Fed’s Williams: Essential to keep monetary stimulus in place
He is right. We do need to continue to keep aggressive polices in place to support this recovery. I appreciate the amount of honesty I am read and watching as of late. The only problem is that is underlines how precarious of a position we are in, not just the United States but globally. We are now fully inter-connected and dependent on one another. After reading this article, I wonder if Mr. Williams included the U.S. as one of the countries that has “unsustainable debt levels” and have not been resolved?
WSJ – It is essential for the Federal Reserve to provide strong stimulus to the economy under current economic circumstances, a top central banker plans to say Wednesday.
“It’s essential that we keep strong monetary stimulus in place,” John Williams, president of the Federal Reserve Bank of San Francisco, is scheduled to say, according to the text of a speech to be delivered as part of the SPUR Business Breakfast Series in San Francisco.
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Merrill Lynch moving derivatives to BofA FDIC insured bank unit
Utter garbage. How can we sit back and let a bank move a massive load of liabilities to a banking unit that has deposits and is backed by the U.S. taxpayers via the FDIC? No surprise the Federal Reserve didn’t see a problem because they would not be first in line to make that banking unit whole again if something went wrong and trigger the CDS and whatever, other exotic contracts Merrill Lynch may have. We are just increasing the risk on this massive institution.
We need to quit using this line of global uncompetitiveness as a reason why our deposit institutions need to act like investment banks and take those type of risks. If it is that important to Bank of America or any other bank (not to single them out), they just need to make BofA Investments or whatever so they can run that operation off their own capital and investors so they can take that risk so try and increase profits. Our banks just need to be competitive in our home market, America.
If other countries allow their “safest” banks jump off a cliff, should we compete to let ours? Even William K. Black is mentioned in the article and he thinks we should have tight runs against this type of practice. Just so people know, I am not against banks or banking, personally I find them fascinating companies and I love their history, but what we have these days is nothing like the old days. When I say that, I mean the sense of duty and prudence is not their and that is a loss for the industry as a whole.
Bloomberg (Bob Ivry, Hugh Son and Christine Harper): Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.
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Video: Jim Rogers ‘Benanke is lying to us, Fed is in the market’
Mr. Rogers ain’t no slouch when it comes to banking matters. He made the very astute comment that regardless if we have QE3 or not, the Federal Reserve has been in the market all this time. When the Fed wants to lower interest rates, the actual method they use to accomplish this is by purchasing agency securities and that pushing yields lowers because of the artificial but very real demand created in that market. They continue to do this until they get to the desired interest rate.
Jim also understands how to handle an excessive debt problem. You have to let them fail so they bad (excessive) debt can be defaulted. Until we get this point and act on it, we will continue to see more disastrous policies and uncertain markets that could spike or crash on a dime and down the road, who knows? We just need to own up to the problem and see how we can fix it and learn.
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Federal Reserve Maintains Zero Percent Interest Rates For Extended Period
With no surprise, the Fed after their two day interest rate policy meeting continues to maintain short term interest rates at near zero and they maintained the “for an extended period” statement in there. At this point they have not given the market any clue that they are starting an interest rate hike cycle.
This continues to tell us that even with the large rally in the equity markets, we are not out of the neck of the woods and things are still holding together by a string. The New York Times article discusses the same important topic I have mentioned about the massive balance-sheet the Federal Reserve has at the moment that is filled with many mortgage related securities and so-called toxic assets.
With the position our banking system is in, they are in no place to purchase back the over $1 trillion dollars in assets they are holding on their books. Until we can deal with those assets in a transparent manner, we can not say that we have a real recovery in our financial system. If they aren’t dealt with then they have essentially been off-loaded to the public and that would be a tragedy having to deal with the inflation associated with that because the banks would have all that extra cash to lend with.
New York Times - The Federal Reserve on Wednesday kept short-term interest rates near zero and maintained, as it has for nearly a year, that rates would stay at that level for “an extended period.”
Despite intense market speculation, the central bank disclosed nothing about the fate of the $2.3 trillion balance sheet it accumulated as it acquired mortgage-backed securities in an effort to prop up the housing market.
The Fed reiterated its expectation that the benchmark fed funds rate would remain “exceptionally low,” as it has since December 2008, for some time, despite growing concerns among policy makers that the stance was too constraining.
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Video: Dylan Ratigan breaks down the Federal Reserve as a racket
Dylan Ratigan has been doing good journalism lately, really taking time to educate people on issue about money and how our high level financial system works. This video is not exception. You may think he is too opinionated in the clip but if you fact check what he is saying and take an unbiased view of what is actually happening in operation you will see that we do not have control over our own money and the people who do have the interests of the banks first and then the American people.
In my opinion, our country was founded so we could get rid of any outside control and self-govern as a independent republic. Things will change because the system we have setup up is not sustainable.
ENJOY!
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Fed to exit mortgage-backed security market today
This is positive news. The more we see these government programs winds down and their assistance not being there to support for the U.S. housing market, the more we will see if this is a real recovery or a head fake. The market has run up in the last few weeks so we are going to continue more impressive earnings and growth to get everyone back into growth and investment mode. Like I said, this is a good first step.
Bloomberg - The end today of the Federal Reserve’s unprecedented buying of mortgage securities won’t have much effect on the market, BlackRock Inc.’s Curtis Arledge said.
Yields on agency mortgage securities relative to benchmark rates will likely widen “a bit” and become more volatile after the Fed’s exit, though probably won’t expand more than 0.2 percentage point, Arledge, chief investment officer of fixed income at New York-based BlackRock, said today in an interview with Bloomberg Television.
“It’s been one of the more telegraphed changes we’ve seen in a long time,” said Arledge, who oversees about $590 billion at the world’s largest money manager. “The marketplace has positioned itself for the Fed to be absent.”
The Fed’s $1.25 trillion of purchases in the $5.4 trillion market of securities guaranteed by government-supported Fannie Mae and Freddie Mac or federal agency Ginnie Mae helped drive yield premiums to the lowest on record, which they remain near by some measures as the program ends.
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Fed keeps key interest rates steady despite board member’s disapproval
Interesting they are still keeping interest rates low for an “extended period” even though we are in a recovery. They must know something we don’t. They called the recovery moderate for sometime and that tells me that the earnings will not keep up with where the market is priced so we should see a correction.
LA Times – Washington D.C. - Reporting from Washington – Amid the political rancor over Federal Reserve Chairman Ben S. Bernanke’s bid for a second term, central bank officials encountered some dissension in their first policy-setting meeting of the year, even as they affirmed their pledge to keep interest rates at near zero for “an extended period.”
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