Fed's Williams: "We Got It Wrong"
In late 2014 and early 2015, we tried to warn anyone who cared to listen time and time and time again that crashing crude prices are unambiguously bad for the economy and the market, contrary to what every Keynesian hack, tenured economist, Larry Kudlow and, naturally, central banker repeated - like a broken - record day after day: that the glorious benefits of the "gas savings tax cut" would unveil themselves any minute now, and unleash a new golden ago economic prosperity and push the US economy into 3%+ growth.
Indeed, it was less than a year ago, on January 30 2015, when St. Louis Fed president Jim Bullard told Bloomberg TV that the oil price drop is unambiguously positive for the US.
It wasn't, and the predicted spending surge never happened.
However, while that outcome was not surprising at all, what we were shocked by is that on Friday, following a speech to the California Bankers Association in Santa Barbara, during the subsequent Q&A, San Fran Fed president John Williams actually admitted the truth.
The Fed got it wrong when it predicted a drop in oil prices would be a big boon for the economy. It turned out the world had changed; the US has a lot of jobs connected to the oil industry.
And there you have it: these are the people micromanaging not only the S&P500 but the US, and thus, the global economy - by implication they have to be the smartest people not only in the room, but in the world. As it turns out, they are about as clueless as it gets because the single biggest alleged positive driver of the US economy, as defined by the Fed, ended up being the single biggest drag to the economy, as a "doom and gloomish conspiracy blog" repeatedly said, and as the Fed subsequently admitted.
At this point we would have been the first to give Williams, and the Fed, props for admitting what in retrospect amounts to an epic mistake, and perhaps cheer a Fed which has changed its mind as the facts changed... and then we listened a little further into the interview only to find that not only has the Fed not learned anything at all, but is now openly lying to justify its mistake. To wit:
I would argue that we are seeing [the benefits of lower oil]. We are seeing them where we would expect to see them: consumer spending has been growing faster than you would otherwise expect.
Actually John, no, you are not seeing consumer spending growing faster at all; you are seeing consumer spending collapse as a cursory 5 second check at your very own St. Louis Fed chart depository will reveal:
But the absolute cherry on top proving once and for all just how clueless the Fed remains despite its alleged epiphany, was Wiliams "conclusion" that consumers will finally change their behavior because having expected the gas drop to be temporary, now that gas prices have been low for "over a year" when responding to surveys, US consumers now expect oil to remain here, and as a result will splurge. So what Williams is saying is... short every energy company and prepare for mass defaults because oil will not rebound contrary to what the equity market is discounting.
We can't wait for Williams to explain in January 2017 how he was wrong - again - that a tsunami of energy defaults would be "unambiguously good" for the US economy.
Full audio recording below.
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+100 on porterhouse and ron zacapa rum!
You got it wrong too, 270,000 jobs created and 600,000 went off the employment rolls. Actually unemp0loyment increased by 320,000.
You som'bitches couldn't close an umbrella!
i wouldn't let that jerkoff manage a kiosk at the mall
We got GREEDY.
I watched Krugtard on Meet The Village Idiot, earlier.
He suggested that the Fed, was wrong for lifting rates. I WAS SCREAMING> at the Top of my lungs.
How much spent wealth does it take to enlighten an dysfunctional libtard?
Krugtard: 1
Yen Cross: 0
Trolls be trollin'!
Some of us " Wake-Up" ? Due Dliligence. [ ms ? Obunga care]
And these people are PAID to be morons? Where do I sign up? I could simply read this website and kickstart the world economy for a tenth of this losers salary. This level of moronism is usually a sign of someone pretending to be a moron for the self advancement of a very few. Could be the case here. Are there really people this ignorant of the basics in the field in which they work?
Pretty much the clientele of ZH could manage global politics and finances.
Too bad Idiocracy is destiny.
These assholes who think they run but but really ruin the economy can't see the forest because all those fucking trees are in the way.
Here is a movie plot:
You create this mandatory paper money that has full faith and credit. Over time the elite, by plan, end up with most of it and purchase any and all things of value supported by deeds, titles and law(more paper). After acquiring these real assets they then make the paper money useless leaving all others with nothing of real value (expect the few with PMs). The End
How many more fed members are going to come forward and say they didn't know what they were doing when they were doing it but they do now? They are high grade geniuses after the fact. There are going to be a lot of congress "representatives?" coming forward after the collapse begging for sympathy and asking for forgiveness. A lot of midnight oil will be burned by them trying to dream up excuses for their actions or in-actions. Torches and pitchforks might be a good investment.
It seems to me the current and ex fed officials that have been fessing up to their incompetence have been doing so since The Big Short was released?
I know, I know, correlation isn't causation. Still.....
they won't be avoiding the gallows when the time comes
Their consumer spending models are wrong and will continue to be wrong until they wake up to the reality that the vast majority of Americans have no savings. Combine that with poor wage growth - the people benefitting the most from the gas price plunge are the most undersaved - they will save some of the benefit. This is bad for their models but good for the nation in the long run.
If no one else is going to say it, I will.
Silentó - Watch Me (Whip/Nae Nae) (Official)
http://www.youtube.com/watch?v=vjW8wmF5VWc (3:22)
Whip Nae Nae, Goldilocks?
Who could have guessed that The Rockie Horror Picture Show as portending the future of our nation?
well, better late than never... just like those oh so timely rate hikes to come
Even a brain dead moron knows the world revolves around oil and prices going up in the future for everything. Gosh, who would have known that everything that is made from Oil, used in Manufacture, used in transportation would make everything cheaper.
It's crazy right, I know.
It's easy to let the Genie out of the Bottle.....
And these over paid Bell-Hops will still be pulling in a Million Pesos a year, instead of being kicked on his as, for not F#cking up a single company but fu#king up an entire country. In fact, he'll probably get a Bonus and a Promotion out of it.
Honestly, why aren't they all fired.
Obama sold out the oil and gas job revolution in the US to his friends in Saudi Arabia and the environmentalists. Good luck getting any economic growth from the only other jobs created in the US...the service industry. The same service industry jobs that are begging for increases to the miniumum wage.
When do the feds ever get anything right? All they do is fuel bubbles, failed to recognize it. blame everything on weather, print money and the screw everyone.
he is right. i have been saving all the money i have saved from lower gas prices in a special account just waiting for confirmation that gas prices will remain low forever. once i get that confirmation i will spend all the money i have saved. i am sure everyone else is doing the same thing.
Sorry to say that if you haven't buying essentials on the way down...
They won't be there when you want them.
Just the law of nature.
This is their real plan. A land grab.
https://www.youtube.com/watch?v=xhHPJTHRgOI
I think they don't have any plan, they are just clueless dumbasses, really - it's just that simple. When they talk it is so obvious they don't have a fucking clue. They try and baffle with bullshit and ecom 101 talking points and all the dumbasses in congress and the media sit there and nod heads. Sad. If this is our so called best and brightest running this shit show we are in deeper shit than I thought.
Sorry, looks like a stuck key on my mac. POS.
Sorry, looks like a stuck key on my mac. POS.
Sorry, looks like a stuck key on my mac. POS.
One thing is absolutely certain, fringe moron bloggers and commentators know more about the economy that dumb fucking bankster spnsored PhDs.
I got this moron thing that I do. It's called thinking.
George Carlin
I resemble that remark.
Spot on William. George was ahead of his time and used comedy/satire to get his point across.
Economics is not a science just another tool to swindle the masses. Critical thinking will get you on the terrorist list. The government took over 25% of the economy with Obamacare and they did not think it would fuck up America? They knew what they were doing. Disposable income is now going to your insurance premium.
The goal is to eliminate all middle class ad get them on the government tit as wll.
We schlonged some mf ers. Mostly white. Mission accomplished.
-President Obama
People are People? Am I wrong?
The most conservative men care the MOST about their family.
That right shoulder is forming on paper gold. ;-D
No shit Sherlock. I see some of these great thinkers who put everyone into the spot are suddenly coming out and being a tad more truthful. Think they're jumping ship before it sinks?!?
Tonsil Hockey?
This consumer is now dealing with a monthly health insruance premium for my family increasing from $1,530 to $2,141. So much for any gasoline savings.
What was unequivocably bad for the US economy was the immense misapplication of capital represented by the shale oil boom. Knowing full well that the costs of extraction in Saudi, Iraq and Iran were a fraction of the cost of shale, the Texas yahoos and others of similar bent nevertheless went hog wild into shale drilling. The result was oversupply which inevitably provoked the Saudi reaction. Any firm believer in the sacred free market could have and should have foreseen it. While being required to reconstruct the shambles of the labor market from this misapplicaion of capital, we should consider that the drop in oil prices enables the reduction of costs in many industries. We will then be able to make a more intelligent application of capital investments into infrastructure, alternate energy and human resources. A completely "free market" sometimes just turns loose fools who do foolish things. Let's face it. The economy needs intelligent guidance, not a free-for-all.
You still cannot see, you blind imperialist exploiters of the masses! The GOSPLAN is a self correcting mechanism!
https://www.youtube.com/watch?v=0yDrtNEr_5M
$avings out of my hands right into those fuckin'RICO colluding Fuckin Insurance Companies.
It's extorting protection money and keeping premiums high to make copay's way too high!
What he got wrong was that large njumbers of people could'nt releverage like his elitist buddies wanted us to,..
I and most people I know make under 60K and that doesnt leave alot left over in descresionary spending after a mortgage and food.
MY/OUR spending is still largely based on paying a mortgage any thing beyond that is for deleverging all the other household debt that I have.
So those of us below the 60K threshold dont live in the same world as our vaunted elite and it shows.
ASIDE
John, save your mea culpas for the proper time and place---your sentencing.
Only in kindergarten does saying sorry make things better. When grown-ups screw up, they are expected to undo the damage they've done, or go to prison if they can't.
That's why grown-ups do the right thing before disaster strikes, not after.
Well that's good to know, now give us our money back you fucken losers.
Energy independence pal..... would have changed the whole dynamic. the pipeline and local oil production would have helped thousands upon thousands or homes instead if bankrupting them.
It seems like to me that shale oil was always both a price and technology play. It was inevitably the high-cost producer, and therefore vulnerable to exactly this scenario, which has happened after every high-cost energy spike.
The fault is the FED, of course, and its incestuous financial system, that made funding cheap and did the standard boom moves of making markets in boom paper, securitizing shit.
The only people who made $ in shale were speculators of an especially clever type, but all of the financial intermediaries did very well.
I find it ironic, that ZH had multiple warning in numerous articles here. And that FED's doesn't even get any clue...
Don't know what to say anymore..
I thought the Fed Chairman (The Pope) and Its various Presidents (Bishops) were infallible? That is after all, what the Priests (CNBS and FoxBS) told me during their sermons on faith.
I was expecting Williams to continue the words "We got it wrong". with "I hereby resign with self respect".
maybe i am naive
Here are some signs of a coming recession.
1. Investors in high-yield bonds are expecting to see their first negative return since the start of the credit crisis in 2008.
http://www.marketwatch.com/story/deteriorating-junk-bonds-flash-warning-signs-for-stocks-2015-12-07?dist=afterbell
2. Factory orders continue to drop
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
3. Default risk spikes
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
4. M&A set record
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
5. Iron ore prices tumble
http://www.marketwatch.com/story/iron-ore-prices-keep-crashing-adding-to-global-growth-fears-2015-11-30
6. Baltic dry shipping index tumbles
http://www.marketwatch.com/story/shipping-index-falls-to-all-time-low-stoking-fears-about-global-growth-2015-11-19
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!