Ben Bernanke & US Fed 01 (May 08 - Nov 10 )

[kennynah]

why USD will not likely crash off the cliff ... reasons which are well known to many ...

chinese wont allow it for fear of T-Bills becoming toilet paper/banana money... europeans wont allow it for fear of trade deficits...

these 2 giants are enough to interfere with the fx markets to ensure USD stays viable for many years ahead...

[millionairemind]

July 10, 2009
Fed warns against govt audits
WASHINGTON - FEDERAL Reserve deputy chairman Donald Kohn on Thursday defended the US central bank's independence, saying congressional oversight could interfere with monetary policymaking.

If the Government Accountability Office (GAO), the investigative arm of Congress, were authorized to audit the Fed, that 'could cast a chill on monetary policy deliberations,' Mr Kohn told a House of Representatives committee.

He acknowledged that the possibility of expanding the audit authority of the GAO over the Fed 'has recently been discussed.'

'Although Federal Reserve officials regularly explain the rationale for their policy decisions in public venues, the process of vetting ideas and proposals, many of which are never incorporated into policy decisions, could suffer from the threat of public disclosure,' Mr Kohn said.

He also defended the Fed's closed-door policy-setting meetings as vital for the financial markets and the public.

'The publication of the results of GAO audits related to monetary policy actions and deliberations could complicate and interfere with the communication of the FOMC's intentions regarding monetary policy to financial markets and the public more broadly,' he said, referring to the Fed's policy-setting Federal Open Market Committee.

Credit rating agencies, Mr Kohn warned, would lower their ratings on the United States if the independence of the central bank seemed threatened, which would make it more costly for the government to borrow at a time when its deficit is soaring amid a recession.

Republican Representative Ron Paul, a libertarian-leaning former 2008 presidential candidate, has proposed legislation that would subject the Fed to political pressure through the GAO audits. Mr Paul, who has advocated abolishing the Fed, claims his measure has the support of more than half the House.

Although critics accuse the Fed of being overly secretive about its operations and decision making, the central bank has made gains in transparency after chairman Ben Bernanke took office in 2006.

The Fed routinely publishes edited minutes of its FOMC meetings three weeks after they are held. -- AFP

[kennynah]

they are so rich...so powerful...and private.... i seriously doubt the congress or even the senate or for that matter, the president, can do anything to the fed, even if they wanted to...

[millionairemind]

July 16, 2009
Fed can 'smoothly' exit

WASHINGTON - THE Federal Reserve said on Wednesday that it is able to 'smoothly' exit an unprecedented stimulus plan and that this would be 'a top priority' once the economy recovers from recession.

In minutes released from the Federal Open Market Committee meeting on June 23-24, the central bank said participants 'generally agreed that the Federal Reserve either already had or could develop tools to remove policy accommodation when appropriate'.

The comments come amid indications the US economy is nearing the end of recession, and address fears that the Fed has to back away from its near-zero interest rates and extra liquidity programs to guard against an inflation surge.

'Ensuring that policy accommodation can ultimately be withdrawn smoothly and at the appropriate time would remain a top priority of the Federal Reserve,' the minutes said.

The Fed pointed out a drop in demand for some of its special programs to get liquidity into the financial system in recent months, noting that 'market conditions had improved'. But the Fed said it had decided in June to maintain these programs and extend them into early 2010 because of a still 'fragile' financial system.

'Moreover, participants viewed the availability of the liquidity facilities as a factor that had contributed to the reduction in financial strains,' the Fed report said.

'If the Federal Reserve's backup liquidity facilities were terminated prematurely, such developments might put renewed pressure on some financial institutions and markets and tighten credit conditions for businesses and households.'

It noted that the year-end period 'was seen as posing heightened risks given the usual pressures in financial markets at that time'.

As a result, the Fed extended most of the programs into February 2010 but said that 'improved market conditions and declining use of the facilities warranted scaling back, suspending, or tightening access to several programs'. -- AFP

[millionairemind]

Published July 17, 2009

Fed sees US downward spiral slowing

But it expects jobless rate topping 10%, up from earlier estimate of 9.6%

(WASHINGTON) The Federal Reserve expects the US economy to sink at a slower pace this year than it previously thought, but sees unemployment topping 10 per cent, according to a forecast released on Wednesday.

The Fed now predicts that the economy would shrink between 1 per cent and 1.5 per cent this year. It is an improvement from its old forecast issued in May of a contraction of between 1.3 and 2 per cent.

The upgrade comes from the expectation that the economy's downhill slide in the first half of 2009 was not as bad as previously thought.

The Fed said that the economy should start growing again in the second half of this year, although the pace is likely to be plodding.

Most Fed policymakers said that it could take 'five or six years' for the economy and the labour market to get back on a path of full health in the long term.

Against that backdrop, the Fed's forecast for unemployment this year worsened. The central bank predicted that the jobless rate could rise to as high as 10.1 per cent, compared with the previous forecast of 9.6 per cent.

The nation's unemployment rate climbed to 9.5 per cent in June, a 26-year high.

The predictions are based on what the Fed calls its 'central tendency', which exclude the three highest and three lowest forecasts made by Fed officials.

The central bank also gives a range of all the forecasts. That range showed that some officials expect the jobless rate could rise to as high as 10.5 per cent this year, and 10.6 per cent in 2010. The post-World War II high was 10.8 per cent at the end of 1982, when the US had gone through a severe recession.

For 2010, the Fed predicted that the economy would grow between 2.1 and 3.3 per cent. That's a slight upgrade from its old forecast of growth between 2 and 3 per cent.

Still, it would mark a slow recovery and that would keep unemployment elevated well into 2011, the Fed said. Companies won't be in any mood to ramp up hiring until they are certain that any recovery has staying power.

To help lift the country out of recession, the Fed has slashed interest rates to a record low near zero. In March, the Fed launched a US$1.2 trillion effort to drive down interest rates to revive lending and get Americans to spend more freely. Those actions - along with President Barack Obama's US$787 billion stimulus package of tax cuts and increased government spending - should help the economy return to growth in the second half of this year, the Fed said.

At their last meeting in late June, Fed chairman Ben Bernanke and his colleagues pledged to hold the key bank lending rate near zero for an extended period of time to help fortify the economy. Many analysts believe that the Fed would leave rates at record lows through the rest of this year.

The Fed last month also decided against expanding its US$1.2 trillion programme of buying government bonds and mortgage-backed securities to drive down rates on mortgages and other consumer debt.

Part of the reason that the Fed stayed the course was out of fear that expanding the programmes could stir up investor fears that the central bank's aggressive actions could spur inflation later on, documents of the closed-door June meeting indicated. In addition, 'it seemed that economic activity was in the process of levelling out'.

On the inflation front, Fed policymakers did bump up their forecasts for this year and next. The Fed expects inflation to rise between one and 1.4 per cent in 2009, reflecting the influence of higher oil and commodity prices. The old forecast called for a gain of between 0.6 and 0.9 per cent this year.

Even with the projected pickup, the Fed believes inflation 'would remain subdued for some time'. That's because the sluggish recovery, idle plants, a weak employment market and cautious consumers will restrain companies from jacking up prices.

Next year, inflation should rise between 1.2 and 1.8 per cent, the Fed said. That's up from the old forecast of between one and 1.6 per cent. -- AP

[winston]

He will be testifying before Congress tomorrow night and Wednesday ..

[millionairemind]

July 21, 2009
Bernanke sees upturn

WASHINGTON - THE Federal Reserve is likely to maintain its easy money policy for some time despite signs of improvement in the economy and financial markets, chairman Ben Bernanke said on Tuesday.

Mr Bernanke, delivering his semiannual economic report to Congress, cited 'notable improvements' in financial markets and a somewhat brighter economic outlook but considerable risks led by high unemployment.

'In light of the substantial economic slack and limited inflation pressures, monetary policy remains focused on fostering economic recovery,' Mr Bernanke told the House of Representatives Financial Services Committee.

He added that 'a highly accommodative stance of monetary policy will be appropriate for an extended period,' suggesting that the Fed is in no hurry to end its near-zero interest rate policy or special programs to pump money into the financial system.

But Mr Bernanke also maintained the Fed was working on a so-called exit strategy to unwind the trillion-dollar effort once a recovery takes root. He said the vast effort 'can be withdrawn in a smooth and timely manner as needed, thereby avoiding the risk that policy stimulus could lead to a future rise in inflation.'

The policymaking Federal Open Market Committee 'has been devoting considerable attention to issues relating to its exit strategy, and we are confident that we have the necessary tools to implement that strategy when appropriate,' he added.

He said some of these tools 'will unwind automatically as the economy recovers and financial strains ease' because of the premium charged by the Fed for its programs.

In an effort to address concerns that the Fed could create a new financial bubble, Mr Bernanke said the central bank was prepared to act. 'Should economic conditions warrant a tightening of monetary policy before this process of unwinding is complete, we have a number of tools that will enable us to raise market interest rates as needed,' he said.

Mr Bernanke also delivered the Fed's latest economic projections, which were made public last week, which called for a resumption of growth in the second half of 2009 after a brutal recession. He commented that financial markets, which had been severely strained at the the time of his last report in February 'remain stressed,' with credit sometimes difficult to obtain, but that 'on net, the past few months have seen some notable improvements.'

He added that better conditions in financial markets 'have been accompanied by some improvement in economic prospects' including stabilisation of consumer spending and moderation in the housing slump.-- AFP

[winston]

He sounded confident and complacent and he has supposedly planned for all scenarios.

So why were they running around like chickens with their heads cut out, when Lehman and Bear collapsed?

The next crisis will be sharp, sudden and unexpected.

It could come from a very sudden collapse of the USD, a sudden collapse of Equities ( During Black October, the market crashed 25% in one day ), a sudden spike in Oil & other Commodities, a collapse of the Bond market etc. Not possible? Think again. The Investment Banks are back to leverage of 70 to 1

[millionairemind]

Another Black Swan in the making

[iam802]

Bernanke : Commercial Property May Pose Risk for Economy

http://www.bloomberg.com/apps/news?pid= ... mAhkgbWDXc

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Seriously, let's crash it and get it over.

Over in Singapore, I see similiar problems. Despite the recent surge in Private Property interests, the Commercial side still sees falling rental, occupancy and prices.