Archive for the ‘Fed’ Category

N.Y. Fed Chief Touted for Top Treasury Post; Obama To Meet With Econ Advisors

November 7, 2008

On an Obama economic brain trust studded with high-profile heavyweights, mTimothy F. Geithner, the low-key president of the Federal Reserve Bank of New York, has emerged as a top candidate to head the Treasury Department or another top policy post in the new administration.

New York Federal Reserve President Timothy Geithner testifies ... 
New York Federal Reserve President Timothy Geithner testifies at the U.S. House Financial Services Committee about financial market regulatory restructuring in Washington July 24, 2008.(Larry Downing/Reuters)

Mr. Geithner, 47, is two weeks younger than the president-elect but has served in top Treasury and Federal Reserve positions since the late 1980s. He joined Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke to oversee the Bush administration’s effort to contain the crises in the world’s credit and financial markets.

By David R. Sands
The Washington Times
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Mr. Obama and Vice President-elect Joseph R. Biden Jr. will hold their first press conference since the election Friday in Chicago after a meeting with the transition economic advisory board. Mr. Geithner is not listed as a member of the transition team.

The New York Fed is considered the most influential of the regional Federal Reserve Banks. By virtue of his position, Mr. Geithner serves as vice chairman of the central bank’s Federal Open Market Committee, the key body guiding monetary policy.

Like Mr. Obama, Mr. Geithner is described by colleagues as even-tempered and wonkish at times, comfortable debating abstract financial concepts and not likely to break the bureaucratic crockery as an administrator.

With the economy declining, plunging financial confidence and a $700 billion Wall Street rescue program just getting under way, the Treasury secretary selection will be one of the most critical for the new president, and one of the most closely scrutinized.

Mr. Obama’s economic advisory team during the campaign contained an unusually large number of heavy hitters, including former Federal Reserve Chairman Paul A. Volcker, billionaire investor Warren Buffett, and two Clinton administration Treasury secretaries — Robert E. Rubin and Lawrence H. Summers.

Mr. Rubin, who had been rumored to receive a top post in the new administration, told Bloomberg News on Thursday that he was not interested in returning to government.

It was Mr. Summers who boosted Mr. Geithner’s career at several points after he joined the Treasury Department’s international affairs division as a civil servant in 1988. He became a top aide to Mr. Summers and was named Treasury undersecretary for international affairs in 1999, a post previously reserved for political appointees.

Mr. Geithner left the department in 2001 and spent time as a fellow at the Council on Foreign Relations and at the International Monetary Fund before joining the New York Fed….

Read the rest:
http://www.washingtontimes.com/news/2008/nov/07/
geithner-touted-for-top-post-at-treasury/

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Obama To Meet With Economic Advisors Today

By NEDRA PICKLER, Associated Press Writer

President-elect Obama is seeking some economic advice from leaders of business, government and academia, making the struggling economy — the nation’s No. 1 concern — his first order of public business.

Obama and Vice President-elect Joe Biden were to meet Friday with 17 members of their transition economic advisory board. Members include former presidential Cabinet officials and executives from Xerox Corp., Time Warner Inc., Google Inc. and the Hyatt hotel company. Investor Warren Buffett was participating by telephone.

Obama also was holding his first news conference as president-elect after the meeting.

It was to be Obama’s first public appearance since Tuesday’s election, where exit polls showed that the economy was far and away the top issue for voters. He’s been using the time for private meetings with his transition team, receiving congratulatory phone calls from U.S. allies and intelligence briefings, and making decisions about who will help run his government.

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http://news.yahoo.com/s/ap/20081107/ap_on_el_pr/obama;_ylt=
AqXrGZ7k1XKeHU99bcehSzys0NUE

U.S. Must Confront Possibility of Long, Deep Recession

October 16, 2008

By ADAM GELLER, AP National Writer 

NEW YORK – The U.S. has not endured a deep and prolonged recession in more than a quarter century — enough time for many Americans to forget what one feels like.

But unlike the last two relatively short recessions, this one could be much longer and more severe, potentially bringing with it anxiety and job losses not seen in many years.

“In thinking about recessions, people will naturally think back to the last couple” in the early 1990s and in 2001, said Paul Ashworth, senior U.S. economist at Capital Economics in Toronto. “What they should be looking back at is further.”

That requires dredging up memories of the economic slides in the 1970s, when an Arab oil embargo starved the nation of energy, and the early 1980s, when unemployment and inflation soared.

The last recession — coinciding with the collapse of the tech stock bubble and the terrorist attacks of 2001 — lasted just eight months. It was known more for the slow “jobless” recovery that followed than for the depth of the downturn.

Many economists agree that the nation won’t be so fortunate this time.

“I don’t think we can escape damage to the real economy,” former Federal Reserve Chairman Paul Volcker said this week in Singapore. “I think we almost inevitably face a considerable recession.”

The Fed’s current chairman, Ben Bernanke, delivered a more measured, but similarly grave assessment to economists, saying the recent financial turmoil “may well lengthen the period of weak economic performance and further increase the risks to growth.”

The signs of stress are starting to show: The U.S. has lost 760,000 jobs since late last year, and retail sales in September plunged 1.2 percent, the largest drop in three years.

Every recession is driven by its own dynamic and psychology. The current slump started with the collapse in the housing market and got worse with sharp restrictions on credit that pressured consumer spending and businesses.

That is a different environment from 1973, when an oil crisis was the culprit, squeezing U.S. businesses and consumers. In the early 1980s, raging inflation and high interest rates took their toll.

Both periods saw millions of Americans out of work. In 1975, the unemployment rate peaked at 9 percent. In 1982, it jumped to 10.8 percent.

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http://news.yahoo.com/s/ap/20
081015/ap_on_bi_ge/meltdown_
recession;_ylt=AtgNO7MiepobjPABCppxQ_qs0NUE

Stock Market Dives 733 or 8% on Fears of U.S. Recession; Second Biggest Drop Ever

October 15, 2008

I’m no economist but apparently I am smarter than the current Fed Chairman Ben Bernanke and President Bush.  They still have not acknowledged the recession we are in now….even after former fed Charman paul Volcker said we were in a recession yesterday.

DA!

We can all read and think and I stated categorically last March 8, 2008, that the United States was in a recession.  I made this statement after mulling over the facts starting around September 2007.  Turns out I was fully seven months ahead of former Fed Charman Paul Volcker who made the declaration yesterday.

Go figure!

By Matt Egan
Fox Business

Fears the U.S. will sink into a recession slammed Wall Street on Wednesday, sending the Dow plunging 700 points lower and below the 9000 threshold.

An ugly report on retail sales served as a wake-up call for the markets, reminding Wall Street that even as the ailing credit markets appear to have improved, the economy is still in a precarious state. 

Today’s Market

According to preliminary calculations, the Dow Jones Industrial Average lost 758.80 points, or 8.15%, to 8552.03, the broader S&P 500 dropped 92.11 points, or 9.23%, to 905.90 and the Nasdaq Composite lost 150.68 points, or 8.47%, to 1628.33. The consumer-friendly FOX 50 fell 64.93 points, or 8.68%, to 683.27.

The economic pessimism kept the pressure on the markets on Wednesday as the major indexes ended at session lows, never even peeking into positive territory. The selloff add to modest losses from Tuesday, combining to erase more than half Monday’s record 936-point surge on the Dow. 

“There’s still a little bit of gloom and doom in front of us,” said Michael Mainwald, head trader at LEK Securities. “Until some of these government-sponsored rescue plans work their way into the [financial] system, we’re going to have these 3% to 5% moves either way.”

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http://www.foxbusiness.com/story/markets/futures
-decline-earnings-return-prominance/

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U.S. Secretary of Treasury Henry Paulson (R) listens as Federal ... 
Above U.S. Secretary of Treasury Henry Paulson (R) listens as Federal Reserve Chairman Ben Bernanke (L) talks about financial markets, fear of recession and the Market Stability Initiative in the Cash Room of the Treasury Department in Washington, October 14, 2008.
REUTERS/Larry Downing (UNITED STATES)

I’m no economist but I can read and think and I stated categorically last March 8, 2008, that the United States was in a recession.  I made this statement after mulling over the facts starting around September 2007.  Turns out I was fully seven months ahead of former Fed Charman Paul Volcker who made the brilliant deduction today, October 14, 2008, that the U.S. was in a recession.  The current Fed Chairman Ben Bernanke and President Bush have still not acknowledged the recession we are in now.

Read the rest:
https://johnibii.wordpress.com:80/2008/10/14/obama-
really-believes-in-wealth-redistribution-money-goes-
from-those-who-earned-to-those-who-didnt/

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By TIM PARADIS, AP Business Writer

NEW YORK – Investors agonizing over a faltering economy sent the stock market plunging all over again Wednesday after two disheartening reports convinced Wall Street that a recession, if not already here, is inevitable. The market’s despair — fed by a stream of disheartening economic data — propelled the Dow Jones industrials down 733 points to their second-largest point loss ever, and the major indexes all lost at least 7 percent.

Traders work on the floor of the New York Stock Exchange, October ... 
Traders work on the floor of the New York Stock Exchange, October 15, 2008. U.S. stocks slid at the open on Wednesday as investors worried that efforts to ease the credit crisis would not avert a recession, overshadowing solid profits from Coca-Cola Co , a bellwether for consumer spending.REUTERS/Brendan McDermid (UNITED STATES)

The slide meant that the Dow, which lost 76 points on Tuesday, has given back all but 126 points of its record 936-point gain of Monday, which came on optimism about the banking system in response to the government’s plans to invest up to $250 billion in financial institutions.

Wednesday’s selloff began after the government’s report that retail sales plunged in September by 1.2 percent — almost double the 0.7 percent drop analysts expected — made it clear that consumers are reluctant to spend amid a shaky economy and a punishing stock market.

The Commerce Department report was sobering because consumer spending accounts for more than two-thirds of U.S. economic activity. The reading came as Wall Street was refocusing its attention on the faltering economy following stepped up government efforts to revive the stagnant lending markets.

Then, during the afternoon, the release of the Beige Book, the assessment of business conditions from the Federal Reserve, added to investors’ angst….

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http://news.yahoo.com/s/ap/20081015/ap_on_bi_st_ma_re/
wall_street;_ylt=AigXgb9565eUtw4z5BSaNZys0NUE

Fed: Economy Sinks Deeper Into Rut

October 15, 2008

By JEANNINE AVERSA, AP Economics Writer

WASHINGTON – The country has sunk deeper into an economic rut, the Federal Reserve reported Wednesday.

Federal Reserve Chairman Ben Bernanke speaks at the Economic ... 
Federal Reserve Chairman Ben Bernanke speaks at the Economic Club of New York. Bernanke said Wednesday that a recovery from the financial crisis “will not happen right away” but that the US economy will eventually emerge “with renewed vigor.“(AFP/Getty Images/Chris Hondros)

The Fed’s new snapshot of business conditions around the nation showed the economy continued to lose traction in the early fall, reflecting mounting damage as financial and credit problems worsened.

Economic activity weakened across all of the Fed’s 12 regional districts, according to the report. Consumer spending — the lifeblood of the economy — slumped in most Fed regions. Manufacturing also slowed in most areas.

Some businesses had become more pessimistic about the economic outlook, the Fed said.

The survey was released shortly after Fed Chairman Ben Bernanke, in a speech in New York, warned that it would take time for the country’s economic health to mend even if badly needed confidence in the U.S. financial system returns and roiled markets stabilize.

THIS IS A BREAKING NEWS UPDATE
The US Federal Reserve in Washington, DC. The United States ... 
The US Federal Reserve in Washington, DC. The United States has slipped into recession, the head of the San Francisco branch of the central bank has said.(AFP/File/Karen Bleier)

Former Fed Chief Says U.S. Now in Recession; Addresses Inflation Fears

October 14, 2008

SINGAPORE (Reuters) – Former Federal Reserve Chairman Paul Volcker said on Tuesday the U.S. housing sector faced more losses and the economy was in recession even as authorities moved to stabilize the financial system.

Former Federal Reserve Chairman Paul Volcker addresses business ... 
Former Federal Reserve Chairman Paul Volcker addresses business leaders at the Spruce Meadows round table on Global Banking in Calgary, September 5, 2008.(Todd Korol/Reuters)

Volcker said the priority for U.S. authorities in the credit crisis was to stabilize the financial system even though that meant heavy government intrusion.

“The first priority is to stabilize the financial system. It is necessary even though the cost involved is heavy government intrusion in markets that should be private,” he said in a speech at a seminar in Singapore.

“House prices in the U.S. are still declining. There are still more losses to come there. The economy, I believe, is in recession.”

Volcker is chairman of the board of trustees of the Group of 30, an international body composed of central bank governors, leading economists and private financial sector experts.

He is credited for battling double-digit inflation that flared in the 1970s.

He was chairman of the U.S. central bank between 1979 and 1987, before handing the reins over to Alan Greenspan, and oversaw a sharp increase in interest rates to quell the price pressures.

Volcker was asked by a member of the audience if the massive infusion of liquidity by the Federal Reserve could lead to inflation or stagflation.

“It’s not going to be a problem in the short run. Inflation doesn’t flourish in the face of recession,” he said.

“It’s something we have to worry about when we get out of this recession.”

Read the rest:
http://news.yahoo.com/s/nm/20081014/us_nm/us_financial_
volcker;_ylt=AhvNr4xKaaHyXXI08NYXgd.s0NUE

Related:
https://johnibii.wordpress.com/2008/03/08/my-
personal-view-is-america-is-in-recession-admit-it/

Perils in The Price Of Each Grain of Rice

April 3, 2008

By David Ignatius
The Washington Post
Thursday, April 3, 2008; Page A17

You may have missed the front-page article in the New York Times last Saturday, with the one-column headline written in clipped newspaperese: “High Rice Cost Creating Fears of Asia Unrest.” But this little story could be an early warning of another big economic problem that’s sneaking up on us.

The new danger is global inflation — most worryingly in food prices, but also in prices for commodities, raw materials and products that require petroleum energy, which includes almost everything. Prices for these goods have been skyrocketing in international markets — at the same time the Federal Reserve and other central banks have been hosing the world with new money in their efforts to avoid a financial crisis.

That’s an explosive mixture. It risks a kind of inflation that would trigger panic buying, hoarding and fears of mass political protest. Actually, this is already happening in Asia, according to the Times.

The price of rice in global markets has nearly doubled in the last three months, reports the Times’s Keith Bradsher.
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Fearing shortages, some major rice producers — including Vietnam, India, Egypt and Cambodia — have sharply limited their rice exports so they can be sure they can feed their own people.

Bradsher summarizes the evidence that food shortages and inflation are fueling political unrest: “Since January, thousands of troops have been deployed in Pakistan to guard trucks carrying wheat and flour. Protests have erupted in Indonesia over soybean shortage, and China has put price controls on cooking oil, grain, meat, milk and eggs. Food riots have erupted in recent months in Guinea, Mauritania, Mexico, Morocco, Senegal, Uzbekistan and Yemen.”

World Bank President Robert Zoellick rang the alarm bell in a speech yesterday. He noted that since 2005, the prices of staples have risen 80 percent. The real price of rice rose to a 19-year high last month, he said, while the real price of wheat hit a 28-year high.

Zoellick warned that this inflation is having political repercussions: “The World Bank Group estimates that 33 countries around the world face potential political and social unrest because of the acute hike in food and energy prices.” To cope with the topsy-turvy economy, Zoellick made an innovative proposal that countries running a surplus, such as Saudi Arabia and China, devote 1 percent of their “sovereign wealth” funds to investment in Africa‘s poor countries. That could yield up to $30 billion in development spending.

Now, cut to the Federal Reserve. At a time when global inflation is raging, you might expect that the central bank’s first priority would be to dampen inflationary expectations in the United States. But because of its worries about a financial meltdown, the Fed has been doing the opposite — drastically cutting interest rates in an effort to unclog the financial markets. The cheap money didn’t stop the Wall Street bank run — it was the Fed’s bold plan to absorb subprime debt that did that — but it may well add fuel to the inflation fire.

Related:
Lowly Rice Grain Impacts Global Economy

Vietnam and India move to limit rice exports

Inflation and Food Shortages?

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http://www.washingtonpost.com/wp-dyn/content/article/2008/04/02/AR2008040202997.html?hpid=opinionsbox1

Bernanke warns of possible recession

April 2, 2008
By JEANNINE AVERSA, AP Economics Writer 

WASHINGTON – Federal Reserve Chairman Ben Bernanke warned Wednesday the economy may shrink over the first half of this year and that “a recession is possible.” Yet, he didn’t offer any assurances of further interest rate cuts.

US Federal Reserve Bank Board Chairman Ben Bernanke responds ...
US Federal Reserve Bank Board Chairman Ben Bernanke responds to questions during a joint congressional hearing on the country’s economic outlook on Capitol Hill in Washington, April 2, 2008.REUTERS/Jonathan Ernst (UNITED STATES)

Bernanke’s testimony to the Joint Economic Committee was a much more pessimistic assessment of the economy’s immediate prospects amid a trio of crises — housing, credit and financial.

“It now appears likely that gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly,” Bernanke told lawmakers. GDP measures the value of all goods and services produced within the United States and is the best barometer of the United States’ economic health. Under one rule, six straight months of declining GDP, would constitute a recession.

Still, Bernanke said that he expects more economic growth in the second half of this year and into 2009, helped by the government’s $168 billion stimulus package of tax rebates for people and tax breaks for businesses as well as the Fed’s aggressive reductions to a key interest rate. Nevertheless, the chairman acknowledged uncertainty about the Fed’s next steps, notwithstanding the mounting economic woes.

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http://news.yahoo.com/s/ap/20080402/ap_on_bi_ge/
bernanke_congress;_ylt=Al0d0o
x8ZL_k__msZcFHZYas0NUE

Bush administration proposes sweeping overhaul of financial industry

March 29, 2008

WASHINGTON (AP) – The Bush administration is proposing a sweeping overhaul of the way the nation’s financial industry is regulated.
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In an effort to deal with the problems highlighted by the current severe credit crisis, the new plan would give major new powers to the Federal Reserve, according to a 22-page executive summary obtained last night by The Associated Press.
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The proposal would designate the Fed as the primary regulator of market stability, greatly expanding the central bank’s ability to examine not just commercial banks but all segments of the financial services industry.
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The administration proposal, which is to be formally unveiled in a speech Monday by Treasury Secretary Henry Paulson, also proposes consolidating the current scheme of bank regulation.

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http://www.washingtontimes.com/apps/pbcs.dll/article?AID=/20080329/BUSINESS/847722253/1001

Stocks soar, Dow rises 420 points

March 18, 2008
By MADLEN READ, AP Business Writer 

NEW YORK – Wall Street stormed higher Tuesday as investors, optimistic following stronger-than-expected earnings from two big investment banks, were also galvanized by the Federal Reserve‘s decision to cut interest rates by three-quarters of a percentage point. The Dow Jones industrial average soared 420 points, its biggest one-day point gain in more than five years.

Trader Vincent Quinones, foreground right, gathers with other ...
Trader Vincent Quinones, foreground right, gathers with other traders on the floor of the New York Stock Exchange, Tuesday March 18, 2008. Wall Street gave up some of its steep gains Tuesday while investors digested the Federal Reserve’s decision to cut interest rates by three-quarters of a percentage point. Many investors had expected a cut of a full percentage point.(AP Photo/Richard Drew)

Many investors were expecting the Fed to cut rates a full point, but appeared to overcome their early disappointment, especially since a 0.75 point cut is still substantial. The central bank’s benchmark fed funds rate is now at 2.25 percent — its lowest level since December 2004, and less than half what it was last summer. The Fed began lowering rates exactly six months ago, after the credit markets seized up due to soaring defaults in subprime mortgages.

In its statement accompanying the rate decision, the Fed said “recent information indicates that the outlook for economic activity has weakened further,” but also that “uncertainty about the inflation outlook has increased.”

“The Fed once again in the statement showed that it is ready for further action if this were needed,” said Christian Menegatti, lead analyst for online economic research firm RGE Monitor. “It also showed the fact that it’s still paying attention to inflation … but that it is far from being the primary concern right now. And the market knows that, and it is happy.”

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http://news.yahoo.com/s/ap/20080318/ap_on_bi_
st_ma_re/wall_street;_ylt=Aiq
VreeKrPsAkThNw8N0Nhqs0NUE

Fire Sale of Bear Stearns Bear Sparks Rout, Bush Tries to Calm

March 17, 2008
By Jack Reerink 

NEW YORK (Reuters) – A fire sale of Bear Stearns Cos Inc (BSC.N) stunned Wall Street and pummeled global financial stocks on Monday on fears that few banks are safe from deepening market turmoil.

A U.S. two dollar bill is taped to the revolving door leading ...
A U.S. two dollar bill is taped to the revolving door leading to the Bear Stearns global headquarters in New York March 17, 2008.(Kristina Cooke/Reuters)

Trying to assuage worries that the credit crisis is spinning out of control, President George W. Bush said the United States was “on top of the situation,” but the sell-off intensified in the early afternoon.

The U.S. Federal Reserve geared up for a deep cut in interest rates on Tuesday to blow money into the fragile financial system — the latest in a series of rate cuts that has brought down borrowing costs by 2-1/4 percentage points and hammered the U.S. dollar to record lows.

Staff at Bear Stearns‘ Manhattan headquarters were welcomed to work on Monday by a two-dollar bill stuck to the revolving doors — a spoof on the bargain-basement price of $2 per share that JPMorgan Chase (JPM.N) is paying for the firm. A hopeful Coldwell Banker real estate agent was hawking cheap apartments to employees who saw the value of their stock options go up in smoke.

The combination of Bear Stearns’ bailout and the Fed’s offer on Sunday to extend direct lending to securities firms for the first time since the Great Depression highlighted just how hard the credit crisis has hit Wall Street.

And it scared market players worldwide….

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http://news.yahoo.com/s/nm/20080317/bs_nm/bearstearns_fed_dc;_ylt=
Agm1uUl9fJe7eEc0zjCowb.s0NUE