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FOMC Minutes For August 10th

As is my usual practice.....

Developments in Financial Markets and the Federal Reserve's Balance Sheet

The Manager of the System Open Market Account (SOMA) reported on developments in domestic and foreign financial markets during the period since the Committee met on June 22-23, 2010. He also reported on System open market operations during the intermeeting period, noting that the Desk at the Federal Reserve Bank of New York had engaged in coupon swap transactions in agency mortgage-backed securities (MBS) to substantially reduce the number of the Committee's earlier agency MBS purchases that remained to be settled.

We made sure that those who sold us things they didn't have didn't get called on it. Isn't that grand? (PS: What do you call selling something you don't actually own - and can't acquire?)

In addition, the Manager briefed the Committee on the System's progress in developing tools for possible future reserve draining operations. The Federal Reserve successfully conducted two more small-value auctions of term deposits to confirm operational readiness for such auctions at the Federal Reserve and at the depository institutions that chose to participate.

Who were those that "chose to participate"? Oh yeah, that's right, we dont't get actual minutes - what we get is another fraudulently-claimed load of bilge.

There were no open market operations in foreign currencies for the System's account over the intermeeting period.

.... that we're willing to admit to......

Staff Review of the Economic Situation

The information reviewed at the August 10 meeting indicated that the pace of the economic recovery slowed in recent months and that inflation remained subdued.

Translation: There was no recovery. Not now, not before, and certainly not on a forward basis.

In addition, revised data for 2007 through 2009 from the Bureau of Economic Analysis showed that the recent recession was deeper than previously thought, and, as a result, the level of real gross domestic product (GDP) at the end of 2009 was noticeably lower than estimated earlier. Private employment increased slowly in June and July, and industrial production was little changed in June after a large increase in May. Consumer spending continued to rise at a modest rate in June, and business outlays for equipment and software moved up further. However, housing activity dropped back, and nonresidential construction remained weak. Additionally, the trade deficit widened sharply in May. A further decline in energy prices and unchanged prices for core goods and services led to a fall in headline consumer prices in June.

The government lied previously, and still is. We of course used this as an excuse, and still are.

Private nonfarm employment expanded slowly in recent months. The average monthly gain in private payroll employment during the three months ending in July was small, considerably less than the average increase over the preceding three months.

When adding in the population of new entrants to the workforce, employment did not expand at all, it actually FELL. But we won't tell you that, because that's would be "truth", and we're allergic. Severely. Oh, we're missing our epipens too.

The unemployment rate moved down in June from its level earlier in the year, and was unchanged in July, as declining civilian employment was accompanied by decreases in labor force participation. Initial claims for unemployment insurance remained at an elevated level over the intermeeting period.

We don't count people who have given up on finding a job as "unemployed."

The output of high-technology items and other business equipment continued to rise.

Yeah, Intel says so too. Oh wait....

Indicators of household net worth--such as stock prices and house prices--were little changed, on net, over the intermeeting period. Consumer confidence fell back in July, with households expressing greater concern about their personal finances and the outlook for the recovery.

Our lies are not working as well as they used to.

The housing market, which had been supported earlier in the year by activity associated with the homebuyer tax credits, was quite soft for a second consecutive month in June. Sales of new single-family homes rebounded some in June after their sharp drop in May, but they remained at a depressed level. Sales of existing homes fell for a second month in June, and the index of pending home sales suggested another decline in July.

The government cheese ran out. Damn.

Inflation remained subdued Deflation accelerated in recent months.

Nominal hourly labor compensation--as measured by compensation per hour in the nonfarm business sector and the employment cost index--rose modestly during the year ending in the second quarter. Average hourly earnings of all employees rose slowly over the 12 months ending in July. Output per hour in the nonfarm business sector declined in the second quarter after rising rapidly in the preceding three quarters. On net, unit labor costs remained well below deflated below their level one year earlier.

In the emerging market economies (EMEs), incoming data generally pointed to a moderation of economic growth, albeit to a still-solid pace, with a notable slowing in China in the second quarter.

China has better liars than we do. They also use bullets on truth-tellers more often. (Those in the US telling the truth often have "heart attacks." Funny coincidence, that....)

In contrast, Mexican indicators suggested that economic activity rebounded in the second quarter after contracting in the first quarter.

The Mexican drug gangs are shooting more people, which is leading to a pickup in demand for guns and ammunition. This is expected to spur economic activity and reduce competition for jobs.

Over the intermeeting period, investors appeared to mark down the path for monetary policy in response to weaker-than-expected economic data releases and Federal Reserve communications that were read as suggesting that policymakers' concerns about the economic outlook had increased.

Investors are losing confidence in our lies too.

Reflecting the same factors, yields on nominal Treasury coupon securities fell noticeably on net. Treasury auctions were generally well received, with bid-to-cover ratios mostly exceeding historical averages. Yields on investment- and speculative-grade corporate bonds decreased, and their spreads relative to yields on comparable-maturity Treasury securities declined moderately. Secondary-market bid prices on syndicated leveraged loans rose a bit, while bid-asked spreads in that market edged down.

Net-interest margin is collapsing. Incidentally, this is threatening to expose the naked swimmers among our banks - and their insolvency.

Broad U.S. equity price indexes increased slightly, on net, as generally positive corporate earnings news and an easing of investors' worries about the potential effects of fiscal strains in Europe were partly offset by concerns about the strength of the economic recovery. Most firms in the S&P 500 reported second-quarter earnings that exceeded analysts' forecasts.

"Work harder, get paid less, or be fired and we'll send your job to a slave labor camp in China!" - the new mantra of American business.

Gross bond issuance by U.S. investment-grade nonfinancial corporations rebounded in July from relatively subdued levels in May and June.

There's always a greater fool....

Prices of commercial real estate appeared to have increased in the second quarter, though the number of transactions was small.

One building sold - from Guido to Guido', for the purpose of establishing a fraudulent mark on the price.

Nonetheless, commercial real estate markets remained under pressure. Delinquency rates for securitized commercial mortgages continued to rise in June, and commercial mortgage debt was estimated to have contracted by a sizable amount again in the second quarter. However, investor demand for high-quality commercial mortgage-backed securities (CMBS) reportedly was robust, although issuance of CMBS remained muted.

Oh crap - we printed three sentences of truth!

Consumer credit contracted again in the second quarter, as revolving credit continued to decline and nonrevolving credit edged down.

Consumers are done with this BS and are choking on debt. Having been hosed twice in ten years, they're refusing to do it again.

Commercial banks' core loans--the sum of commercial and industrial (C&I), real estate, and consumer loans--continued to contract in June and July.

That's called "default".

Securities holdings by banks increased substantially in recent weeks.

But the banks are buying stocks! (Ed: are they using depositor funds to do that, or are they using Fed-printed money? Either is a problem, no?)

Staff Economic Outlook

In the economic forecast prepared for the August FOMC meeting, the staff lowered its projection for the increase in real economic activity during the second half of 2010 but continued to anticipate a moderate strengthening of the expansion in 2011.

See, we still lie! Are you going to believe us?

Overall inflation deflation was projected to remain subdued increase substantially over the next year and a half.

Fixed it for 'ya.

Weighing the available information, participants again expected the recovery to continue and to gather strength everything to go to hell and continue toward Lucifer's cradle in 2011. Nonetheless, most saw the incoming data as indicating that the economy was operating farther below its potential than they had thought, that the pace of recovery had slowed decline had advanced in recent months, and that growth would be more modest during the second half of 2010 Lucifer had been chortling with glee than they had anticipated at the time of the Committee's June meeting.

Fixed it for 'ya.

Committee Policy Action

In their discussion of monetary policy for the period ahead, Committee members agreed that it would be appropriate to maintain the target range of 0 to 1/4 percent for the federal funds rate.

I threatened them to get them to all fall in line - as soon as they got to Jackson Hole they started talking though. Bastards.

Mr. Hoenig dissented because he thought it was not appropriate to indicate that economic and financial conditions were "likely to warrant exceptionally low levels of the federal funds rate for an extended period" or to reinvest principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. Mr. Hoenig felt that the "extended period" expectation could limit the Committee's flexibility to begin raising rates modestly in a timely fashion, and he believed that the recovery, which had entered its second year and was expected to continue at a moderate pace, did not require support from additional accommodation in monetary policy. Mr. Hoenig was also concerned that these accommodative policy positions could result in the buildup of future financial imbalances and increase the risks to longer-run macroeconomic and financial stability.

Mr. Hoenig has a brain, and what he really expressed is that the economy cannot stabilize until the excess debt is removed, and that can't happen as long as the FOMC is tampering with the bond market. Therefore, until rates rise, there will be no recovery.

We don't dare print that, however.

Yes, this is all tongue-in-cheek.


Denniger at his best here, very funny :lol::lol:

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      • down 5% +
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      • Even
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