Blankfein Warns Of "Jarring" Jolt From Fed Rate Hike

Tyler Durden's picture

Lloyd Blankfein and Michael Bloomberg sat down for an interview with Bloomberg TV on Wednesday, and discussed a wide range of topics from Fed "liftoff" to China to US politics. 

There was quite a bit of aimless pontification, a bit of levity, plenty of hypocrisy, and some rather amusing commentary on democracy in America and the role of the Presidency. Most notable are Blankfein’s thoughts on the effects of a Fed rate hike and Bloomberg’s take on income inequality in America and Congressional paralysis. 

Here’s Blankfein on "liftoff":

Well, I think it will be jarring when we see an interest rate hike because we have not had one for some time. And then I think people will get out the smelling salts, take a sniff, and recover because when we have that first hike, the Fed has already suggested that it will be very conservative, at the trajectory of future hikes. 

 

And so if we end up with interest rates at 0.5 percent, or even if we went, over time, in the near future to 1 percent against the growth rate, it will only be because the growth rate is at trend growth or maybe even higher.  That will still be substantially easier financial conditions than we usually have. 

 

And the Fed  would rather take a risk on having rates too soft for longer than run the risk of giving up all that they have accomplished and in getting  the economy to where it is now.  And so they will keep things easier for a long time.

So in other words, a legion of traders who have never, in their young careers, seen a rate hike cycle will immediately panic and have to be revived with "smelling salts", after which everyone will realize that in the grand scheme of things, rates will never really "normalize" (incidentally, neither will GDP growth) and that the Fed became an instrument of Wall Street decades ago, so if the FOMC does prove unable to keep the party going in financial assets, it won’t be for lack of trying. 

Next is Bloomberg on inequality and the Fed’s role in exacerbating the wealth divide:

Well, I think -- there's no question that they have -- the Fed's low -- in my mind, anyways -- no question that low interest rates have exacerbated the wealth gap between the poor and the rich because the rich have assets.  And that is what is being hiked here because of low interest rates, whether they own stocks or real estate or whatever the case may be. 

 

And long-term, that is a very big problem for this country.  And you do not solve the problem as the populists would argue by taking things away from the rich.  You solve the problem by giving opportunity to everybody and by creating jobs. 

Aside from the humor inherent in the fact that this is a billionaire talking about class segregation, the real punchline here is that Bloomberg is making these comments just a week after his own media empire ran a story on Lloyd Blankfein becoming a billionaire on the back of the Fed-assisted rise in his company’s stock price. 

And here’s Bloomberg on why what matters in the political process isn’t necessarily what citizens want, but rather how effective a President is at imposing his or her own will on the collective. As for Congress, well, Bloomberg "doesn’t want to use the word manage," but really, lawmakers are a lot like children wanting to play Angry Birds and as such, the President must be the parent and simply "bring them along."

But let me just give you a thought, Stephanie, we keep thinking the wrong thing when we pick the elected leaders, particularly the Presidents of the United States, governors of the states and mayors of the cities. These are not policy jobs.  These are executive jobs.  You have to pick somebody that knows how to run the railroad. 

 

That's part of the job.  You can't blame -- the executive's job is to bring along the legislature. I don't want to use the word manage because they have their own third of the government, if you will, of power. But it is the executive's job to explain to the legislators why his or her policies are the right one and bring them along. 

 

You do not go and do a poll and ask the public what they want and then try to take them there. That is leadership from the back.  You are elected to go and to say this is what I'm going to do and convince people to come along with you and have the horses to get us all there.

 

But you know, that is the executive's job, to get Congress to come together. You trade, you bribe, you threaten, you cajole, you do all these sorts of things, the same way you run your kids. 

 

You say to your kid, clean your room or you do not get your allowance.  You say to your kid, you do your homework or you cannot play Angry Birds.  You say to your kid, you're doing a great job and let's just do more of it.  I'll help you.  I'll work together.  People interact on a lot of different ways.  And it is the executive's job to do that with Congress as well. 

And if all of the above isn’t scary enough for you, we’ll close with the following exchange:

Bloomberg: Would you like to get into government? 

 

Blankfein: I think it would be an attractive thing to do. 

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StackShinyStuff's picture

Blankfein needs a jarring jolt right up his ass

Headbanger's picture

Translation:    WE TOLD YOU TO GET THE FUCK OUT NOW YOU MOE-RONS!

But the term should be "SHREDDING", not "jarring"

clooney_art's picture

 

That Jarring Dolt should continue doing God's Work.

mtl4's picture

My personal favorite was "You do not go and do a poll and ask the public what they want and then try to take them there."

I'm sure he questions why we even need political elections either..........thank god for Jade Helm, right Lloyd?!

 

Amish FinEng's picture

Both these stinkpot joos need a horse kick right between the eyes!

ebworthen's picture

Exactly.  Sounds like Gold Slacks may be putting a Republicrat in the White House this time around to keep the delusion alive.

J S Bach's picture

The hubris of the tribe is breathtaking.

Gold...Bitches's picture

Not really.  They see that there are no consequences even when they outright break the law so why wouldnt they have this viewpoint?

JustObserving's picture
Blankfein Warns Of "Jarring" Jolt From Fed Rate Hike

Obviously his second billion will get more diificult - so the head of the Vampire Squid warns.  Old Yeller better listen to her owner.

US debt is so high that any rate hike can destroy the fragile economy

No rate normalization during my lifetime Bernanke

Ivanovich's picture

Why would Blankfein want to get in government?  He owns it already.

Honey Badger's picture

He wants to be on the receiving end of bribes.

venturen's picture

It is a time honored tradition...look at all the good works Hank Paulson did! He singlehandedly rescued Goldman and made them trillions! He destroyed Lehman. Blankfein plans to do the same! 

i_call_you_my_base's picture

More like a jarring jolt to blankfiend's stock options.

booboo's picture

Of course it does, the debt merchants and the politicians both understand that debt HAS to continue to grow or the ponzi collapses like house of cards

38BWD22's picture

 

 

We all know the debt can never be repaid in anything like real terms.  The whole thing will come down one way or another.  Inflation, default or borrowing until it crashes.  Ugh.

*   *   *

Nice being back among old friends, booboo, even if mi nombre es diferente...

NoDebt's picture

"You solve the problem by giving opportunity to everybody and by creating jobs."

And why, exactly would we want to do that, Lloyd?  Seems the current system is working quite well for you and your buddies right now.  

I find it IMPOSSIBLE to believe this guy is afraid of a few pitchforks.  Or ANY pitchforks.  Especially since there has been NO VIOLENCE towards "rich people" of any kind in any way, even as their wealth has outstripped that of average Americans by a multiple of thousands, even millions.

Self-serving tripe.

williambanzai7's picture

No you don't take their money, you string them up.

Infinite QE's picture

Lord Blankfein, being a khazarian kingpin in the Fed knows there will be no rate hikes during his lifetime.

Bill of Rights's picture

Don't be so sure of yourself inflation is running higher than stated, and they know it.

Infinite QE's picture

As it has been for a decade or so. Raising rates will implode the system. Which of course could be their reason to raise them.

asteroids's picture

I remember the dayz when the FED would raise rate a full point. If that were to happen, I think banksters would stroke out and start jumping out of windows.

Chuck Knoblauch's picture

It would be bad news for Hildabeast.

Arnold's picture

I doubt that there would be anything good for Hillary now, short of a global EMP.

Chuck Knoblauch's picture

You'll be surprised when Trump is forced to run as an Independent.

With no competition among the Demonic party.

Satan himself is running this election.

quasi_verbatim's picture

Scorn Clintoris at your peril.

Hath not a woman eyes? If you prick us, do we not bleed? and if you wrong us, shall we not revenge?

youngman's picture

You solve the problem by giving opportunity to everybody ....funny then why build a HFT computer.....that is kind of the other side of that statement I think.....the Tribe can steal...but not you

gregga777's picture

I am not a practitioner of anti-Semitism, the European and now Islamic disease of the mind. However, it is appalling that there are so many high-profile Jews (Greenspan, Bernanke, Blankfein, the Goldman-Sachsonites, Bloomberg, Sumner Redstone, et. al.) who are leading the charge of Class Warfare against the middle and lower classes.

Make no mistake about it, there is Class Warfare being relentlessly waged in the United States against the American People by the rich. Zero Interest Rate Policy (ZIRP) is the most recent, directly "in your face" form of class warfare implemented by the rich. The Class Warfare that has now been intensively waged for more than three decades has impoverished tens of millions of Americans and dramatically reduced the middle class and enlarged the lower classes.

As far as I am concerned, the rich and their whores in politics, government, main stream media, Wall Street, banking, law enforcement, etc., are the enemy of the American People. When they and their families reap the whirlwind I will lift not one finger to help them. They have brought it all upon themselves with their blind greed and whorish values.

Infinite QE's picture

None of those you mentioned are semites. They are khazarians. Devils incarnate.

dontgoforit's picture

So, Mein Kampf was correct?  I don't think so.  There's somethng else afoot.  For the non-believer it's hard to figure; for the believer, it seems fairly obvious.

JR's picture

And thus the false claim of modern Zionists as sole descendants of the biblical Israelites to Palestine as “A land without a people for a people without a land."

Palestinian people: Wikipedia (excerpt)

The Palestinian people are the modern descendants of the peoples who have lived in Palestine over the centuries, and who today are largely culturally and linguistically Arab due to Arabization of the region. Despite various wars and exoduses, roughly one half of the world's Palestinian population continues to reside in historic Palestine, the area encompassing the West Bank, the Gaza Strip and Israel...

Genetic analysis suggests that a majority of the Muslims of Palestine, inclusive of Arab citizens of Israel, are descendants of Christians, Jews and other earlier inhabitants of the southern Levant whose core may reach back to prehistoric times. A study of high-resolution haplotypes demonstrated that a substantial portion of Y chromosomes of Israeli Jews (70%) and of Palestinian Muslim Arabs (82%) belonged to the same chromosome pool….

http://en.wikipedia.org/wiki/Palestinian_people

JR's picture

How do we express our opposition to actions by people dominated by race without the label anti-Semitism? If it isn’t anti-Semitism what is it?

“This is our Israel, this is for the Jews. No Palestinian should come to Israel”: A Palestinian-American’s story of being detained at Ben Gurion airport’

 - See more at: http://mondoweiss.net/2015/07/palestinian-americans-detained#sthash.8x4cY7cC.dpuf

Time Warner executive moonlights as speechwriter for Netanyahu

US Politics Philip Weiss on July 28, 2015

Gary Ginsberg, a top executive at Time Warner, is a speechwriter for Benjamin Netanyahu in his free time. Ginsberg says Time Warner is fully aware of his service but has not disclosed it because he does so in his personal capacity as a friend of Netanyahu’s.

http://mondoweiss.net/

Dr. Engali's picture

It's a lousy quarter fucking point! If the markets can't handle a quarter point what makes anybody believe that we will ever see rates normalized again? Oh yeah, fuck you Blankfein

kralizec's picture

Blankfein is like a pitboss suddenly realizing there is gambling going on.

CHC's picture
CHC (not verified) Jul 30, 2015 8:31 AM

Anyone notice how only the rich (very rich) are the ones always blabbering about income inequality as if that's something they're really concerned about?  Makes for awesome sound bites but when you realize what they're saying - you'd rather just punch them in their necks.

Budnacho's picture

Such a robust economy that a .25% increase will cause havoc....

Yep...Good times ahead!

samsara's picture

"And the Fed  would rather take a risk on having rates too soft for longer than run the risk of giving up all that they have accomplished and in getting  the economy to where it is now."

"no question that low interest rates have exacerbated the wealth gap between the poor and the rich because the rich have assets"

 

So if we put those two together,  the Fed doesn't to give up all that it has acheived.  That being that the Elite got the gravy and the poor got the shaft I guess.

 

 

MFL8240's picture

We all know that Loyd is an honest man and he is doing this for our good!

biggestbrother's picture

SO 

What LLoyd Blankthief wants is for the Fed to keep the white powder free money coming his way until he has personally pocketed all the savings of the American Middle Class.

 

But what the not so smart, just lucky and corrupt, Blankthief doesnt realize is that the market will shortly implode under its own weight, China will tank at the same time, and the Fed will be completely out of ammo. No amount of printing will pick us up.

 

And he can go off to his big ugly house in the Hamptons and sit there alone, very rich and very hated thinking what a contribution he has made to mankind. 

biggestbrother's picture

SO 

What LLoyd Blankthief wants is for the Fed to keep the white powder free money coming his way until he has personally pocketed all the savings of the American Middle Class.

 

But what the not so smart, just lucky and corrupt, Blankthief doesnt realize is that the market will shortly implode under its own weight, China will tank at the same time, and the Fed will be completely out of ammo. No amount of printing will pick us up.

 

And he can go off to his big ugly house in the Hamptons and sit there alone, very rich and very hated thinking what a contribution he has made to mankind. 

biggestbrother's picture

SO 

What LLoyd Blankthief wants is for the Fed to keep the white powder free money coming his way until he has personally pocketed all the savings of the American Middle Class.

 

But what the not so smart, just lucky and corrupt, Blankthief doesnt realize is that the market will shortly implode under its own weight, China will tank at the same time, and the Fed will be completely out of ammo. No amount of printing will pick us up.

 

And he can go off to his big ugly house in the Hamptons and sit there alone, very rich and very hated thinking what a contribution he has made to mankind. 

biggestbrother's picture

SO 

What LLoyd Blankthief wants is for the Fed to keep the white powder free money coming his way until he has personally pocketed all the savings of the American Middle Class.

 

But what the not so smart, just lucky and corrupt, Blankthief doesnt realize is that the market will shortly implode under its own weight, China will tank at the same time, and the Fed will be completely out of ammo. No amount of printing will pick us up.

 

And he can go off to his big ugly house in the Hamptons and sit there alone, very rich and very hated thinking what a contribution he has made to mankind. 

Fahque Imuhnutjahb's picture

 

 

...yeah, either that or, he'll front run the damn takedown positioning himself to capitalize on the disaster (playbook '08). 

"He would see this country burn if he could be king of the ashes."  -- Varys,  G of T's

Son of Captain Nemo's picture

Speechless by his words of course...

But I don't know what is more breathtaking... 

The slimy motherfucker in his own words?... Or Bloomberg giving him the capacity and "the podium" for speech?

Fahque Imuhnutjahb's picture

It's "god's work" man, you wouldn't understand,  Mammon works in mysterious ways.

thunderchief's picture

The fed has lots of ammo.

It's called NIRP and it can go as low as they want.

Jack Daniels Esq's picture

Black cock in Blank's asshole is the only jarring that counts

Son of Captain Nemo's picture

Something "Black" indeed...

But I was thinking of something more prodigious along the lines of Shaquille O'Neil's fist all the way up to his shoulder!