Here, Let Me Translate That Fedspeak for You, WSJ. Richmond Fed's Lacker on, Er, Inflation Risks and Expansion?
Pic credit: Neoncola
(this is only funny to you if you played Silent Hill and with My Little Pony
if not, sorry you missed the joke. I might be the only one who gets it)
Step aside and let a professional handle this. Translating Fedspeak is kind of like re-enacting things you've seen on YouTube... sometimes it's not really advised for the uninitiated. Just sayin. It's fucking dangerous in that motherfucker, have you been across that line? Bleh.
WSJ's Real Time Economics:
Richmond Federal Reserve President Jeffrey Lacker Wednesday said there are concerns about the U.S. Federal Reserve’s resolve to act soon enough to prevent inflation from rising.
“I think there’s also apprehension about the extent to which political influence might be brought to bear on us in an attempt to get us to allow inflation to rise,” Lacker told reporters.
Last month, the House Financial Services Committee passed a provision sponsored by Rep. Ron Paul (R., Texas) that would subject the Fed’s monetary policy decisions to broader audit scrutiny, a move observers fear would jeopardize the Fed’s independence in setting interest rates.
History has shown that political influence in monetary policy decisions can bring about inflation.
Federal Reserve Chairman Ben Bernanke, who faces a confirmation hearing before the Senate Banking Committee Thursday, recently pointed to studies showing that countries with an independent central bank have a better economic performance, including lower inflation.
In a speech earlier Wednesday, Lacker warned that inflation expectations can drift higher in the early stages of an economic recovery.
“The perception of inflation risk could be particularly pertinent to the current recovery, given the massive and unprecedented expansion in bank reserves that has occurred,” said the Fed official, a 2009 voting member of the Fed’s policy-setting committee known for being an inflation hawk.
Lacker also said that the huge U.S. budget deficit posed an immense challenge to the economy, adding the central bank wouldn’t print money to finance it.
“None of us intends to monetize the deficit. I believe none of us would support allowing inflation to increase materially in order to solve the deficit problem,” Lacker said in a response to a question.
The Fed official said the federal deficit, which has surged to more than 10% of U.S. gross domestic product, could hurt the economy’s resilience.
You can find Lacker's full remarks to the Charlotte Chamber of Commerce here. And before I get any further, I do want to thank Richmond outside of the 140 for rescuing me from a huge fly that was buzzing around my office last night. That fucker was massive and the Winter 2009 EQ saved me. The picture of Gavin Newsom taped to my monitor might need to be washed off but everyone is fine, thanks.
Let's start with cars. I'm not sure who this stunt double was but this isn't the Lacker I know:
Consumer purchases of cars and trucks also began to tail off in 2007 and then fell very sharply in 2008. Sales hit a low point this past February and then increased very gradually before the "Cash for Clunkers" program boosted sales in July and August. Clearly that program pulled forward many sales that would have occurred anyway later this year, and so it was not surprising that sales fell back in September to about where they were in the spring. What caught many analysts by surprise, though, was the rebound in the sales rate in October. Granted, sales are still well below the long-run trend that would be needed to keep the stock of vehicles growing in line with population. But, just as with housing, autos are no longer a drag on GDP growth and should make positive contributions going forward, again in welcome contrast to the last two years.
And everything is fine (insert big fucking question mark here):
One key element supporting the recovery is the significant improvement in financial conditions that has occurred this year. Corporate borrowing costs have declined considerably, as interest rates on commercial paper and corporate bonds are now much lower than they were last year. Many major banks have sold stock successfully and now have the capital to support new lending, even if conditions turn out worse than expected. Although many borrowers naturally face tougher credit terms in a soft economy, the banking system as a whole appears capable of supporting business investment and expansion.
But we're back to doomsaying in commercial real estate (duh) and unemployment (second that):
While the outlook has brightened in recent months, we still face major economic challenges. In commercial real estate, construction is falling, vacancy rates are rising, and falling property prices are eroding owners' equity positions. Holders of commercial-mortgage-backed securities have already taken sizeable losses, with more on the horizon as numerous projects are scheduled for refinancing. And some community banks have lent heavily to commercial real estate developers and are now facing rising delinquencies and losses. No one expects a quick reversal of these negative trends, and as a result, business investment in nonresidential structures is likely to be a substantial drag on U.S. growth in the near term.
More worrisome is the extremely weak labor market. The number of people employed has fallen for 22 straight months. The unemployment rate has more than doubled, to a 10.2 percent rate. Wages are under pressure; so far this year average hourly earnings have only risen at a 2.1 percent annual rate, about half its rate in mid-2007. Going forward, as overall economic activity continues to improve, employment will bottom out and then begin to return to an upward trajectory. Even the more optimistic forecasters, though, do not expect a rapid improvement in national labor market conditions, and we will need to carefully monitor employment and earnings for an extended period.
He's saying he expects a return to growth next year, which is consistent with what he's been saying all along. Really...
Seriously? This is all I get to work with? I'm disappointed. Just last month he was making Ben Bernanke look like a spineless bitch, wtf?
It's like taking a ride on the quarter pony and realizing you only have one quarter. *sniff*