed May Have Just Made A Historic Mistake, And Done More Damage Than It Realizes Joe WeisenthalJune 22,2013REUTERS/Jason ReedThe most important story in the world is the change of direction in US interest rates, which coincides with the change in tone out of the Federal Reserve, which on Wednesday indicated that so long as its economic projections come to pass, it plans to slowdown on Quantitative Easing later on this year, with an eye towards totally ceasing bond purchases sometime in 2014. The markets puked on the news, and interest rates shot up, a move that was exacerbated...

End of QE? – I don’t buy it By Detlev Schlichter, on 22 June 13 A new meme is spreading in financial markets: the Fed is about to turn off the monetary spigot. US Printmaster General Ben Bernanke announced that he might start reducing the monthly debt monetization program, called ‘quantitative easing’ (QE), as early as the autumn of 2013, and maybe stop it entirely by the middle of next year. He reassured markets that the Fed would keep the key policy rate (the Fed Funds rate) at near zero all the way into 2015. Still, the end of QE...

Tapering The Taper TalkPeter Schiff Friday, June 21, 2013 As usual the Federal Reserve media reaction machine has fallen for a poorly executed head fake. It has fallen for this move many times in the past, and for its efforts, it has tackled nothing but air. Yet right on cue, it took the bait once more. Somehow the takeaway from Wednesday's release of the June Fed statement and Chairman Ben Bernanke's press conference was that the central bank is likely to begin scaling back, or "tapering," its $85 billion per month quantitative easing program sometime later this year, and that...

JIM O'NEILL: We Could See A Bond Crash Steven Perlberg Jun. 14, 2013, 12:33 PM As the market speculates on when the Fed will begin to slow its quantitative easing program, former Goldman Sachs Asset Management chairman Jim O'Neill isn't alone in believing a taper would mean turbulence for financial markets. But for O'Neill, it would also "not be a stretch" to see 5% yields on the 10-year Treasury, reports Bloomberg. Given the 10-year's current 2.11% yield, that would imply a big sell-off in the bond market. O'Neill talked about that — and his prediction for a bond crash —...

ANALYST: What We Are Seeing Is A Recalibration Of The Cost Of Money Joe Weisenthal May 27, 2013, 7:02 AM Part of the reason people are nervous about Japan is the potential for a disturbance caused by an increase in long-term government bond yields. The fear is that ultra-aggressive easing will create inflation, leading to an interest rise, creating havoc for banks who own so much government debt. And in the US, all the concern is about the so-called "Taper" the winddown of QE that may begin this year. In an email to clients, SocGen's Kit Juckes writes: What we...

U.S. Economy Drowning In A Liquidity Trap? Economics / US Economy May 26, 2013 - 06:33 PM GMT By: Frank Shostak Bruce Bartlett recently lamented in The New York Times that given the current state of economic affairs we need more Keynesian medicine to fix the US economy. According to Bartlett, the core insight of Keynesian economics is that there are very special economic circumstances in which the general rules of economics don’t apply and are in fact counterproductive. This happens when interest rates and inflation rates are so low that monetary policy becomes impotent; an increase in the money...

<p>UPDATE: The minutes from the Federal Reserve's April 30-May 1 FOMC meeting on monetary policy are out.</p> <p>The main headline: many on the Committee said more progress is needed before tapering back any bond purchases under the Fed's quantitative easing program.</p>

U.S. Economy Staring Into The Abyss! Only Gold Is Worth Buying Stock-Markets / Financial Markets 2013May 12, 2013 - 07:38 PM GMT By: Robert M Williams "Behind every great fortune there is a crime." - Honore de Balzac (1799-1850) A number of important figures are now talking about the possibility of increasing the US Federal Reserve’s quantitative easing given the “decline in inflation.” In March we heard comments from Fed Presidents Eric Rosengren and Narayana Kocherlakota calling for QE well into 2014 while Chicago Fed President Richard Evens thought the Fed needed to do more. Then in April the St....

According to the Wall Street Journal, The Fed is planning to dial back the incredible monetary stimulus. But it won’t go “cold turkey.” We can always rely on The Dallas Fed’s Richard Fisher for a pithy comment: “I don’t want to go from wild turkey to cold turkey,” Richard Fisher, president of the Federal Reserve Bank of Dallas, said in an interview Friday. “I think we ought to dial it back.” Mr. Fisher is part of a contingent of Fed hawks who are wary of the central bank’s easy-money policies. After all, Central Banks have lowered interest rates 511 times...

FED: WE MAY DO MORE Sam RoMay 1, 2013, 2:10 PMThe Federal Reserve has completed its Federal Open Market Committee meeting, and it has just published its statement. For now, the Fed is on hold with its month purchases of $85 billion worth of bonds in its efforts to keep interest rates low. However, one of line that was new this time around was this: The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition...

EL-ERIAN: It's Official — The World Needs To Worry About The Damage Caused By QE Mohamed El-ErianApril. 20, 2013, 10:05 AMIt is now official: "We will be mindful of unintended negative side effects stemming from extended periods of monetary easing." This is how the G-20, the most important country grouping today, put it in the communique they issued Friday night. But what exactly are they talking about? It all started with the difficulties that most advanced economies faced in generating adequate growth and employment after the 2008 global financial crisis. Rather than catalyze the political system into action, this "new...

The Federal Reserve released the minutes from its March meeting before the opening bell Wednesday morning, hours earlier than planned after the news was inadvertently sent to Capitol Hill staffers at some point Tuesday. The biggest news out of the release was the possibility that the central bank could start paring back its quantitative easing efforts by the summertime, and not necessarily because the economic recovery has firmed up. Minutes from the March 19-20 policy meeting reinforced comments from recent statements out of the Fed that extraordinary monetary policy will remain necessary until substantial improvement in the economy, but also...

BRUSSELS (AP) — European countries should ease off their austerity and adopt more growth-friendly policies, U.S. Treasury Secretary Jacob Lew said Monday as he kicked off a series of meetings with the region's top leaders. America's biggest trading partner and the world's largest economic bloc has entered the fourth year of its debt crisis, which has plunged many of the 27 EU governments into recession. The U.S. administration hopes Europe will relent in its focus on debt reduction, which has been hurting growth through spending cuts and tax increases. Lew, who became treasury secretary in February, started his first official...

As the months go by, it is becoming clear that the Federal Reserve's "QE3" program, which is supposed to be "doing something" about unemployment, is having the exact opposite effect. We can only wonder how long it will take Fed Chairman Ben Bernanke to realize this. Friday's "Employment Situation" report from the Bureau of Labor Statistics (BLS) was really, really, really bad. The reported 0.1 percentage point decline in the "headline" unemployment rate (from 7.7% to 7.6%) fooled no one. Total employment actually fell by 206,000. The only reason that the reported unemployment rate went down was because 496,000 Americans...

The decision of the government in Cyprus to simply take money out of people's bank accounts there sent shock waves around the world. People far removed from that small island nation had to wonder: “Can this happen here?” The economic repercussions of having people feel that their money is not safe in banks can be catastrophic. Banks are not just warehouses where money can be stored. They are crucial institutions for gathering individually modest amounts of money from millions of people and transferring that money to strangers whom those people would not directly trust... [snip] One of the big differences...

M&T Bank Corp.'s (MTB) Chief Executive Robert Wilmers railed against the "astronomical" pay of his fellow bank executives, calling on them to rein in their compensation while singling out the "Big Six" banking "oligopoly" for its outsized paychecks and serial regulatory lapses that continue to shade the public perception of banks. Mr. Wilmers, who has led M&T for 30 years, issued his stark criticisms in his annual shareholder letter, in which he also took aim at "unnecessarily complex" accounting and new banking rules that amount to "misguided regulatory chemotherapy." snip While the Big Six are not named in the letter,...

Charles Brady, senior editor of the FOX Business Network, has put together a remarkable chart that clearly shows the Federal Reserve’s monetary easing policies are not going into the U.S. economy, but instead into the stock market. The chart here compares the Dow Jones Industrial Average with the St. Louis Federal Reserve Bank’s adjusted monetary base. It shows the effect of Fed purchases of mortgage-backed and Treasury securities from Fed dealers, whereby the Federal Reserve buys $85 billion total every month from the big banks, hastening the growth in the Fed’s balance sheet to more than $3 trillion. The central...