Source: Board of Governors of the Federal Reserve System
Chairman Ben S. Bernanke
Semiannual Monetary Policy Report to the Congress
Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, Washington, D.C.
July 21, 2010
Chairman Dodd, Senator Shelby, and members of the Committee, I am pleased to present the Federal Reserve’s semiannual Monetary Policy Report to the Congress.
Economic and Financial Developments
The economic expansion that began in the middle of last year is proceeding at a moderate pace, supported by stimulative monetary and fiscal policies. Although fiscal policy and inventory restocking will likely be providing less impetus to the recovery than they have in recent quarters, rising demand from households and businesses should help sustain growth. In particular, real consumer spending appears to have expanded at about a 2-1/2 percent annual rate in the first half of this year, with purchases of durable goods increasing especially rapidly. However, the housing market remains weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction.
Ohio Newspapers’ Public Pension Systems Project
- Many top educators double dip the system – Akron Beacon Journal
- School chiefs get better deal than teachers – Akron Beacon Journal
- Double dipping saps pension funds as school superintendents cash in – Toledo Blade/Akron Beacon Journal
- Pension rules encourage retire-rehire deals – Dayton Daily News
- Double dipping state and local employees collect paycheck & pension – The Plain Dealer
- Ohio taxpayers pay for state workers’ pensions but it’s all cloaked in secrecy – Akron Beacon Journal
- Pensions lobby has power at the Statehouse – Toledo Blade
Well it’s about time, isn’t it? According to the AP, taxpayers have pumped $145 billion into the two comatose mortgage guarantors. These companies should have never been allowed to engage in the sort of mortgage speculation that other banks, brokers and mortgage companies.
Fannie, Freddie to Delist – Associated Press
BP Covering Up Wildlife Deaths Due to Spill?
Finance, Markets, Economy
- Markets Pricing in ‘Paradigm Change’ – El-Arian – CNBC
- Best Buy profits don’t meet target - CNBC
- Data and BP top market agenda - MarketWatch
- Efforts to control gulf spill described as ‘chaotic’ - New York Times
- Setbacks cloud U.S. plan to exit Afghanistan – New York Times
- Banks Yielding on Volcker, Picking Other Fights – New York Times
- Kasich’s tax returns flip flop - Columbus Dispatch
- Editorial: Your tax dollars at work - Columbus Dispatch
- U.S. man arrested in Pakistan for Hunting bin-Laden – Agence France Presse
- More Alvin Greene - Washington Post
As usual, the New York Times’ interactive maps rule. You can visit the Times’ oil spill tracking map here. Check out the “play” feature at the upper left portion of the map to see the oil spill grow and move over time.
There are also tabs at the top of the map to change the data shown. For instance, you can see a plot of the effects of the spill on wildlife.
- Op-Ed, Thomas Suddes: Pandering in Ohio is a Two Party Business – The Plain Dealer
- Editorial: What Price are Cafaros Paying? – The Vindicator
- Kasich and His ‘Bible Guys’ – Columbus Dispatch
- Op-Ed, Brent Larkin: Close Races Brewing in Ohio – The Plain Dealer
- Editorial: Ohio Senate Vacation Extends Foreclosure Follies – The Plain Dealer
- NRA Working Ohio Legislature – Columbus Dispatch
- ODOT Looks for Future Funding of Rest Areas – The Plain Dealer
- Op-Ed, Joe Hallett: Redistricting Reform Falls Prey to Dreams of Power – Columbus Dispatch
- Op-Ed, Jonathan Riskind: Election Surprises Loom in November – Columbus Dispatch
- Editorial: Dollar by Dollar – Akron Beacon Journal
- Editorial: Dollar by Dollar (Part II) – Akron Beacon Journal
- Editorial: Ohio Late but on Right Testing Track – Dayton Daily News
- Tobacco Lobbyist Biggest Boehner Donor – Columbus Dispatch
- Kilroy on FinReg Conference Committee – Columbus Dispatch
- Brown, Voinovich Work to Fund Nuclear Cleanup – Columbus Dispatch
- Increasing Number of Mahoning Valley Families Face Foreclosure – The Vindicator
- Sex Offender Registration Force Some Underground – The Plain Dealer
- Do Sex-Offender Laws Make Us Safer? – The Plain Dealer
- 17.5% of Ohioans Underemployed – Dayton Daily News
- Dayton-Cincy Corridor Important to U.S. Exports – Dayton Daily News
- Commercial Properties Selling at Deep Discounts – Dayton Daily News
- Op-Ed, Michael Douglas: An Energy Revolution for the Great Lakes – Akron Beacon Journal
It’s totally reasonable and inevitable that the share price of BP would suffer mercilessly from the company’s gargantuan liability in the Gulf of Mexico. Earlier this week I created the following chart of BP’s daily closing share price for it’s U.S.-listed shares.
When Interior Secretary Ken Salazar opined publicly that the company ought to be responsible for all unemployment claims related to the federal government’s six month moratorium on offshore Gulf drilling, BP’s stock took an especially nasty dive to a 14-year low on Wednesday. I hope that the Obama Administration’s efforts to turn public opinion back in the president’s favor on this mess don’t backfire and kill what this country needs to be the proverbial “Golden Goose” for the next several years. A heavily-regulated and monitored BP – in a strong financial position – is the company that will be able to afford the tens of billions of dollars needed to make the people and environment of the Gulf Coast whole.
Uh, apparently not. According to polling by Gallup, not so much.
One hears a great deal about just what it will take for the U.S. stock market to rally and head on to another leg up from the March 2009 lows. Along with a Chinese soft landing, stabilization of the Eurozone, and passage of FinReg, there is a constant and well-deserved preoccupation with U.S. employment. The last two releases by the federal government – May unemployment and today’s weekly claims number were either bad or lackluster, depending upon your disposition. For some reason tonight, I thought to take a look at the Mass Layoff numbers for the last five years — I wanted an idea of whether or not the big layoffs, such as plant closings or major downsizings were subsiding since what was probably the peak of the recession in early 2009.
As you can see, in March 2009 Mass Layoff Events hit a peak just as you’ll remember the stock market bottomed. Unfortunately, they are ticking up once again – and the market is in the midst of several weeks of volatility. I’m not making a direct cause and effect statement here, but I am wondering if this employment statistic, along with the other dreary numbers, supports one argument out there that the growth we’ve experienced has been merely the restocking of depleted inventories.
Believing in Ohio:
Gov. Ted Strickland’s 2010 State of the State Address
January 26, 2010
(Source: Office of the Governor, State of Ohio)
Speaker Budish, President Harris and Chief Justice Moyer. President Harris and Chief Justice Moyer will both be retiring at the end of this year. This is their last State of the State as public officials and I want to thank them for their service to Ohio. Leader Batchelder and Leader Cafaro, Lt. Governor Fisher, statewide elected officials, members of the Cabinet, and a special word of thanks to Director Terry Collins who is retiring after 33 years of service to the Department of Rehabilitation and Correction, members of the General Assembly and the Supreme Court, distinguished guests, First Lady Frances Strickland, and my fellow Ohioans…
I believe in Ohio.
- New York wants less salt in food – New York Times
- Now N. Korea wants peace treaty to keep talking - New York Times
- Blagojevich says ‘I’m blacker than Barack Obama … ‘ – Chicago Tribune
- Illinois’ unpaid bills reach $5 billion – Chicago Tribune
- Flare up of violence in Tijuana – L.A. Times
- A complaint in China could land you in a ‘black jail’ – L.A. Times
- AP Analysis: Stimulus has had no effect on employment – Associated Press (via The Plain Dealer)
- Heineken bids for FEMSA – MarketWatch
- Goldman Sachs Execs May be Forced to Give to Charity – CNBC
- China now world’s largest auto market – Bloomberg
Sen. Harry Reid
- Reid Apologizes for ‘Negro’ remarks – New York Times
- Op-Ed – Sandy Banks: It’s Not Reid Who Should Apologize – L.A. Times
- Dems launch offensive to save Reid – Politico
- GOP claim Lott-Reid Double Standard – Politico
UPDATED: Includes the seven banks seized by the FDIC over the holiday weekend. Since the FDIC began publishing the failed bank list in 2000, 74% of the banks on the list were placed there during this recession.
Filed under: Economy, Foreign Policy, National Security, Politics
(Source: ABC News)
ABC’S “THIS WEEK WITH GEORGE STEPHANOPOULOS”
STEPHANOPOULOS: Major milestone this week here in Iraq with the American troops pulling out of the cities. And I wonder if you can put the broader American mission in context. Are we in the process of securing victory or cutting our losses to come home?
BIDEN: Securing victory. Look, the president and I laid out a plan in the campaign which was twofold. One, withdraw our troops from Iraq in a rational timetable consistent with what the Iraqis want. And the same time, leave behind a stable and secure country.
And one of the reasons I’m here, George, is to push the last end of that, which is the need for political settlement on some important issues between Arabs and Kurds and among the confessional groups. And I think we’re well on our way.
Madoff Sentencing Emotional Affair – Swindler Gets Max
- Madoff Sentenced to 150 Years – CNBC
- “I don’t ask for any forgiveness” – Bloomberg
- Madoff victims scavenge for food, aluminum cans – Bloomberg
- Some victims applaud, others cry – CNN
- Madoff gets 150 years for huge Ponzi Scheme – New York Times
- Bernie Madoff to rot in jail – NY Post
Daily Graphic: FDIC Bank Seizures This Year at 45 Nearly Double Those Seized in Recession’s First Year
Five more banks were seized by the Federal Deposit Insurance Corp. over the weekend in Georgia, Minnesota and California. During the first year of the current recession – 2008 – 25 FDIC insured banks failed. Little more than halfway through 2009 this year’s total is 45.
Release Date: June 24, 2009
For immediate release
Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.
The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.
In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. 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 are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
Go check out this story at the Financial Times … energy market may conspire to stop recovery …
Text: Geithner Testimony to Senate Appropriations Committee – Treasury’s Priorities & Financial System Update
Chairman Durbin, Ranking Member Collins, members of the Subcommittee, I appreciate the opportunity to testify before you for the first time as Treasury Secretary on the President’s Fiscal Year 2010 Budget request for the Department of the Treasury.
While we see some initial signs of economic improvement and the financial system is beginning to heal, our country faces very substantial economic and financial challenges.
President Obama and his Administration are working to meet these challenges by getting Americans back to work and getting our economy to grow again; by restoring fiscal discipline to ensure a sustained recovery, and by making the long-neglected investments in health care, energy and education needed to enhance America’s global competitiveness and produce more balanced, sustainable growth over the long-term.
Treasury’s Key Priorities
To achieve these goals, we are repairing and reforming our financial system so that it works for, not against, a recovery that serves all Americans.
To restore growth and meet our fiscal goals, we are redesigning and bolstering enforcement of our tax code so that it is both fairer and more efficient.
To advance our interests globally, we are working with other nations to promote economic recovery and financial repair, and to ensure more open markets for U.S. business.
A story out on the Associated Press wire today is the best explanation of all of the hullabaloo you hear from bond traders regarding big government programs and bailouts meant to stimulate the economy.
Most days for lunch I retire to the conference room and switch the TV on to CNBC. During those segments when they go octobox and have eight people on at once discussing the generalia of the larger economy it always seems like it’s the bond guys and the commodoties gals who are fretting while the stock traders are pumping out the positives.
AP makes it a bit more clear:
To understand how this is all connected, you have to think like a bond trader. Inflation is their enemy because it means the purchasing power of the dollars they receive when bonds eventually are paid off will be diminished. The only question is by how much.
Yields on 10-year Treasury notes, a benchmark for home mortgages and other consumers loans, jumped from 2.5 percent in March around the time of the Fed announcement to as high as 3.7 percent in recent days as signs that efforts to stabilize the financial system and economy were starting to pay off. And 30-year mortgage rates jumped more than a quarter-point this week to 5.29 percent, the highest level since December, Freddie Mac reported.
“If the meltdown continues in the bond market, then mortgage yields will soon be at levels that choke off refinancing activity,” said economist Ed Yardeni, who runs his own investment firm. “Even worse, they could abort any necessary recovery in home sales and prices.”
Must Read: Wall Streeters Call for Reform & Say Federal Efforts to Combat Financial Crisis Inch Wide, Mile Deep
America and the world have found out the hard way how Wall Street’s fast and loose ways hurt regular folks more than the fatcats with Gulf Stream jets and golden parachutes. It’s heartening to see at least two creatures of The Street find religion and evangelize the good news of reform.
Sandy B. Lewis and William D. Cohan do just that in an op-ed piece headlined, The Economy is Still at the Brink, in Saturday’s New York Times. It’s a shame that the editors at the Times decided to run their important message in Saturday’s edition rather than Monday morning when it might have attracted more attention from the likes of CNBC or the day’s cable news cycle. Cast against the constant stream of “Everything’s Fine,” from the Obama Administration to the likes of Jim Cramer, Lewis and Cohan’s message is succinct and important to the long run of the U.S. economy.
In short, the pair are telling us that the structural issues with American high finance are still there, Bush and Obama Administration efforts to staunch the bleeding are merely fingers in Wall Street’s dike, the current system is too heavily weighted in favor of ‘insiders’ and a program of real reform is needed to restore full confidence and ensure a system that works for all levels of the economy.
Here are some take aways from their piece:
- If nearly everyone agreed six months ago that our banking system was a sham, why is every government program or action directed at preserving the old order? Lewis and Cohan say to start with compensating executives well for moving the ball, but create a system where their net worth is tied to their failures as well.
- The writers wonder why so many federal resources are going to propping up those at the top of the financial pyramid – the big banks and insurers – when recovery will come only when the bottom of the pyramid gets more confident.
- Rather than talk of the “imminent return” of the “good times” President Barack Obama should be messaging America with “living within our means.”
- For the “long term health of the market” shareholders and other investors in the big banks need to feel the “market’s wrath.” No more rescues for the banks that created the mess.
- More market discipline and fewer government bailouts – where will the federal government draw the line?
- Fewer academics should be advising the president and he should make room for more folks saavy in trading and markets – not to have the fox guard the henhouse, but to design incentives that will work to revive the capital markets.
- More transparency in the entire system – from providing the same real-time market information to citizens that’s available to Goldman Sachs or Morgan Stanley – to replacing the marketing exercise known as financialstability.gov with real information.
- Go after the bigwigs who brought this pox upon us – either through truth commissions or the same way the FBI prosecutes the mafia.
There’s a lot more detail in what Cohan and Lewis wrote – go check it out.