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A Look At The Fed's Nest In 2013: Here Are This Year's Voting Hawks And Doves

Tyler Durden's picture





 

Back in December 2011, we previewed the rotation in the FOMC's voting block with "When Doves Laugh: 4 Weeks Until The Quiet Coup In The Fed Gives QE3 A Green Light", a post whose summary was that as a bevy of new voting doves came in, it made QE3, then very much a taboo topic - because, you see, "the economy was improving on its own" - virtually inevitable (despite some angry comments from even our own readers). Naturally, as 2012 played out, we got not only QE3 but QE4EVA. So now what? Well, with the new year comes the now traditional new roster of voting regional Fed president members. And while the supremacy of the Bernanke core supermajority group of 8 permanent voters (especially with the three new hires) will never be in jeopardy, 4 new regional presidents join the core group of Bernanke doves. The new voting FOMC members: Evans, Rosengren, Bullard and George. They replace Pianalto, Lockhart, Williams and consummate critic and sole voice of reason and opposition at the Fed in 2011, Lacker. So how does the layout of the 2013 FOMC nest of hawks and doves look like? SocGen summarizes.

A quick glance above shows that on average, the new voting FOMC members are far more polarized than their predecessors with Evans once again reentering the voting race, arguably the biggest dove in the history of the Federal Reserve, and next to him will be Boston's Eric Rosengren, yet another consummate dove. On the other side we get James Bullard, an occasinal hawk, as well as new Kansas Fed president Esther George, a modest hawk.

Does this split mean anything material will change in the 2013 voting pattern at the Fed? Hardly. Here is SocGen's explanation:

One man, one vote, but some votes are worth more than others. As represented in the picture above (see left column), the annual rotation of voting members will see a replacement of 1 hawk and 3 doves with 2 hawks and 2 doves. It is tempting to conclude that this will change the bias, but we don’t think it will have much impact on FOMC decisions. Aside from the fact that moderate doves will be replaced with extreme doves (Evans and Rosengren); the hawkish side of the spectrum will see some softening as well. We may in fact see fewer dissents in 2013. Of the two incoming hawks, we don’t expect George to dissent and we are 50/50 on Bullard. And, even if both dissented, this would not alter the outcome. Recall that in 2011 we had three dissents, and it did not stop the Fed from launching operation twist and introducing calendar guidance. Ultimately, it is the votes of the Fed Governors that matter and the Governors tend to always vote with the Chairman and Vice Chair.

Sure enough, the voting FOMC members are merely the supporting cast of the top three: Ben, Janet and Daniel, and at the end of the day, it is always about Bernanke. So while the FOMC may get one more borderline hawk, it is getting two more far more vocal doves, which likely means that at the end of the day, there will be zero change in the Fed's posture in 2013, which at the end of the day is always about one simple thing: i) injecting reserves into dealers so they can use the cash to fund prop trading, and ii) to monetize the US deficit.

It also means that the 2013 run-rate of TSY and MBS monetization of $1 trillion will last not only through the end of the year, but almost certainly past year end 2014.

Everything else is smoke and mirrors.

 


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Wed, 01/09/2013 - 13:29 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Damn. Krugman was passed over again.

<Wait until next year.>

Wed, 01/09/2013 - 13:31 | Link to Comment q99x2
q99x2's picture

Hawk n Dove this.

Wed, 01/09/2013 - 13:31 | Link to Comment Danks18
Danks18's picture

Ben is "-1".  Th scale seems less credible with that number.

Wed, 01/09/2013 - 13:33 | Link to Comment Dr. Engali
Dr. Engali's picture

Quite frankly I wish they were all doves that way we can stop pretending like they might do something else besides print.

Wed, 01/09/2013 - 13:38 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Maintaining CONfidence as we spiral down into the fiat black hole requires plausible deniability and lots of conflicted minions.

Oh.........and plenty of denial to boot.

Wed, 01/09/2013 - 13:52 | Link to Comment Dr. Engali
Dr. Engali's picture

It amazes me that there is any CONfidence remaining at this point.

Wed, 01/09/2013 - 14:11 | Link to Comment Spastica Rex
Spastica Rex's picture

Confidence is all that's needed.

Until something happens.

Wed, 01/09/2013 - 13:39 | Link to Comment AccreditedEYE
AccreditedEYE's picture

+1000

Wed, 01/09/2013 - 13:34 | Link to Comment AccreditedEYE
AccreditedEYE's picture

Which means..... yup, you guessed it: BTFD in 2013!!!

Wed, 01/09/2013 - 15:01 | Link to Comment donsluck
donsluck's picture

Hey EYE, +1 for at least having the balls to stop whining and DEAL WITH WHAT WE HAVE.

Wed, 01/09/2013 - 15:07 | Link to Comment AccreditedEYE
AccreditedEYE's picture

Thx. Sick of getting run over. Besides, what's more fun than making fiat profits AND pushing the system to the brink at the same time?

Wed, 01/09/2013 - 13:38 | Link to Comment news printer
news printer's picture
China to Set up Drone Bases along Coastal City

"China is planning to set up two drone bases for surveillance of coastal waters.
 
One will be built in the coastal city of Yingkou in northeast China's Liaoning Province to cover the Bohai Sea area."

Wed, 01/09/2013 - 14:01 | Link to Comment disabledvet
disabledvet's picture

When will Government set up a "Boner City" instead? You know..."t.v. We might actually want to watch."

Wed, 01/09/2013 - 13:41 | Link to Comment sansnobel
sansnobel's picture

What does it matter, they all must be smart enough to know it's print or fucking die.....To allow interest rates to rise would implode the system.

Wed, 01/09/2013 - 13:47 | Link to Comment Gamma735
Gamma735's picture

The train is already over the cliff, we just don't know when we will hit the bottom.  Enjoy your ride and please remain seated until the train has completed it's crash.

Wed, 01/09/2013 - 13:55 | Link to Comment Tortuga
Tortuga's picture

Drudge just reported Joe Biden saying Obama will control guns by executive order. The cliff will not matter if this is true.

Wed, 01/09/2013 - 13:56 | Link to Comment lolmao500
lolmao500's picture

Who cares, the FED charter has run out of time, it's time to let it DIE FOREVER.

Wed, 01/09/2013 - 14:13 | Link to Comment Dr. Engali
Dr. Engali's picture

That is a myth. The fed does not have an end date. The fed can only be dissolved by congress or ended if they commit a crime( which matters little since the bankers write the laws).
The Federal reserve act was passed by the House on December 22, 1913 and in the Senate, on December 23, 1913. It also was on a 20 year charter.

In 1927 The original Charter was amended To read "To have succession after February 25, 1927, until
dissolved by Act of Congress or until forfeiture of franchise for violation of law." This means the 20 years never ran out it should have ran out in 1933, this is due to the fact that the first two Federal banks of the United states ran out due to charters not being renewed. This was the only way to combat it.

Wed, 01/09/2013 - 14:01 | Link to Comment Broccoli
Broccoli's picture

This reminds of me of voting for the Dems or the Repubs. No matter who you vote in, the government gets bigger, the deficit gets larger, and your freedoms get smaller. Dove or Hawk, they are all printers by the very nature of them being a part of the Fed.

Wake me up when the FOMC votes to target interest rates at 10% to clear the system of malinvestment and force fiscal responsibility on everyone include the Federales. Oh and they fire all primary dealers.

Edit. Actually my proposed solution still involves central planning, wake me up when the FOMC votes to dissolve itself.

Wed, 01/09/2013 - 14:09 | Link to Comment disabledvet
disabledvet's picture

Eh...what else do planners do other than "centralize planning." no one ever has a "diffuse planning agency" where "planning it outsourced to a local planning detail." and are they planning really? Or are they just in fact conniving? Aspiring minds want to know. Open the drapes Fed Momographers! Us sheeple want answers. Who's suits do you wear? What class do fly? Is there a ballroom in those Government digs? What are we paying for this time around?

Wed, 01/09/2013 - 14:06 | Link to Comment Snakeeyes
Snakeeyes's picture

The Fed doves AND hawks should just do what they want to do: issue those Zimbabwe-like trillion dollar platinum coins. Paul Krugman (aka, Dr. Evil) recommends it!

http://confoundedinterest.wordpress.com/2013/01/06/pennies-40-ton-trilli...

Wed, 01/09/2013 - 14:14 | Link to Comment LongSoupLine
LongSoupLine's picture

I don't give a fuck how they vote, the point is the entire concept and organization is a fucking criminal syndicate that needs to fucking end. Fuck you Bernanke, and our fucking asshole fed staff. Fuck off you bank ass eating fucks.

Wed, 01/09/2013 - 14:13 | Link to Comment Dr Benway
Dr Benway's picture

Birdbrains of the same feather, whatever they call themselves

Wed, 01/09/2013 - 19:18 | Link to Comment TrustWho
TrustWho's picture

I heard Daddy Bernanke is pissed with only -1. Ms Yallen does NOT have a bigger dick than him!!!!!! Daddy is the Big Dog.

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