I think he would say he is being proactive...though I don't know how they (bernanke & the fed chiefs) can defend their last Fed statement (in July): a month ago, the economy is strong, but now we are running scared.
I guess those of us tuned into the tremors were not surprised by the credit crunch, weakening consumer & deteriorating jobs picture.
Strange that the Fed was so surprised (apparently).
They are trying to figure out what will happen if they lower 50 bps along with the US.
I'd assume (hope) that dollar-pegging allied govs do not get a secret heads-up before our Fed acts. They probably haven't had a big problem going along with the US moves up until now.
Now they have a dilemma with their oil-revenue economy booming, their dollar peg makes even less sense.
Any move on the Saudis part can have complex repercussions...
(Something for consideration: how does the US easing affect other USD-pegged economies around the world?)
The rate CUTS reflect real estate problems and employment problems. It doesn't hurt when Wall Street (Big Bankers, mulitnationals, consumer goods, etc. et.c) is lobbying for them.
This is all very bad for the currency -- which he is abandoning. Make no mistake about it! And, Congress is meeting soon to raise our debt limits.
The rate cuts may not do much to jump start homebuilders. I have heard that Fair Isaac is tweaking their algorithms to make credit ratings much harder. Couple that with the lenders still in trouble. CFC is re-purposing itself. Every company with lending exposure (Etrade being the latest) is distancing themselves and/or severly cleaning up their practices. CDOs are being re-evaluated by Moody's & Fitch. Etc. Etc.
You simply aren't going to have the major demand you need to sustain all the new housing that was built recently. Ain't gonna happen.
I'm not a history major, but I'd like to see some charts of the Discount rate overlayed with our currency vs say the Swiss Franc (with their discount rate overlayed).
Calculated Risk has a very interesting post about the USD & US deficit. Shows the connection between USD strength/weakness & deficit increase/decrease. He seems to believe that the relation makes it possible to forecast a bottom to the current USD decline. (ie, deficit peaked, thus USD will bottom sooner rather than later).
Interesting. I will ask him, though if it matters that the major occurance of that pattern was engineered by the Plaza/Louvre Accords...
4 comments:
I think he would say he is being proactive...though I don't know how they (bernanke & the fed chiefs) can defend their last Fed statement (in July): a month ago, the economy is strong, but now we are running scared.
I guess those of us tuned into the tremors were not surprised by the credit crunch, weakening consumer & deteriorating jobs picture.
Strange that the Fed was so surprised (apparently).
My read on the Saudis:
They are trying to figure out what will happen if they lower 50 bps along with the US.
I'd assume (hope) that dollar-pegging allied govs do not get a secret heads-up before our Fed acts. They probably haven't had a big problem going along with the US moves up until now.
Now they have a dilemma with their oil-revenue economy booming, their dollar peg makes even less sense.
Any move on the Saudis part can have complex repercussions...
(Something for consideration: how does the US easing affect other USD-pegged economies around the world?)
I see it as Ben picking his battles.
The rate CUTS reflect real estate problems and employment problems. It doesn't hurt when Wall Street (Big Bankers, mulitnationals, consumer goods, etc. et.c) is lobbying for them.
This is all very bad for the currency -- which he is abandoning. Make no mistake about it! And, Congress is meeting soon to raise our debt limits.
The rate cuts may not do much to jump start homebuilders. I have heard that Fair Isaac is tweaking their algorithms to make credit ratings much harder. Couple that with the lenders still in trouble. CFC is re-purposing itself. Every company with lending exposure (Etrade being the latest) is distancing themselves and/or severly cleaning up their practices. CDOs are being re-evaluated by Moody's & Fitch. Etc. Etc.
You simply aren't going to have the major demand you need to sustain all the new housing that was built recently. Ain't gonna happen.
I'm not a history major, but I'd like to see some charts of the Discount rate overlayed with our currency vs say the Swiss Franc (with their discount rate overlayed).
I'm going to work on those CHF charts!
Calculated Risk has a very interesting post about the USD & US deficit. Shows the connection between USD strength/weakness & deficit increase/decrease. He seems to believe that the relation makes it possible to forecast a bottom to the current USD decline. (ie, deficit peaked, thus USD will bottom sooner rather than later).
Interesting. I will ask him, though if it matters that the major occurance of that pattern was engineered by the Plaza/Louvre Accords...
-G
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