Bernanke Seems Willing To Allow More Downturn Than Greenspan 22 comments
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This past week the news flow rekindled recession fears in the United States. Lehman Brothers came under a cloud again, the credit ratings of bond insurers Ambac and MBIA were downgraded, May unemployment showed a jump from 5% to 5.5%, and crude oil shot up to a record $139 a barrel.
The U.S. was headed for a recession in 2001 but Federal Reserve Chairman Alan Greenspan dodged it with a dramatic reduction in interest rates and the help of a bubble in real estate. My guess this time around is that current Fed Chairman, Ben Bernanke, is willing to allow more of a downturn to emerge.
One sign: Bernanke drained the liquidity created by his rescue of the U.S. financial system to keep high-powered money on an even keel. Another sign: his recent speech about the need to avoid further interest-rate decreases to keep the U.S. dollar from going into a tailspin and fueling inflationary pressures.
Then there is the greater inflation threat in 2008. Prices for commodities and agricultural products are soaring. The consumer price index may still be relatively well behaved but the person in the street is complaining about inflation feeling higher than reported, thanks largely to gasoline and food prices. And investors are less willing to hold bonds as demonstrated by the recent run-up in their yields. The last thing Bernanke wants to see is an inflation psychology take root, where people seek to recoup lost purchasing power through bargaining for higher wages and demanding higher bond yields.
Politically, the timing for a downturn is about the best one can hope for. It’s early in Bernanke’s term and the term of the next President. There will be plenty of time to turn things around and get the show back on the road over the course of their terms.
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There will not be a revolution in America anytime soon as long as there is some semblance of a middle class and a healthy amount of white people; white people gave up revolution a while ago.
white people have unleashed plenty of death and destruction throughout the world. have you ever heard of the nazis? have you ever heard of the ku klux klan?
you'd have fit right in. now you're just a closet racist.
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You see?
I did not say white people were not / are not capable of violence or atrocities. Stop being such a narrow minded knee jerk. As long as there are a class of people afraid of losing what material possessions and social status they may still have, you will be hard pressed to have a revolution in the streets. The middle class in this country is still predominately white and too complacent for "revolution", unless you count college aged kids wearing Ché tee shirts as revolutionaries.
BTW, calling someone a Nazi is hyperbole, don't you think?
He sets interest rates at 2%, far below the rate of inflation. He puts hundreds of billions of taxpayer dollars at risk by financing the Bear Stearns deal and then lending directly to any investment bank with dodgy collateral.
A little speech about inflation concern does not change what he's done.
Opps, I forgot a small detail, Didn't our government just took all our civil liberties away under the terrorism pretext?
I think marching in the streets would not be very safe unless you like getting detained and sent to Guantanamo. Plus the average idiot is too busy watching American Idol, he must rather complain than take action.
True unemployment at 12%, food priced have increased 60% in a year, Gas will hit $7/gallon by December. Most people cant afford to get sick even if insured, 60% of the homes purchased in FL in 2007 have negative equity and we are blowing 1 bil a week in Iraq.
If the above desn't inspire a revolution I dont know what will.
You can't fix stupid.
I am loving my retirement in Cost Rica.
Under Alan Greenspan they were full of detail that had no broad significance anyway and under Ben much of those details are stripped but we still miss rather imported information about for example debt growth.
Total debt of the US economy on herself is above 50 trillion (this explains also why the FED rates are always so low compared to normal economies).
A very readable file is the next:
www.federalreserve.gov...
Add up the relevant 'total' columns, observe that this file says US Federal debt is only 5244.5 billion but use the official debt ceiling as a better estimate and you see:
Total debt of the US economy on herself is above 50 trillion US$.
At an average interest level of 5% the yearly interest payments would be 2500 billion or about the same size as the government takes in via taxes.
To put it simple: Never ever the US FED rate will make it too 5% because most Americans know that low taxes are good for the economy...
ok you've clarified your comments. i misunderstood your reference to "white people" and i apologize.
i agree with your assertion that we have a complacent middle class, whatever it's color. whites will soon be a minority in this country.
Will it take another Great Depression and World War before fractional reserve banking is reconsidered?
I will write in Ron Paul's name this Nov. He can take where we need to go to prudently and moderately. But if a Revolution comes, I will scream the loudest "Don't forget the bankers this time!"
Stalin and Mao have killed many times more people than A. Hitler.
Nazi did not invent extermination gas-chambers and concentration camps. Extermination gas-chambers were invented and widely used by Bolsheviks in 1920s. The first concentration camps were invented and used by British.
The real initiator of the WWII was not Hitler. The main driver forces behind the war were J. Stalin and FDR.
Yes, Nazi committed lots of crimes but during their colonial times British commited much more crimes specifically in India.
Finally, Americans use A-bombs to kill endless civilians in Japan. The plan B, if America did not have A-bombs, was to gas millions of Japanese.
So much about bad Nazi and good American.
When brilliant men cause havoc, it is time to rethink the system they operate in.
RightinSanFrancisco.co...
and...dont forget pol pot, the clauldian emperors, etc.
ad infinitum ad nausem
and .... the japanese used the bomb thingee to save face....they knew we only had two...try reading history
San Francisco
Puleeze! When we have an honest banking system then I will consider other culprits. Consider this: what came first the Federal Reserve or the Great Depression/New Deal which led to all the social spending today? Don't blame the victims, please.
for more info on the Fed:
www.lewrockwell.com/ro...