Friday, August 27, 2010

I wonder what “unconventional” steps are?

Fed stands by to boost US growth

'Ben Bernanke, Federal Reserve chairman, said on Friday that weaker-than-expected consumer spending growth and a “depressed” housing market had slowed the pace of the US recovery and promised that the central bank was ready to take “unconventional” steps to stimulate the economy if needed. In a speech at a gathering of central bankers in Jackson Hole, Wyoming, Mr Bernanke acknowledged that the pace of economic growth had been “less vigorous” than the Fed was expecting and that the pace of the labour market’s recovery had been “painfully” slow.'

Posted by hpwatcher @ 05:55 PM (1612 views)
Please complete the required fields.



8 thoughts on “I wonder what “unconventional” steps are?

  • From the article:-

    Mr Bernanke’s remarks came after a sharp downward revision to second-quarter gross domestic product, which was held back due to a surge in imports. The Fed chairman said that the US central bank was surprised by the “sharp deterioration” in the US trade balance, but discounted it as the result of temporary and special factors.

    The Fed chairman defended the central bank’s surprise decision earlier this month to keep the size of its balance sheet constant and said the Fed was prepared to take “unconventional” measures to stimulate the economy if the outlook darkens.

    Outlining other ammunition the Fed could use, Mr Bernanke pointed to additional purchases of long-term securities, changing the language of the Fed’s statements and reducing interest paid on excess reserves.

    Mr Bernanke said there was no support within the Fed to increase its medium-term inflation goals above levels consistent with price stability.

    “Such a step might make sense in a situation in which a prolonged period of deflation had greatly weakened the confidence of the public in the ability of the central bank to achieve price stability, so that drastic measures were required to shift expectations,” Mr Bernanke said.

    In the short term, Mr Bernanke said that pre-conditions for a pick-up in growth in 2011 “appear to remain in place”.

    Reply
    Please complete the required fields.



  • Will these “unconventional” measures involve a large bundle of unused notes and a helicopter I wonder

    Reply
    Please complete the required fields.



  • So amongst those ‘unconventional measures’ is basically ‘print more moohney’ a la Zimbabwe.

    Reply
    Please complete the required fields.



  • no need to wonder – it is a code that ben will create dollars by buying junk loans….. Good luck with that!!! of course he believes he wont have to, because of the pick up for growth as quoted. as for the amount paid on excess reserves being reduced, cant pay much less can he.

    he is basically calling the markets bluff.

    its a bit like having a nuclear deterrent – the fact everyone knows you have one means you are unlikely to be forced to use it.

    you can look on you tube and see how often ben has been wrong about the housing market in particular. but he is not really wrong is he – as schiff says he is actually just being economical with the truth.

    he has to be though- he cant say “yes we are about to have total economic collapse” which he might believe to be the case. printing money – nope thats a long way off and really is, if you like, the nuclear option.

    Reply
    Please complete the required fields.



  • 3. techieman

    You were so nearly there, untill you bottled it. One day perhaps, when it’s so plain to see, an infant can explain it.

    Get well soon!

    Reply
    Please complete the required fields.



  • Totally agree Techie, but the markets seemed to like to promise of more printy, printy, Dow up 1.7% on the day. Can the market actually work without the incentive of free money? If this carries on we will have a generation of traders who honestly believe free money is their right, just like home owners believed, for the past decade, that their houses really were worth 20%+ a year more.

    Reply
    Please complete the required fields.



  • hi bystander. well personally i got out of most shorts last week @ ftse 5075 and sandp 1040 (dow equiv mid 9900s). i re-entered short before friday but liquidated most of that – with a marginal profit on friday before the gdp figure. that looked dumb for a while as the market re-tested the 1038 low – but it held.

    dow really was all over the place. i was almost tempted to do some intraday stuff. (but i didnt) a day that separated the men from the boys!

    i was looking for ftse 5225+ to start to get short (its 5235 after hours). i am looking for sandp 1065-78, so likely to be nursing short losses for a while- but looking to add to shorts scale up.

    basically the market was oversold and too many bears. bottom of stochastics, bollinger bands and keltner channels.

    UNLESS the market crashed there was always likely to be a short squeeze. thats what i think it was. no more no less. next time OR the time after that Sandp 1040 gets broken…. thats it…. imo!

    interesting to see what happened to the long bond though…

    Reply
    Please complete the required fields.



  • ”Unconventional”? QE. Monetize the US debt mountain and push the problem back into the EU. And what do you think the response of the ECB will be … ? Trade and currency wars looming.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>