A Translation of the Federal Reserve Statement

by: Karl Denninger

From The Fed:

Release Date: June 23, 2010

Information received since the Federal Open Market Committee met in April suggests that the economic recovery is proceeding and that the labor market is improving gradually.

The economy is falling off a cliff. The Federal Government has blown over $1.5 trillion a year for the last two years to try to get private parties to lever up again, but they have no more credit capacity and still have no jobs.

Household spending is increasing but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.

Housholds can't spend what they don't have, and they don't have. There has been no income growth other than government handouts. Household "wealth" has been revealed to be an empty suit, devoid of any substance, as it was simply a $100,000 VISA credit line, which has now been slashed to $100.

Business spending on equipment and software has risen significantly; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls.

Nobody in their right mind would hire anyone with the economy this crappy and the only consumer and business spending that is taking place is coming from the nipple of a government tit. Businesses are taking seller-financed OptionARM equipment deals, which will soon start bankrupting the firms that were idiotic enough to do that.

Housing starts remain at a depressed level.

New home sales printed the lowest number on record today. "Depressed"? Well, yes. As in DEPRESSION. Welcome to our use of that word. Expect it to expand.

Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad.

Greece is the first of many. It's coming here. Be ready.

Bank lending has continued to contract in recent months.

Banks have not only lied, they've bought all this crap paper from the European nations. The banks are still bankrupt, incidentally, but we're still too chickenshit to tell you the truth.

Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be moderate for a time.

Prices of energy and other commodities have declined somewhat in recent months, and underlying inflation has trended lower. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.

There is no demand for these commodities - except for financial speculation.

Which we support.

Especially if it bankrupts the middle class.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

Point, pull, CLICK.

Oh damn.

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.

Our financial forecast:

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer-run macroeconomic and financial stability, while limiting the Committee’s flexibility to begin raising rates modestly.

Hoenig has it figured out and we're warning you, so you can't say we didn't later. Just like we "never saw the housing bubble" coming.

Oh wait - Greenspan did. In 2004. He just didn't want anyone to know about it.

Just like us.