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Fed Chairman Ben Bernanke Warns Against Hasty Action On The Us Deficit

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http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8044461/Fed-chairman-Ben-Bernanke-warns-against-hasty-action-on-the-US-deficit.html

Federal Reserve chairman Ben Bernanke has warned against the danger of tackling America's budget deficit while the recovery in the world's largest economy remains fragile.

"Economic conditions provide little scope for reducing deficits significantly further over the next year or two," Mr Bernanke told an audience in Rhode Island. "Indeed, premature fiscal tightening could put the recovery at risk."

The comments are a rare intervention by the Fed chairman in fiscal policy, which has been catapulted higher up the agenda as politicians on Capitol Hill argue over whether to extend tax cuts that are due to expire at the end of the year.

The US Treasury said on Tuesday that this year's budget deficit is likely to be about 10pc of gross domestic product, matching the size reached in 2009.

Mr Bernanke's caution on taking aggressive steps to immediately rein in the deficit are in contrast to Bank of England Governor Mervyn King, who has publicly backed the Coalition government's plan to cut spending from next year.

"In the US, there are short-term and medium-term concerns on fiscal policy," said Michael Gapen, a senior US economist at Barclays Capital. "The recovery is not where Bernanke wants it to be to address the deficit."

However, the Fed chairman made clear the deficit will need addressing, and that there will be benefits for the economy if Congress can agree on a plan to reduce a shortfall that swelled to $1.9 trillion (£1.19bn) last year as the recession chipped away at tax revenues and spending on unemployment benefits rose.

"What we do know, however, is that the threat to our economy is real and growing, which should be sufficient reason for fiscal policymakers to put in place a credible plan for bringing deficits down to sustainable levels over the medium term."

Mr Bernanke added that the only choice facing politicians is whether the debt is addressed in "a careful and deliberative process" or whether action is forced upon them by a "looming or actual fiscal crisis."

The establishment of fiscal rules may also help create the discipline needed, he said.

The Fed chairman has spent the summer seeing the recovery lose momentum, but the latest services data yesterday signalled it has stabilised.

IMF trillions needed for banks thread

So the IMF release a report just before the great Bernanke announces the recovery needs more help.

In the short term there is only real concern for the banks. Apart from the magic printing press where are they going to get the money from to rollover the debt from?

Got love the idea that the US will be running a $1tr+ deficit for the next couple of years, clearly a sustainable policy that won't have any long term implications. Once more the political leadership is looking extremely short term and screw the future.

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http://market-ticker.org/akcs-www?post=168291

Just Trash The Dollar And It's All Good....

Well, for stocks... temporarily.

Chart is the SPX, white line is the dollar by comparison. That's where the ramp the last month has come from. That's an OVERT currency devaluation - 7%.

And what's the SPX change? About 10%.

Oil? Oh, it's up 17%. Hope you like much more expensive gas and.... this winter.... heating oil.

What percentage of your assets are in stocks? Now about that oil price... it's in your food, not just your gas tank and heating oil tank, and for most people of middle-class means, they spend far more as a percentage of their income on fuel in all forms and food than they have in stocks.

So for most people, this is a huge net lose.

CNBS, of course, is talking about how should we continue to do this, it could drive the SPX back to the April highs.

However, doing so takes the dollar back to the 2007/08 lows - historic lows below which there is literally no floor, and which would likely drive oil well north of $100 again, right into the time when those with "less resource" cannot afford it - winter heating season.

Never mind what happened the last time Bernanke did this. He cranked up commodities through the same crap with the dollar and triggered the worst of the slowdown economically in terms of its impact on ordinary people, because energy and commodity prices ramped.

Oh, you say you don't care because you heat with natural gas? Well that's not immune either - it's up 13% in the last month.

Say thanks to your government, which is once again trying to distract you from the massive fraud and games in the financial sector - including your foreclosure that was probably illegal. Remember that they did the same damn thing in 2007 and early 2008, and also remember that last time it didn't work and instead of producing "stability" and a "rescue" we instead got an economic, stock market and banking system collapse out of it.

Their method of distraction this time? Starve and freeze 'ya, while the very wealthy chuckle as their stock prices go up.

(Never mind that priced in dollars when adjusted for the debasement, they're not actually going up at all.... and your salary sure as hell hasn't gone up 7% in the last month either. Incidentally a 7% monthly rate compounded over the year implies a 225% annualized inflation rate, which is the gain you'd have to have in your salary to keep pace with this crap.)

Still think this is all "orderly" eh?

More at the link.

Thankfully it's all contained.

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Ringing priase for Bernt*****e.

http://www.zerohedge.com/article/paul-farrell-explains-why-fed-wall-street-complex-will-self-destruct-2012

Taleb is merciless when it comes to politicians like President Obama, Congress and The Fed chairman: You can’t trust any of them. Earlier Bernanke’s reappointment “stunned” Taleb: He “doesn’t even know he doesn’t understand how things work or that the tools he uses are not empirical,” wrote Taleb in HuffPost. But it’s “the Senators appointing him who are totally irresponsible ... The world has never, never been as fragile,” and we’re stuck with an economist running The Fed whose methods make “homeopath and alternative healers look empirical and scientific.”

Obama’s reappointment of Bernanke left Taleb so distraught he “withdrawing into the Platonic tranquility of my library, to work on my next book, find solace in science and philosophy, and … structure trades betting on the next mistake by Bernanke, Summers and Geithner.”

Taleb’s “metric” essentially warns Americans to trust no one, certainly not Washington and Wall Street insiders. The vast majority fail his simple metric, “Did someone predict the last crisis before it happened? ... If the answer is no, I don’t want to hear what the person says. If the person saw the crisis coming, then I want to hear what they have to say’.”

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Bernanke is a muppet.

Come on Errol don't be like that. For guys like you and me, Bernanke is a gift from the heavens. The more debt he piles onto the US books, the greater the wealth transfer to those in the know. I love the guy.

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At this point the deficit is the only thing barely keeping the US economy going. Eventually they will come to understand my original analysis at the start of the crisis that it needs to rise to 4.5 trillion/year.

People think I am crazy or trolling.. but the reality is the situation is that bad. Something like 7 million Americans are now behind on their mortgage. This is in a nation with 80 million houses. Not just bad unemployment, but actual serious sustained hit in the labour force participation, where good job openings simply don't exist in many areas.

The labour force participation rate is now down to what it was back in the 1970's.. when women started entering the workforce en masse.

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Come on Errol don't be like that. For guys like you and me, Bernanke is a gift from the heavens. The more debt he piles onto the US books, the greater the wealth transfer to those in the know. I love the guy.

Yes, obviously gold is going crazy but do you think I want to see gold at $5000 an ounce?

When gold goes that high the last thing most of us will be worrying about will be yellow metal. I'm very worried about what the future holds now. The end of all this is going to be catastrophic.

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At this point the deficit is the only thing barely keeping the US economy going. Eventually they will come to understand my original analysis at the start of the crisis that it needs to rise to 4.5 trillion/year.

People think I am crazy or trolling.. but the reality is the situation is that bad. Something like 7 million Americans are now behind on their mortgage. This is in a nation with 80 million houses. Not just bad unemployment, but actual serious sustained hit in the labour force participation, where good job openings simply don't exist in many areas.

The labour force participation rate is now down to what it was back in the 1970's.. when women started entering the workforce en masse.

You can't do that the debt repayments will eventually destroy the economy.

That sort of borrowing cannot be funded unless Bernanke prints free money.

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You can't do that the debt repayments will eventually destroy the economy.

That sort of borrowing cannot be funded unless Bernanke prints free money.

Yes step in with big time printed money to fund maybe 2 trillion of the amount. At some point as this money is bombarding the economy demand will pick up.. and when that happens businesses will step up and start expanding, borrowing money in the process.

Thats when the printing can stop, and even reverse some of it.

Right now businesses want to invest some of their cash, and they would love to borrow money and build more capital. But without end demand, and actually already overcapacity they have to cut back instead.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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