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The One Rate That Is Not Only Not Going Down, But Is At A 13-Year High

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With 77 million Americans having debt past due and the average household owing more than $15,000 in credit card debt, it appears the Fed's supposed plan to 'help Main Street' is not working so well. As the following chart from NewEdge's Brad Wishak shows, despite Fed Funds at practically zero, US credit card variable interest rates continue to rise - now at their highest since July 2001.

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Deadbeat Nation: A Shocking 77 Million Americans Face Debt Collectors

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We have been warning for years that as a result of the Fed's disastrous policies, America's middle class is being disintegrated and US adults are surviving only thanks to insurmountable debtloads. But not even we had an appreciation of how serious the problem truly was. We now know, and it is a shocker: according to new research by the Urban Institute, about 77 million Americans have a debt in collections.

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Consumer Confidence Explodes Higher To October 2007 Highs

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On the heels of UMich confidence tumbling to 4-month lows, the Conference Board's consumer confidence exploded higher to the highest since October 2007. This is the 3rd monthly rise in a row and the biggest beat in 13 months all led by a spike in future expectations to its highest since Feb 2011. The Conference Board proclaims this is due in part to a "brighter outlook for personal income," though reality of falling real hourly wages suggests that is simply false. The last time the conference board confidence diverged this much from UMich confidence was June 2007 and that did not end well...

And yet consumer confidence is up!

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Fed's Fischer: Global Recovery 'disappointing'

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Well, duh!

U.S. jobs pay an average 23% less today than they did before the 2008 recession, according to a new report released on Monday by the United States Conference of Mayors.

What did you expect, idiots?

You want, promote, elected and cheer on a Congress and President who have exactly two goals:

Deficit spending -- that is, counterfeiting of the currency, albeit via legal means. This makes the value in real terms of every dollar less. Productivity and technology improvements should mean that each hour of labor buys more goods and services; that is, you need fewer hours of work to buy the same number of pounds of hamburger, shelter for your home, gallons of gasoline and surgeries in the local hospital. The exact opposite has happened because the government had $5 trillion in unbacked currency issued by deficit spending in the system in 2007; today it has $12.57 trillion, or 2.5x as much. That entire $7,570 billion, or over $22,000 per man, woman and child in this country, has come directly out of your hide and the worst of the impact has been taken by the poor and lower middle class.

Great news when interest rates start going up...

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Car Repos Soar 70% As Auto Subprime Bubble Pops; "It's Contained" Promises Fed

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The auto loan subprime bubble may be the latest to burst (after student loans) as the rate of car repossessions jumped 70.2 percent in the second quarter, with much of that increase coming from finance companies not run by automakers, banks or credit unions. "The number of delinquencies and repossessions rising is what we would expect as the auto industry sells more vehicles," "But this slight uptick is one to keep an eye on." The surge in delinquencies and repossessions is being driven primarily by borrowers with subprime and deep subprime credit scores.

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No Fed update IRRO?

Haven't you been following OT???? I've been up on the roof!

Is no one else following events on HPC!!!!

The Broken Links In The Fed's Chain Of Cause & Effect

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The Federal Reserve’s prevailing view of the world seems to be that a) QE lowers interest rates, B) lower interest rates stimulate jobs and economic activity, c) the only risk from QE will be at the point when unemployment is low enough to trigger inflation, and d) the Fed can safely encourage years of yield-seeking speculation – of the same sort that produced the worst economic collapse since the Depression – on the belief that this time is different. From the foregoing discussion, it should be clear that this chain of cause and effect is a very mixed bag of fact and fiction.

Mal-Investment Mania - The Second-Lien Scramble Is Back

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The zombification of corporate America is nowehere more evident than the yield-starved demand that has enabled companies with the lowest of the low credit ratings to raise debt capital and stay alive far beyond their 'natural' lifespan. As WSJ reports, investors are gobbling up some of the riskiest debt from junk-rated European companies at the fastest pace in years. The riskiest tranche of that debt - so-called second-lien, or junior, loans - amounts to $3.3 billion, almost double the amount raised at the same stage last year and the most over the same period since 2007. The reason is simple - Central Banks - "If you have more demand than supply then you end up with a loosening of terms and potentially more leverage and more aggressive structures." This is 'mal-investment' writ large, and at least as bad as during the 2007 bubble.

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Dallas Fed Plunges, Biggest Miss In 16 Months As New Orders Collapse

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With Philly Fed surging to record highs (along with stocks) but Services PMI dropping "as the recovery fades," it was left to Dallas Fed to split the buy good news or buy bad news dilemma this morning. It was bad news - from 2012 highs, Dallas Fed plunged to 7.1 (against 12.7 expectations) for the biggest miss in 16 months. Production fell, capital expenditure and employment subindices all fell and New Orders collapsed at the fastest rate since April 2013 (to 2014 lows). Even hope faded as the outlook index dropped.

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http://www.forbes.com/sites/samanthasharf/2014/08/22/yellen-leaves-rate-hike-options-open-at-jackson-hole/

Federal Reserve Chair Janet Yellen took center stage in Jackson Hole, Wyoming Friday morning to address her fellow central bankers, as well as the financial market participants watching with bated breath from around the world. The theme of this year’s conference is “Re-Evaluating Labor Market Dynamics,” and in her speech Yellen was somewhat positive yet introspective about the state of the labor market but did not provide the policy clarity investors were hoping for.

Yellen started by declaring, “In the five years since the end of the Great Recession, the economy has made considerable progress in recovering from the largest and most sustained loss of employment in the United States since the Great Depression.”

She pointed out that more jobs have been created than were lost in the crisis but added, “It speaks to the depth of the damage that, five years after the end of the recession, the labor market has yet to fully recover.” She continued, “A key challenge is to assess just how far the economy now stands from the attainment of its maximum employment goal. Judgments concerning the size of that gap are complicated by ongoing shifts in the structure of the labor market and the possibility that the severe recession caused persistent changes in the labor market’s functioning.”

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http://www.bloomberg.com/news/2014-08-26/dollar-rallies-precede-fed-tightening-cycles-chart-of-the-day.html

History’s message to currency investors is buy the dollar six to nine months before the Federal Reserve starts raising interest rates.

The CHART OF THE DAY shows the U.S. Dollar Index climbed about 7 percent during periods six to nine months before the start of the previous three central-bank tightenings started in February 1994, June 1999, and June 2004. The greenback appreciation tends to fizzle and the performances became mixed after the first actual increase in the Fed’s target for the federal funds rate.

The Fed has kept the benchmark rate at a record-low zero to 0.25 percent since December 2008, while futures traders saw about a 56 percent chance the central bank will start raising rates by July 2015, according to data compiled by Bloomberg. The July Federal Open Market Committee meeting showed policy makers discussed the possibility that jobs gains may lead them to increase rates sooner than anticipated.

“Leading up to the first hike, that’s when the dollar gains the most consistently,” Jens Nordvig, a managing director of currency research at Nomura Holdings Inc. in New York, said yesterday. “That’s more consistent than anything happened after the rate hikes.”

Sounds like they are just guessing and have no idea what they are doing.

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http://www.voanews.com/content/when-will-the-fed-start-to-raise-interest-rates/2424181.html

"

When Will the Fed Start to Raise Interest Rates?"

"On Wednesday, the Fed released the minutes from last month's meeting, and they show a majority of Fed policymakers believe interest rates can rise because the U.S. economy is now strong enough."

US Federal Reserve hints at interest rate rise in 2015"

http://www.bbc.co.uk/news/business-26640955

"The Fed Will Raise U.S. Interest Rates in March 2015"

http://www.marketoracle.co.uk/Article47034.html

There is not a hope in hell that the UK will raise rates before the US.

Ever get the feeling you are being lied to.

Edited by TheCountOfNowhere
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http://www.businessweek.com/articles/2014-08-27/whats-the-unemployment-rate-new-research-suggests-we-have-no-idea#r=lr-sr

No U.S. economic statistic is more important than the unemployment rate, which was officially reported as 6.2 percent in July. Unlike gross domestic product, it’s not subject to revision, adding to its aura. But a new academic paper, highlighted in the New York Times, finds that a long-known source of potential error in the unemployment rate “has worsened considerably over time.” The actual rate may be higher than the reported one, though it’s hard to know for sure, the paper says.

The unemployment rate is calculated by averaging the results from eight separate samples of the population, known as rotation groups. In theory, the people in all eight rotation groups should have the same likelihood of being unemployed, but they don’t. In the first half of 2014, the newest rotation groups had an unemployment rate of 7.5 percent. The oldest rotation groups had an unemployment rate of just 6.1 percent.

That disparity of 1.4 percentage points is huge, considering that economists pay close attention to changes in the jobless rate down to the tenth of a percentage point. The Bureau of Labor Statistics puts a heavier weighting on the older rotation groups, so the official unemployment rate for the first half of 2014 was 6.5 percent.

The new paper (PDF) is important not just because of its finding but also because one of its authors is Alan Krueger, a Princeton University economist who was chairman of President Obama’s Council of Economic Advisers from 2011 to 2013. His co-authors are Alexandre Mas of Princeton and Xiaotong Niu of the Congressional Budget Office.

Hilarious, still at least they aren't basing any serious economic or monetary policy on these figures....

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http://www.cnbc.com/id/101950613#.

Markets could soon face a fall of up to 60 percent, two experts told CNBC on Wednesday.

A jolt to international confidence in central banks will lead to a 30 to 60 percent market decline, said David Tice, president of Tice Capital and founder of the Prudent Bear Fund. When this happens, he said, markets will face a "period of extreme turmoil."

This crash will be precipitated, he said, by a disillusionment with the Federal Reserve's "confidence game," which will then see inflation rise, and the Fed scramble to raise rates. At that point, Tice added, "the Fed starts to lose control."

Another market watcher also called for an impending fall.

The Fed's low interest rates could bring a "scary" 50-60 percent market correction, said technical analyst Abigail Doolittle.

And on the MSM. The last time they just laughed at the likes of Schiff / Roubini now they have a bigger problem as the last crash was "fixed" by uber cheap, the next logical step in that area is negative rates....

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Trust me, they say, the CPI is essentially zero, so there's no inflation.

Uh huh.

As Labor Day approaches and the usual ritual of grill use approaches, is that true? No, say people actually going to the store:

"We've always done burgers in the past. They used to cost around $2 per person, but now it's up to $3.75," says Ms. Powers-Mattioli, a clothing-store and dog-spa owner who lives in Hamburg, N.Y. The couple spends a lot on drinks and music, and this year they want to keep the food budget under control, she says. "I thought hamburgers were just an everyday staple, but I'm not going to pay nearly double for them."

$2 to $3.75? What's that inflation rate -- 87% or so?

But there's no inflation, so they say!

Uh huh. The cash register receipt says otherwise.

Isolated incident? Uh, nope.

Ms. Powers-Mattioli recently did a double-take when checking her weekly grocery-store receipts. Typically, she spends around $130 a week on groceries for her husband, young daughter and herself, but lately that figure has climbed to around $200. "I don't even buy chips, snacks or any pre-made salads anymore," she says. "What is going on?"

It's called a lie Ms. Powers-Mattioli. You know, what politicians and others in power do, and you, along with the rest of us (yes, myself included) let them get away with?

Yes, that. That wee little problem. And we let them do it even when it reams us straight up the exit door.

Denniger highlighting US inflation is well under control.

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Heh look, an admission!

During the first and second quarters of 2014, the velocity of the monetary base was at 4.4, its slowest pace on record. This means that every dollar in the monetary base was spent only 4.4 times in the economy during the past year, down from 17.2 just prior to the recession.
This implies that the unprecedented monetary base increase driven by the Fed's large money injections through its large-scale asset purchase programs has failed to cause at least a one-for-one proportional increase in nominal GDP.
Thus, it is precisely the sharp decline in velocity that has offset the sharp increase in money supply, leading to the almost no change in nominal GDP.

In other words, QE did not advance economic activity.

What's worse? Right here:

Fed policy, in which it has expanded its balance sheet to nearly $4.5 trillion by buying various debt instruments, including Treasurys, has driven interest rates lower. Under normal circumstances, the decline in 10-year Treasury rates would have pushed monetary velocity lower by 0.085 percentage points. Instead, it has declined 5.85 percentage points, fully 69 times more than models would suggest, the paper states.

In other words, our models are broken; they not only missed expectations they have absolutely no relationship to what actually happened.

This of course means that all of the other expected outcomes are also likely wrong -- as are those who claim that the Fed can "exit" without catastrophic consequences.

See, the problem at its core is that we never unwound all the bad debts that distorted prices in the first place.

That is, the goal of "monetary policy" was not to advance the economy, but to protect those who had made bad investments from having to eat the consequences of having done so, while at the same time maintaining and furthering the destruction in purchasing power that those bad investments caused when the credit necessary to make them was invented out of thin air.

http://www.cnbc.com/id/101963821

The St. Louis Federal Reserve thinks it has the answer: A paper the central bank branch published this week blames the low level of money movement in large part on consumers and their "willingness to hoard money." The paper also cites the Fed's own policies as a reason for consumers' unwillingness to spend.

Though American consumers might dispute the notion that inflation has been low, the indicators the Fed follows show it to be running well below the target rate of 2 percent that would have to come before interest rates would get pushed higher.

That has happened despite nearly six years of a zero interest rate policy and as the Fed has pushed its balance sheet to nearly $4.5 trillion.

Much of that liquidity, however, has sat fallow. Banks have put away close to $2.8 trillion in reserves, and households are sitting on $2.15 trillion in savings—about a 50 percent increase over the past five years.

It would be interesting know what the velocity of money was in the months and years leading up to the recession. The figure of 17.2 seems to be the abnormal level, is 4.4 near "normality"?

Is hoarding "saving"? If there is no saving how do you get capital formation?

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Inflation is low, probably just highly distorted by yield chasers in some sectors, and hope to see it recoil and leave them with losses (mortgages/BTLs).

Wonder if these $2.15 trillion / 50% increase, includes house price gains from the specualtion.

I'll spend/borrow... when I've got something to buy. Eg a house, and furniture, and craftsmen to work on it. Can't do that yet, because house price so high, reflated 30% above 2007 crazy high. And older VI/BTL kept in position.

The Nagging Fear That Qe Itself May Be Causing Deflation
Started by zugzwang, Jun 04 2014

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10876377/The-nagging-fear-that-QE-itself-may-be-causing-deflation.html

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Quality Of Jobs Created In August Deteriorates Again

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Back in 2011 we noted that while the market, and at the time, the Fed, have been focused exclusively on the quantity of jobs created each month, a far more important aspect of the US economic recovery is the quality of newly created jobs. It took the Fed about three years to catch up but it finally did, and Yellen no longer cares so much about the headline NFP print or the unemployment number but rather how good the newly created jobs are, manifesting in the quality of wages and earnings. So what was the quality of seasonally-adjusted job gains in August? In a word: disturbing. Of the 142K jobs created, just under half came from the lowest paying jobs possible: education and health; leisure and hospitality; and temp-help. The best paying jobs, finance and information, added a whopping 4K jobs between them. Finally, about that much delayed US manufacturing renaissance: stick a fork in it - in August the number of manufacturing jobs created was exactly 0.

High paid jobs replaced by low paying jobs. The recovery goes from strength to strength.

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