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January FOMC Statement - Hoenig Dissents To "No Change" Vote
Release Date: January 27, 2010
For immediate release
Information received since the Federal Open Market Committee met in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating. Household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls. Firms have brought inventory stocks into better alignment with sales. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability.
With substantial resource slack continuing to restrain cost pressures and with longer-term inflation expectations stable, inflation is likely to be subdued for some time.
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, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter. The Committee will continue to evaluate its purchases of securities in light of the evolving economic outlook and conditions in financial markets.
In light of improved functioning of financial markets, the Federal Reserve will be closing the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility on February 1, as previously announced. In addition, the temporary liquidity swap arrangements between the Federal Reserve and other central banks will expire on February 1. The Federal Reserve is in the process of winding down its Term Auction Facility: $50 billion in 28-day credit will be offered on February 8 and $25 billion in 28-day credit wil be offered at the final auction on March 8. The anticipated expiration dates for the Term Asset-Backed Securities Loan Facility remain set at June 30 for loans backed by new-issue commercial mortgage-backed securities and March 31 for loans backed by all other types of collateral. The Federal Reserve is prepared to modify these plans if necessary to support financial stability and economic growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.
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Wow, Hoenig is making a bid for chairmanship.
When was the last time we saw a dissenting vote?
Ugh these things make me quesy...
So they will continue the extend and pretend - thats all it means..
Looks like Hoenig thinks conditions have changed (for him).
Nothing to see here, now how about that "i-pad", eh?
MCC(s) "Reminds Me Of Feminine Products" is not on t CNBC website for some reason.... :-)
http://www.youtube.com/watch?v=BJyEN1dbQUU
So Fed sticking with its expiration schedule on agencies & treasuries. Don't see how the market can recover on this. Drive the market lower so that public opionion swings back to a pro-Wall Street mood as dep-224ression is too ugly to confront. -10% or so
Bernanke: In order to prevent a depression we must keep rates low
Bernanke: In order to grow the economy we must keep rates low
Bernanke: The recovery is slower than we have hoped we must keep rates low however there are improving signs.
Bernanke: The recovery never appeared we must keep rates low indefinetly to avoid a depression lol
So under no circumstances do rates go higher.
This ill-advised strategy will work... until gasoline hits $5 per gallon. At that point J6P will not give a rat's a$$ if "core" inflation is down.
F--- savers and retirees forever. Take care of the banks.
Looks like you are a specialist on this because you just made it so easy to be with you, motivated me to learn more on the subject! May I ask you, do you devote a lot of effort to it because you seem to be so in tune with bender ball
any bets that this good news is referenced in the State of the Union this evening
I read this as, "Things still suck, but we're going to act like we're removing the liquidity." That would be bearish for equities, but who knows what clandestine operations the FRB is running?
zero chance the housing market doesnt utterly implode without MBS purchases.
and yet... equities act as if nothing is happening. just up and down between support and resistence. it makes you sea-sick just watching it. no volume, just fucking nothingness.
Im not even in equities except for some special sits, personally, and yet I still find myself so angry. so angry that Americans have no balls, nor a modicum of intelligence.
Cashin wrote this yesterday:
The “New Populism” Makes A Manufactured Quote Very Apt And Timely – On this day back in 2003, we pondered a fascinating quote. It was said to be from a book titled “The Decline and Fall of the Athenian Republic” by a professor of history at Edinburgh University. His name was said to be Alexander Fraser Tytler. Most fascinating (to me) was that the book was said to have been published in 1776 just as the American Republic was being born.
Here is the quote:
"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over a loss of fiscal responsibility, always followed by a dictatorship. The average of the world's great civilizations before they decline has been 200 years. These nations have progressed in this sequence: From bondage to spiritual faith; from spiritual faith to great courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to complacency; from complacency to apathy; from apathy to dependency; from dependency back again to bondage."
Our research suggests that the quote was “manufactured” at a far more recent date. Nonetheless, the quote seems especially appropriate in today’s political atmosphere. Let us hope its conclusion does not turn out to be appropriate.
We’ll know a lot more from today’s tax referendum in Oregon. The vote will be whether to validate a tax surcharge on folks earning over $250,000 ($125,000 individually). Let’s hope Tytler is wrong.
When just about 50% of the people pay no income taxes, guess what they are going to be in favor of and guess who they are going to vote into office? (hint: it smells a lot like the current make-up of Wash DC).
Cashin is pretty much right on the quote source and timing.
Sadly the founders had no intention of creating a true "democracy" -- they recognized the dangers of such. The Constitution gives power primarily to the states with "enumerated" powers for federal government, but a) folks do not like to interpret what's written in the Constitution within the context of what the authors were writing or in the context of the whole document, and b) everyone wants to broaden the power of the federal government via the "general welfare" clause so they can exercise more control over people and give out goodies (of course all in the name of benevolent care).
Oso - Great wisdom in that quote. Anon, I think we are now at that 50% tipping point.
Fed statement: We've saved you from the abyss, everything is fine now, green shoots are bountiful once again across the country. Therefore we are keeping interest rates at zero to assist some laggard bankster's more time to cover their bets, er uh, investments.
Bernanke...what an a**hole.
Normally the market reacts one way after the announcement and then changes its mind an hour later.... eurodollars much lower, equities higher, sell now??
S&P at 100 day MA, a close below 1091 is negative
Great day for the oligarchs - bad day for Americans. Noticed a headline a few minutes ago Bernanke scheduled for vote tomorrow. So, the oversight committee stepped on their dicks this morning, and tomorrow we get Heli Ben back. All is good in the world - Dow 15,000.
Money is free and the losses are not yours...what's not to like?
If they don't FF&C CRE they're going to have an even larger bank implosion wave coming in the next year. I cannot see a decreasing liquidity environment as feasible if they want to prevent full-on banking collapse
whats FF&C ??
"Full Faith & Credit"
FF&C = Full Faith and Credit
vote with your feet
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