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Here Is The "Rate Hike Decision" Waterfall Analysis Goldman Gave To The Fed
The cozy "relationship" between Goldman and the Fed has been documented on these pages and elsewhere for years. From our 2010 question "Why Does Brian Sack Interact With Goldman's FX Committee?", to the Carmen Segarra tapes, the fact that the Fed, and specifically the New York Fed, is merely a branch of Goldman has been firmly established. Of course, for a bank which has every other major global financial institution also firmly in its grasp, this is merely ordinary course of business.
The main reason why this two-way relationship is so very critical, is because in a Fed dominated by career economists who are clueless about practical policies, the entity that comes up with said policies is none other than Goldman Sachs, and specifically head economist Jan Haztius. Conveniently, at this critical time to the Fed's rate hike decision, it was none other than Hatzius who moments ago schooled the Fed during the "20th Annual Financial Markets Conference: Central Banking in the Shadows: Monetary Policy and Financial Stability Postcrisis."
Reuters reported the big picture: Jan Hatzius said on Wednesday he believed the Federal Reserve will likely raise interest rates late this year or early next year, given the amount of slack still present in the labor market.
Hatzius, speaking on a panel here at an Atlanta Federal Reserve Bank event, said his view on the timing reflected a significant amount of slack still in the labor market and weak wage growth.
"My own view is that it's not yet time. Certainly not high time yet," Hatzius said, adding that Goldman's forecast for the first hike is for September.
"My opinion in terms of when monetary policy ought to be tightened is very late this year, or early next year."
Amusing that this is the same "analyst" who last year forecast "above consensus" growth in the US. So much for that. However, now that he has been proven wrong once again (recall he did the exact same thing in December 2010 when he went from bearish to bullish just as the Fed was preparing to unleash Op Twist and QE3), it is time to tell the Fed what to do.
Which is precisely what he does in the presentation he delivered earlier today titled "Hiking Rates in the Name of Financial Stability."
Here is the punchline: Goldman's waterfall analysis on what the Fed should think about as it is about to announce a rate hike:
And while Goldman is ok with layer 1 through 4, the one place that Hatzius tells the Fed to hold back on is item #5: "It the macroeconomy ready?" Goldman's answer: it may not be ready yet.
- While some job market measures such as job openings and headline unemployment have tightened a lot, broad measures such as U6 and E/P still show substantial slack.
- The continued weakness of nominal wage growth supports a focus on broad as opposed to narrow slack measures.
- Core inflation remains well below the 2% target, and only some of this is explained by oil and dollar pass-through.
- The risks to global growth and inflation remain on the downside.
- At the ZLB, hiking too early is riskier than hiking too late.
What is left unsaid that the one place that currently is most at risk from an "early" rate hike (because 7 years of ZIRP is clearly not enough) is Goldman's 2015 bonus pool.
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Muppeteer Tutorial
actually it's 1 question: What does the VAMP want
Makers and Takers.
-Ayn Rand
They are clueless and have no fucking idea what to do, from the lowest desk trader all the way to FED chairman. These are the people leading us today...
"These are the people leading us today..."
These are the people stealing from us today......
There fixed that for ya.
They are stealing only because they are at the top of the chain. In a normal world, they would all have a hard time making ends meet as some petty MLM peddlers...
power has been shifted to DC. The cozy links are broken.
You are correct , they are in leadership positions, however that is not how they veiw it.
Banksters Inc. looks at their role as an "ownership" position as in they own the whole ball of wax. Not one thing can or will be done about it. "Free" to steal in broad daylight!
So easy even Moe Howard could do it!
6. Is Goldman Ready?
- No: no response
- Yes: Let 'er riiip. Muppets be damned.
Q: What do the Sheeple have to say about this?
A: Bah, bah, bah. Baaah, baaah, baaah. Bah, bah, bah.
no more shenanigans, no more tomfoolery, no more ballyhoo...
Assume this is what they will use to make the decision
Taking direction from Goldman is the path to certain economic death
7 years is not enough, you need at least 10 to make a decade.
do i give a shit ?
- yes -> goto no
-no then i do not give a shit
Item number 5 out of 4, am I missing somethng? What a load of rubbish. With trillions in debt and even moar trillions in unfunded liabilities, the macroeCONomy will never be ready for a rate hike. Seven years of ZIRP is just the warm up.
The last one should read "Is the macro-economy ready for INTERESTing times and a shearing?"
Bring back Hank Paulson and Jon Corzine. They will figure this out.
the rate hike decision tree has only 1 branch
does it benefit wall street (at main street's expense)?
if yes, hike away
Isn't that every decision tree at the Fed?
Thanks El capitan' (Hatzius) obvious, for those pearls of wisdom. </heavysarc>
These fucking clowns remind me of that 'Barrel of Monkeys' game. Just swinging from one BS hopium branch to another like blind chimps. First it was June, then September, and now September to the beginning of '16.
I think the markets are going to do their jobs for them. The smell of turmoil is growing stronger by the day, and the stench of rhetoric being bloviated about how good things are is unbearable.
When does 'credibility' Crack, ¥X...? Isn't that about the only question left...?
Is there a big risk of damaging bust? Yes.
Are regulatory tools effective? No.
Do higher rates reduce bust risk? No, they guarantee it.
WAT DO?
Unclear.
I'll tell you what to do, Fed... BOAKYAG
It is worrying indeed, that Hatzius is the best that they can do. This guy has had to downgrade almost every growth forecast he has made on the U.S economy over the past thirty six months; sometimes and often, within a matter of weeks. And, of course, the irony being that in many instances he and his colleagues at GS are relying on models that have been provided to them (for free) by the FED;
http://www.federalreserve.gov/econresdata/frbus/us-models-package.htm
The truth is, that they are all guessing and none of them have a clue, but as long as they keep earning their wealthy clients 2/3% a year, everything will be just fine.
thanks Goldman...i think?
Goldman flow chart-
Is shit fucked? If yes, 'respond'
Will 'response' fuck is over? If yes, kick the can.
Repeat as needed.
Wrong. Here is the plan/protocol;
1) Print money from nothing,
2) aquire ownership of real assets and governments,
3) do people still accept our FRNs?
4) If yes, return to step "1",
5) if no, kill people in false flag ops and have political puppets change laws to hide or make what was done or make all actions of the bankers and financiers perfectly legal, then return to "1" with a new flavor of fiat if necessary....
In other words, the 'Scheiss' dollar, as honorable Mr. Willie puts it.
Can we delay this gigantic bust until the fall when we can just blame it all on that Shemita thingy?
Who's FED is it anyways? Sorry that was rhetorical. I'm thinking of opening up a business called the Federal Fiat Corporation. What better way to sound official. I not sure what the company will do but I'm sure the muppets will probably think it has something to do with the government and cars. Probably take it public in a year should have market cap of $100,000,000.
higher rates will rocket the USD - will crush US indexes
like everything else, yellen talks riddles and does fuck all - typical gubbamint worker
but since the Fed has no mandate and acts like a market maker, you never know - rates could rise if yellen gets short
Freudian slip there in the title of the conference: "Central Banking in the Shadows". Do tell, Mr. Hatzius.
why would anyone at GS/FED ever claim that "higher rates reduce bust risk"?
"everyone knows" that Great Depression was due to Fed slightly raising rates that caused collosal bust so why those ppl would believe raising rates would ever reduce it?
so, effectively no rate hikes this year or next?
Uh, looks like Hatzeus' publication was pulled from the link above. Not available via search on their site, either. Self destructing after enough time and/or views?