(POLL) Is the Fed out of Bullets?

MsMorrisine

the same talking heads saying "the Fed will likely implement Operation Twist at the Wed Meeting" are the same talking heads trashing the idea on today's shows.

I see it as the Fed giving the market what the market thought it wanted.

However, if the Fed has to "appease the market" and only does Operation Twist... I can only conclude that the Fed is out of ideas.

OldEastside

<< <i>I can only conclude that the Fed is out of ideas. >>



Its not just the Feds, there out of Ideas across the board!!!

Steve

57loaded

i think Bernanke knows he screwed up and doesn't want to do "anything more QE" and doing nothing (twist) is better than something more bigger QE for his career after the FED chairman position.

pf70collector

The move will lower 30 year mortage rates to 3.5% Since this is a 70% consumer driven economy, my guess is he hoping for a large wave of mortage refinances so the consumer will spend more. Though the consumer probably learned his lesson from the 08 meltdown and won't be buying consumer products frivolously. They will refinance, but probably not spend. At least I won't when I refinance.

gsa1fan

J
O
B
s

To heck with bullets! Ben the Bernank would have to toss a few Tomahawk missiles!

Putting pressure on Europe oughtta help Right take a page from China.

Well I guess the Reds own us anyway

RGJohn

<< <i>J
O
B
s
............q]

Ben and Barak and Bush and the rest of the Bozos do not 'create' anything. They derive their sustenance from those who do. They are the non-productive 'overhead' department which we all pay for and must endure. To look for salvation from that quarter is to guarantee disaster.
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Housing was too large a part of our purported 'economy'. We can/could not continue indefinately to 'flip' real estate, depending upon the ever increasing 'value' of one's home. Everybody shares in having concocted and repeated that lie. Realtors ( registered trademark), licensed appraisers, bank officials, and yes U'N'ME 'cause we were forever bragging about what we paid for it versus what it now 'worth'. We didn't own homes, we had laid enormous bets which many of us could not cover when they were called.
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Now with lower interest rates coming, perhaps young people will be able to purchase homes ( they are after all the ones with families), with rapidly accelerating inflation ( don't give me statistics, give me groceries!, give me gasoline!), perhaps the plunging prices of housing will eventually stop plunging at some unknown point where the lower value of the dollar intersects with the decreasing home price. Let us hope that point is reached sooner rather than later if we want to enjoy again what used to be called 'stability'.
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The best thing the 4 B's mentioned in the first line can hope to do is to create an atmosphere that allows those of us who actually produce something worthwhile, to do so. And then stay the heck out of the way until it's time to claim the credit for what WE did , often DESPITE them.

57loaded

<< <i>The move will lower 30 year mortage rates to 3.5% Since this is a 70% consumer driven economy, my guess is he hoping for a large wave of mortage refinances so the consumer will spend more. Though the consumer probably learned his lesson from the 08 meltdown and won't be buying consumer products frivolously. They will refinance, but probably not spend. At least I won't when I refinance. >>



banks are tight as a drum and who has the equity?, well some do, glad if you are one of them!

you are spot on about folks NOT spending that extra money each month if they do refi.

it was a no-brainer in years past if one put 25% down on a house and refied later at lower rates, even in a flat or slightly down housing market.

some of that $$$ > TARP, QE whatever) that no one has seen should go straight to a % of loan forgiveness or allow one to be able to refi at 100% LTV. (this would never happen but it's still a thought)

shadow inventory/bank owned RE is crushng any recovery.

DoubleEagle59

Do you really need to ask?

jmski52

I know what you're thinking. "Did he fire six shots or only five?" Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is a .44 Magnum, the most powerful handgun in the world, and would blow your head clean off, you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?

pf70collector

Not taking cash out but taking advantage of the low interest rate to come. The Bernanke is driving mortgage interests low for a reason. Whether it will work for its intended purposes .... who knows. You can refinance in order to get a lower monthly payment and not take any cash out, it will free up more money for the consumer to spend from his disposable income.

jmski52

Normally, I'd be inclined to say yes - the Fed is out of bullets. But Ben doesn't think so, so I voted "no".

Excerpt from the helicopter speech:

Because central banks conventionally conduct monetary policy by manipulating the short-term nominal interest rate, some observers have concluded that when that key rate stands at or near zero, the central bank has "run out of ammunition"--that is, it no longer has the power to expand aggregate demand and hence economic activity. It is true that once the policy rate has been driven down to zero, a central bank can no longer use its traditional means of stimulating aggregate demand and thus will be operating in less familiar territory. The central bank's inability to use its traditional methods may complicate the policymaking process and introduce uncertainty in the size and timing of the economy's response to policy actions. Hence I agree that the situation is one to be avoided if possible.

However, a principal message of my talk today is that a central bank whose accustomed policy rate has been forced down to zero has most definitely not run out of ammunition. As I will discuss, a central bank, either alone or in cooperation with other parts of the government, retains considerable power to expand aggregate demand and economic activity even when its accustomed policy rate is at zero.

Because there is a bit more substance in the body of the speech, I'm linking it for anyone who might be interested in his position on bullets:

Deflation: Making Sure "It" Doesn't Happen Here.