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| Economy |
| The Fed Is Freaked Out About the Financial Markets |
| 2016-01-31 |
| Early in the new year, on Sunday, Jan. 3, Federal Reserve Vice Chairman Stanley Fischer delivered a hawkish speech to the American Economic Association. Completely misreading the economy, which is woefully weak while inflation is virtually nil, Fischer strongly hinted that the Fed would be raising its target rate by a quarter of a percent every quarter for the next three years. The next day Standard & Poor's 500 index dropped 1.5 percent. In the week that followed, the broad index fell 6 percent. The week after that it fell over 2 percent. During that two-week period, the Dow Jones dropped 1,437 points. The dollar went up. Oil plunged 21 percent. Raw material commodities dropped. And credit risk spreads in the high-yield junk market rose substantially. Actually, it was a global event, as stock markets around the world plunged. Utter chaos. This past week, the Fed retreated in its Federal Open Market Committee policy statement. For the first time in a long while, it didn't bother with a risk assessment between inflation and employment. The whole statement had a much softer tone. It reminded me of the prevent defense of Bill Parcells' old New York Giants. Putting it more starkly, I'd say the Fed is completely freaked out by financial markets that are turning against it. More at the link |
| Posted by:badanov |
| #5 I'm freaked out by the Fed(s), so we're even. |
| Posted by: Barbara 2016-01-31 13:17 |
| #4 "Utter chaos" - No. Not by a long shot. "Utter chaos" is when stores run out of stock of bare necessities because deliveries have stopped, the ATMs don't dispense cash anymore, when very few are even willing to accept cash, companies cannot secure even the shortest term loans to stay in business, or when prices for necessities rise 10% - a day. Or when an indefinite bank holiday is imposed and private ownership gold is outlawed, and the US Supreme Court ratifies it. Oh wait - that's already happened! |
| Posted by: Anguper Hupomosing9418 2016-01-31 13:12 |
| #3 If they didn't do the bail outs at the start of the fiasco and allow the natural processes of open markets to take place, we'd already be in a recovery instead of lurching from one bubble to another bubble sustained by the cabal of employees who move from the money houses, the Fed and the Treasury. But hey, the big donors have made a lot of money in the process. |
| Posted by: Procopius2k 2016-01-31 08:26 |
| #2 Easy money is a hard habit to break and when it finally happens will cause all sorts of pain. |
| Posted by: DarthVader 2016-01-31 01:50 |
| #1 That's because they are stupid. |
| Posted by: gorb 2016-01-31 01:23 |