Fed reduces 2009 outlook
Real Estate Investor · Las Vegas, NV · Member since 2008 · 1k+ posts · 447 votes
Federal Reserve reduced its economic outlook for 2009.
I'm shocked! The Fed actually realizes what most of us have known all along. We'll see how that changes the deficit forecast. Remeber first it was oing to be $1 trillion, then it was revised to $1.8 trillion. Next we'll be talking about $2 trillion+. And that was based on the economy recovering this year and also used a very robust assumption of 3.2% GDP growth for 2010. I can't wait to see the spin on this.
http://finance.yahoo.com/news/Stocks-close-lower-after-Fed-apf-15309661.html?sec=topStories&pos=main&asset=&ccode=
:cool:
Don't you know it's still Bush's fault?
:cool:
Come on now fellas, how in the world is Obama responsible for any of this. Four to eight years from now if things aren't better then go ahead and feel free to bust his huevos.
It’s not a matter of blaming “O†for any of this, it’s just a matter of being sick of him laying blame all the time. He wanted the job, shut up and do it. While I don’t like what he’s doing, I wasn’t too happy with “W†either. Obama has two years to do well enough to keep his grip on Congress and four years to hang on to his own job. Whatever Bush’s many failings were, he didn’t spend all his time wailing about what his predecessor did or didn’t do.
:cool:
That's a good point Richard. He does refer to bush and his short comings quite a bit.
You can't say he's doing a lot of talking and not enough walking though. It's tough to turn around a decade, if not more in economic policy shortcomings.
My opinion is our best bet is to banish the federal reserve and/or going back to the gold standard.
That is funny that it is referred to as bush's fault for the decade or more of policies when he wasnt there a decade or more ago.
In order to lay blame on anyone or anything you must be specific as to cause and effect. There is no doubt that loaning money to a company then stepping in and firing the CEO does not make a very secure foundation to be able to build any stability upon.
That move alone has made it improbable that many investors will trust this administration. And they need all the money infusion into this economy that they can get so that their positive outlook will be close to the numbers that actually come in.
I am by no means saying that Bush was an award winning president but I do get tired of hearing that all this is his fault when the start of the fall of our Roman Empire was initiated by that cigar puffing imbecile that came before him, Clinton. He is the one that de-regulated the financial institutions and made it possible for people that couldn't afford houses to buy them. Bush, like the Big idiOt had his fair share of problems left before he ever got into office. But most of them came from his own Communistic party. It's sad that the American people are so dim witted they won't look at the real cause and effect relationships and keep voting the same Republcrat party in every year.
In all reality, the debacle began a long time before Clinton.
It was a good idea to help your neighbors. But being forced to do so continuously is a drain on anyone. (Teddy and the new deal).
It is the same as trying to save someone who is drowning. You can do it for a while, but unless you can get to dry land where you can put them down, they will drag you under water.
Add the other countries that we help(and never get repaid) to that mix of our own "down on thier luck" neighbors. And you can understand why we are drowning today.
But its start was way back when people were told by the government that they will take care of them.
WE were made strong and powerful by standing on our own two feet and helping others to stand on their own two feet. NOT hang around our necks!!!!!!!
Jawsette,the truth hurts and I feel your pain.
Clinton was indeed responsible for the repeal of the Glass-Steagall Act in November of 1999 which was indeed a big step toward the mess today. It was a Republican bill, but he signed it!
But along with his many failings, sexual and otherwise, he actually managed to have 3 straight years of budget surpluses before turning it over, even got rid of the 30 year bond, Bush never had a surplus. When the big 'O' took office it was already forecast to be 1.2 trillion deficit with an 800 million stimulus package included.
But Bush repealed the up-tick rule, allowed the banks to expand leverage and never attempted to reign then in, he also never came close to a balanced budget and left the world at the brink of collapse, in two wars, and within the worst recession since the depression.
Watching the mis-management of Tarp and the Car companies, both Bush and Obama, brings no joy either. Ayn Rand must be saying. "I called it!"
But again, blame does not set a path forward, and you are right, he asked for the job so stop complaining about the past. How would you all go forward from here?
Me. I would re-institute the Glass-Steagall Act, up-tick rule, and raise the balance sheet capitalization requirements for any institution allowed into the FDIC program or use the Fed window, and clean-up the GAAP, they are broken.
I would bring all derivatives and Hedge funds under regulation and stop the financial madness that is at the root of the credit crisis. The financial institutions have become completely corrupted by greed and we need to stop this from ever occurring again by reigning them in.
Disband the Sec, as well, it has failed to protect our system in any way and seems to be more a financial institution lobbyist group these days then anything else.
Me, I would get rid of the Fed. While all of the above are really good ideas it doesn't get rid of the corruption or diminish the size of an overbearing, out of control government that is no longer for the people in which it is meant to represent. I'm even disgusted with my Governor right now, Mr. No Tax increase Crist, whose lying self is now seeking the Senate. So take him and ship him on down to Gitmo with the rest of them.
Actually, the uptick rule was repealled by the SEC and not Bush as explained by this snippet from Investopedia.
"Investopedia explains Uptick Rule
The SEC eliminated the rule on July 6, 2007, but in March of 2009, following a conversation with SEC Chair Mary Schapiro, Rep. Barney Frank of the House Financial Services Committee said that the rule could be restored. Frank's conversations were spurred by a call for the return of the rule by several members of Congress and legislation reintroduced on January 9, 2009, for its reinstatement. On April 9, 2009, the SEC approved the release of five proposals for reinstating the uptick rule, which will each be put out for a 60-day public comment period."
Did you notice that the SEC (which you want dispanded) has called for the reinstatement of this rule. It does seem that they are responding to the way things have gone since they repealed it.
Now maybe with one of their 5 proposals they can improve its implementation which is why it was considered for repeal to begin with.
Hi Karen,
Totally agree about Crist. What a disaster he has been. He campaigned on solving the insurance problem in Florida, and then after one try, lost in court, threw up his hands and said "Oh, well, I tried!".
Insurance is now worse then ever and his new property tax abatement program just penalizes business which is incredibly short-sited and will lead to business going elsewhere. My average insurance bite in Florida is now at two+ months rent, it was one month 10 years ago.
Limiting the property tax increase to 10% for non-homestead is really just a smoke-screen for the continuing rise in taxes for business property owners.
My average property tax bite is now at two+ months rent, it was one months rent 10 years ago.
The housing recovery willed be slowed in Florida as buyers realize the implications of the higher bite of property taxes in any rental property evaluation.
Currently, we have close to 5 months rent just to cover insurance and property taxes, it is a bit absurd and is reaching the point where you are better off putting your money into a savings account rather then a rental property, or you take on more risk, self-insure.
Hopefully, he will not be re-elected, he made it quite clear that he had no problem leaving his elected post should McCain want him, but have never seen a more Republican state.
We continue to avoid adding rentals in Florida and look to unwind our investment properties there. Looking at the situation there, just can't see any good news on the horizon to improve the situation.
As far as increasing or contracting the balance sheet there is a very good article on it at bloomberg.
http://www.bloomberg.com/apps/news?pid=20601068&sid=aqz8dxEft5SQ&refer=economy
And the feds mandate in this area according to that article states.
Fed’s Mandate
Fed officials, in their most recent forecasts, signaled that both of their legally mandated objectives -- stable prices and maximum employment -- are under threat. Policy makers forecast the unemployment rate will be above their long-run preference range of 4.8 percent to 5 percent through 2011.
Similarly, Fed governors and district-bank presidents anticipate that inflation will be slower than their median long- run objectives of 1.7 percent to 2 percent in 2009, and 14 members expect the rate to be below the range next year.
Plugging those forecasts into a model to determine the right policy stance, “the funds rate should be near its zero lower bound not just for the next six or nine months, but for several years,†Rudebusch wrote in a research note released May 26.
The President appoints the head of the SEC and therefore has the final responsibility. The only reason the SEC is bring it back is due to pressure, and the replacement of its head by Obama.
McCain also called for Cox replacement, but the final responsibility is and always was with the administration, and the President.
"The Commission may conduct a public meeting as early as next month to consider whether to formally propose reinstatement of the uptick rule, or consider other measures related to short sales," SEC spokesman John Nester said. In her Senate confirmation hearings in January, SEC Chairman Mary Schapiro pledged to review the rule.
Ahead of the agency’s announcement, momentum was building among policymakers in Washington reinstate the rule -- or some version of it -- in the nation’s stock markets.
In 2007, under the Bush Administration, the SEC repealed the rule after decades in use; the agency argued it was outdated and contributed to market inefficiencies. But with markets dropping sharply in the last year, many investors have called on the SEC to reinstate the rule, among other things charging that its absence has allowed short sellers to coordinate “attacks†on certain stocks, particularly financial stocks, possibly driving down their share prices beyond levels warranted by a company’s fundamental earnings and operations.
This "VAR" (Value at risk) models used to calculate the amount of risk an institution has on its books and its susceptibility to shocks in the system are the basis for calculating the minimum capital a bank must have as a backup for its positions.
This minimum capital is calculated using a ratio. Cash to Risk.
As the current crisis has once again proved, all models fail according to the old rule, "If there is only one way for a model to fail, it will fail that way with a certainty approaching 100%".
So, what I am saying is that, especially after the SEC raised the amount of leverage an institution has on its books, the failure of the VAR models to correctly predict how the banks positions would react to shocks suggests a reasonable solution is to raise the capital ratios again and to look at the VAR model in depth, it doesn't seem to be working or there would have been no need for a bailout.
Although appointed by the President, they must be confirmed by Congress and are responsible to Congress and not the President or his administration. The Congress has the final responsibility.
There is always a problem when you use a model instead of actual figures to see a particular problem. Investors know that the higher the risk the higher the rewards or failure is. So lets punish all investors for taking high risks. That is not the correct approach. But when they do fail they fail, there is never a need for a bailout.
The bailout never did fly with me in the beginning. The only bailout should be by the FDIC for the amount that each persons account is insured when and if the bank actually does fail. That way the people are protected from the bad investments that were made and not everyone has to pay for the continous mistakes.
There is that word again, Republican. How is that different from Democrat these days. Republicans use to be conservative, they had values such as patriotism. They felt our nation should be independent and sovereign to protect its people against things like terrorist threats. Reagan was the last thing we had that even resembled a Republican. Everything we've had since has been some globalist pushing our country into the pathetic little socialist society that it has become. Everybody asking uncle Samantha for a handout instead of taking responsibility for their own lives. All I can say is that I am proud to have been a member of the last generation of the free country of the United States.
The bloomberg report was also quoted in trying to get back to richards question of spin on 3.2% growth. This has not happened and people are beginning to talk about hper-inflation, but now the feds say
Can we believe this?
They also say that
Low interest rates for several more years could be a very good time for investors who do things right. :mrgreen:
Yeap, just in time for Stalin to swoop down with his "rich tax" so he can fund a study on why cow patties stink in the summer time.
Stalin can be removed, it only takes involvement. Taxes can be repealed, look at CA.
The revolt is only beginning!
Gotta wake people up before any of that happens. My sarcasm may seem harsh at times but Marilyn Manson doesn't sell CDs singing "Mary Had a Little Lamb".