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Plosser Says 2010 GDP Outlook "Somewhat Lower Than What It Was", Sees Very Limited Amount Of Things That Can Be Done To Improve Economy
After earlier saying in prepared remarks that "based on my current outlook, I do not support
further asset purchases of any size at this time," Philly Fed President Charles Plosser has confirmed he is firmly in the anti-QE camp of Fed members. And as remarks from the Q&A following Plosser's speech hit the tape, we discover just how ugly the situtation in America's economy truly is. Among the soundbites, Plosser has said that there is a "very limited amount of things we can do at this point", noted that he is "worried about the downside of further easing", says that the doesn't see "deflationary expectations emerging" , and, last but not least, tells everyone else after Fashion Island apparently already was well aware of all this weeks ago, that the 2010 forecast is "somewhat lower than what it was." This statement validates Kocherlakota's reduction in his 2011 GDP forecast earlier from 3% to 2.5%, which we discussed previously.
Some more observations on his prepared remarks earlier via Reuters:
Plosser acknowledged that growth has moderated, and that inflation has been subdued. However, he said he expects inflation expectations to remain stable and does not see a significant risk of sustained deflation.
Plosser said he opposes asset buying under current conditions because he worries policymakers would squander public confidence in the Fed's ability to combat deflationary expectations by acting prematurely.
Also, he said, it is difficult to see how additional asset purchase could have much impact on the near-term outlook for unemployment.
Plosser has been outspoken in expressing concern about the massive expansion of the Fed's balance sheet, which has doubled from pre-crisis levels as a result of recession-fighting efforts.
Unfortunately, as Plosser is not a FOMC voting member, the fate of the middle class remains in the hands of a few psychopaths and Tom Hoenig, who unfortunately is unable to make more friends among the other voting "doves."
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After 3 Fed officials DK QE2 in the last 16 hours (Lockhart [nonvoting], Kocherlakota [President of Minneapolis] , and Plosser [President of Philadelphia]), we get a 'buy the farm' speech from Rosengren [President of Boston], including today’s WTF headline “TREASURY YIELDS ARE STILL ‘WELL ABOVE ZERO’”.
Federal Reserve Bank of Boston President Eric Rosengren said the central bank still has tools to boost an “anemic” recovery and should consider further action to cut unemployment and raise the inflation rate.
Policy makers must respond “vigorously, creatively, thoughtfully and persistently, as long as we have options at our disposal,” Rosengren said in the text of remarks to the Forecasters Club of New York today. “And we do have options, despite having pushed short-term rates to the zero lower bound.”
Rosengren’s comments put him at odds with Charles Plosser, head of the Philadelphia Fed, who said earlier today that he’s against further monetary expansion because he sees “little risk” of deflation. Central bankers said after a meeting on Sept. 21 that too-low inflation and sluggish growth may warrant an easing of monetary policy, including resuming large-scale asset purchases.
While Rosengren stopped short of explicitly endorsing that option, he said it would highlight the Fed’s determination to reduce disinflationary pressures and stimulate the economy by reducing long-term interest rates.
http://www.bloomberg.com/news/2010-09-29/rosengren-says-federal-reserve-...
Perhaps keep a running "QEII YES" vs. "QEII NO" tab on Fed members, and if/when Bernanke finally wrecks the dollar, we have a guillotine party in DC and NY.
What say you?
I love how they talk like they still have any options..Trapped...crash the system or loot the american people those are the only 2 options the fed has...
When you say it like that, it sounds like a bad thing! No wonder the Fed sounds like a bunch of Gypsy fortunetellers (with apologies to Gypsies everywhere).
Oops, Bill Gross's stamp collection is missing a few pages
There will be NO double bummer.
GOOSE IT!
Makes me wonder if there are certain Fed Govs (especially non-voting) hoisted out there as 'contrarians' in order to make the Fed appear tough, thoughtful, and conservative.
Riddle me this Ben: If QE I, Ia, etc. haven't worked so far, why would QE II work? Isn't there a saying about this?
Oh, you say that you have printed free money and used it to purchase income-producing assets backed by future taxpayers' labor from your friends, cronies, and shareholders in order to line their pockets? Oh, it seems QE has worked quite nicely then. Please proceed with the raping...
Are you trying to say they own all sides of the argument in the form of controlled opposition?
Next you'll be saying crazy things like they are presenting these contrarian views because QE2 is a done deal and they know it, therefore they've nothing to lose, and everything to gain by pointing out its obvious flaws.
Among the soundbites, Plosser has said that there is a "very limited amount of things we can do at this point".
You believe nothing else this guy says, and yet you believe him when he says there is a "very limited amount of things we can do at this point." He just got your nickel, didn't he? You are very naive.
Look at the stats. There is BLS 4.6% unemployment in the U.S. among those with a Bachelor's degree or higher. 4.6%!!!
What does that mean? It means that there are still PLENTY of grossly overpaid American clerks out there still getting their paychecks. They need to be starved.
Is Plosser trying to tell us that there is a "very limited amount of things we can do at this point" in order to loot those clerks?
BALONEY! There are still many trillions of dollars to be looted from the American people. Don't believe this total economic criminal Plosser for ONE MOMENT, when he tells you, very bashfully no doubt, that there are a "very limited number of things" the Fed can do in the way of further looting. What a ridiculous song and dance. And you fell for it!
Are you crazy? There are LOADS of things the Fed will do in order to continue this process of Mellonesque liquidation.
You are very, VERY naive.
I'd say they are extremely limited, as they've only EVER had one thing that they do, which is to destroy the currency. Now, there may be no limitations to that thing (yes, government negative interest rate regime, I'm looking at you (I'll gladly pay you $.90 tomorrow for $1 today)), but it is the only thing they've got.
While Plosser is not a voting memeber of the FOMC at least we have an increasing (yet still small) number of Fed people opposing additional QE.
I hate to be optimistic right before B52 Ben hits me again, but I can be naive at times.
And baby, this is one of those times. Dream on.
Plosser and Kocherlakota will be a voting members in 2011. This may force Bernanke to do QE II before year-end since he will have the votes but he risks having the program terminated when these two hawks are allowed to vote. The compromise may be the WSJ article where the Fed buys assets of $100 mm in between meetings. It allows Bernanke to do something now but limits the entire commitment.
I'd guess it's all baked in the cake. Here's the downward spiral I see (already in progress):
1. Bernanke/Fed discusses possiblity of another round of QE
2. Fed critics emerge
3. Ben has to act quickly, before they gain power
4. Create the Greatest Flood of liquidity, ever
5a. As global economy collapses
5b. Fed critics vote to shut off the money
6. MSM blames Fed critics for failure of current round of QE
7. Apoligists note long-term disaster but insist we have to something NOW!
8. Return to step 1
They are all rats in the same clusterfuck; and speak in concert even when appearing to oppose or 'balance' one another.
Sorry to break the news, but Plosser and Kocherlakota are no hawks. They are inflationists. They are for now just not advocating as dangerous a tactic as Rosengren.
Not to make a direct comparison, but some Nazis were probably more gung-ho than others.
Inflationists all of them.
So the question becomes, is this just misdirection following the FOMC statement to create more confusion about future direction, or is this more confirmation of the rumors about significnat arguments and infighting at the Fed?
What's really amasing is if he would have said, he see's the need for more QE, the market would have popped like a rocket. He says he doesn't see the need and he's ignored. I'm feeling more like the scarecrow every day.
Gregg IP aka former (still) fed shill on talking about the US 60% debt to GDP ration (lol) and how the US is different since we can print money and we dont have a history of default. An virtual cornicopia of lies
Hey Tyler, did you catch the GS flash crash? From 143 to 114!
I saw that too, but could not get details on if it was real or just a chart fart.
just updated again and that shadow down to 114 disappeared, rather strange since it sat there for 45 minutes on my screen... hmmmmm
wonder who hit the reset button- can't be the sec, they are too busy understanding in great detail the flash crash form three months ago.
It was part of their stock buyback program.
StreetSmart Pro at Schwab shows the low as 114.22
While inflation is (to some extent) expectation driven, deflation is not. When he says he doesn't see "deflation expecatations emerging," he just demonstrates that he doesn't understand deflation. Monetarists like Bernanke don't. They are clueless.
I'm sure he would claim that J6P not buying a new HDTV because he is waiting for desparate retailers to drop their prices is an example of "emerging deflation expectations."
While this expectation may or may not be tied to deflation, it certainly exists, and has long been the whipping boy known as a "hoarder."
Of course, if they would just let the damn prices fall to market-clearing levels, we wouldn't have any of these problems now, would we? (and I would have a bigger TV)
Cut government spending in half and get rid of useless departments like the Department of Education. Since the DOE has been in existance the cost of education has gone up, and the quality of education has gone down. This is just one example though the list is long and distinguised.
Lower taxes across the board and incentivize business and innovation.
Abolish the Federal Reserve and adopt the gold standard.
Remove 75% of government regulation that suffocates business to make doing business in the U.S easier. Most of these regulations are uselss anyway.
Hold the SEC accountable to protect investing.
Stone members of the government who are caught lying and defrauding Americans.
Bitchez, problems solved.
QE IX is already under way
QED
What these guys say and what these guys do are no way related. This sudden trickle of Conservatism was thrown out there to quell the masses before election. Lets see what the spending lame ducks can accomplish before the farm is torched.
OT: Engineers Slam Internet 'Censorship' Bill Ahead of Key Senate Panel Vote
http://www.foxnews.com/politics/2010/09/29/engineers-slam-internet-censo...
"According to the bill, a website would have to be "dedicated to infringing activities" to trigger the enforcement."
As ZH is "dedicated to infringing activities" of the banksters, the FED, and heavy handed Gov, it would likely be the first to go.
The New Normal from the Wall Street Journal from today:
"Stocks climbed despite drops in consumer confidence and central-Atlantic manufacturing conditions, as investors saw the economic weakness as a sign the Federal Reserve may be more likely to introduce more stimulus."
Up on bad news because there may we worse news around the corner. Unbelievable.
Yes; a sign that the culture is in terminal decline.
Buy Mortimer, Buy! ...
I mean, Sell!
The problem is people trained to pilot an airplane are trying to steer a submarine. At this point all they know how to do is pull levers and twist knobs, and they are doing it. But when the outcome isn't what they intended they throw their hands up in frustration and proceed to do what their parents did to them when they caused problems -- throw money at it.
Simon Johnson has the answer, and it's simple! Just kill that pesky dollar! Why hadn't we all thought of this already? Oh, because we're not MIT econ teachers. We're just the simpletons who don't understand how truly grand $12/gallon gas and $7 milk will be. Does everyone have a ZH t-shirt to wear the day the sh** hits the fan? We can promise now not to shoot each other then. http://www.bloomberg.com/news/2010-09-29/obama-as-comeback-kid-just-need...
I dunno, that logo looks an awful lot like a target. Besides, those will be the people with gold!
GDP at 2.5??? This mf'er is deluded. That's real risk taking on the heels of 1.6 GDP and deteriorating conditions. Maybe he's thinking Obama will resign soon.
The Fed doesn't seem to get it:
Of course there's nothing the Fed can do to improve the economy! That's because the less the Fed does, the better the economy is - The more the Fed does, the worse the economy is!
But that would make the Fed useless and obsolete, and risk closing their personal gateway for insider trading and collusion and power and shutting down competition and...
yeah! Time to pump up the rally.