Econophile's blog

The Fed Open Market Committee, in a major policy shift, voted today to roll its holdings of maturing Fannie and Freddie debt into longer term Treasurys. This represents a significant change in Fed policy and it appears that the anti-deflationist wing of the Fed, led by James Bullard, president of the St. Louis Fed, won over the anti-inflationists.

A disappointing July jobs report came out Friday showing weak employment gains, further evidence that the economy is stalling out. What will the Fed do?

I almost choked when I read Lee Bollinger's op-ed piece in the Wall Street Journal advocating public financial support of the mainstream media. This is the Lee Bollinger who is the president of Columbia University and was recently named Deputy Chair of the New York Federal Reserve Bank. It is unbelievable and irresponsible that anyone in his position could seriously advocate subsidies for the press.

It appears that the Fed is ready to debate what they are going to do about a sinking economy and the specter of continued high unemployment. ZIRP isn't working, yet they are afraid to tighten rates. Will they monetize federal debt as a tool of quantitative easing? All signs point to yes.

The Fed came out with its Beige Book, a summary of economic activity from June to mid-July. The report overall noted "modest" growth if not slowing growth. Consumer confidence declined and durable goods orders were also down.

While I tremendously respect David Rosenberg, his article on Wednesday on inflation and deflation is a confusing mishmash of Keynesian ideas which are clearly wrong. But in the end, despite his struggle with concepts, he may have the market timing right.

Interesting things have been happening in the real estate markets, but does it mean we are in a real estate recovery?

This week the S&P 500 was up 7.3% for the month, corporate earnings have been looking good, retail sales inched up last week, the CPI is low, interest rates are low, Dr. Bernanke is ready to pump money into the economy if things go awry, most European banks passed their stress test, and we've got a new financial markets regulation bill which will save us from economic collapse. What's to worry?

If you closely read the commercial bank Q2 reports, their loan activity continues to decline which shows that out in the trenches, credit continues to contract.

Two good leading indicators have turned south: ECRI and Consumer Metrics Institute.

While Obama is in Michigan touting the wonders of fiscal stimulus and what he terms the "Recovery Summer", the Fed came out with the minutes of their June meeting. In it they say they expect 5 or 6 years until we've achieved a recovery. Here is the data and it doesn't support Obama's assertion.

Why isn't our economy recovering? I ask that question often and have written about it many times. Perhaps a better question is: what needs to happen in order to make our economy grow? I offer some solutions.

Vignettes from my "Lost Weekend" in Las Vegas while I was attending Freedom Fest. Perhaps a bit off topic for ZH, but I think it has a lot to do with our perma-Boom-Bust economy. The stories of The Cabbie and The Gambler. Enjoy.

It's hard to ignore the data that is coming out. There is a definite slowing trend in the economy. It supports my forecasts of a slowdown coming in the second half of this year. Expect the data to be its normal uneven trend, but it is clear that the economy is slowing. Here I show you what I'm seeing.

Why the G20 meets I don't know. They say lofty things, make empty promises, and go home and do what they were going to do anyway. But wait. There seems to be a huge rift between the U.S. and Europe and I'm not talking about the Atlantic ocean. Merkel vs. Obama. Deficit Reduction vs. Spend. What is happening? Is fiscal sanity breaking out in Europe?