- Booyah. It's morning in America. The jobless numbers
are stabilizing, the stock market is sizzling, quarterly earnings came
in better than expected, traders have turned bullish, housing is showing
signs of life, and clunker-swaps have given Detroit a well-needed boost
of adrenalin. Even Cassandra economists --like Paul Krugman and Nouriel
Roubini--have been uncharacteristically optimistic. Is is true; did we
avoid a Second Great Depression? Is the worst really behind us?
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- Maybe. But there is only one way to find out for sure.
Raise rates.
-
- Bernanke should welcome the opportunity to show everyone
how he's pulled the world's biggest economy back from the brink of disaster.
All he needs to do is stop giving away free money, shut down a few of his
so-called lending facilities, and stop manipulating interest rates by purchasing
mortgage-backed securities (MBS) from Fannie and Freddie. How hard is that?
The S&P 500 has skyrocketed 48 percent since March 9. What's Bernanke
waiting for; a 75 percent increase; a 100 percent increase??? How high
do stocks have to go to convince Bernanke that the economy can stand on
its own two feet without the torrent of cheap liquidity issuing from the
Fed?
-
- Bernanke can prove to his critics that the US economy
doesn't need the Fed's monetization programs and price fixing; that it
doesn't need the liquidity injections and the buying up of junk mortgages.
($80 billion last month alone) After all, as Bernanke opines, "The
fundamentals of our economy are strong!"
-
- Right. Now prove it.
-
- All Bernanke has to do is boost rates by a point or two
and demonstrate that he's willing to mop up some of the $13 trillion he's
pumped into the financial markets. With just one announcement, the Fed
chair could show our biggest creditor--China--that he's serious about defending
the dollar and the trillion dollars of US Treasuries China purchased believing
that the US was a responsible trading partner who would never write checks
on an account that was overdrawn by $12 trillion. (The National Debt)
-
- So, go ahead, Ben. Raise rates, shut down the printing
presses, roll up the corporate welfare programs. Be a He-man. Make your
critics eat their words. This is from Bloomberg News 8-12-09:
-
- "The Fed's policy-setting Open Market Committee
will today keep the target rate at zero to 0.25 percent and retain plans
to buy as much as $1.45 trillion of housing debt by year-end to help secure
a recovery, analysts said. The FOMC's statement is expected at about 2:15
p.m. in Washington."
-
- Hmmmmmm. So all the "green shoots" happy talk
is pure gibberish, right? There is no recovery. Bernanke plans to continue
flooding the financial system with cheap liquidity. It's all a fraud. Things
aren't better; they're worse.
-
- Look at the facts.
-
- There were 1.9 million foreclosures in 2009 in the first
six months, and there will be another 1.5 before the end of the year. Is
that better? According to Bloomberg: "A glut of unsold homes is also
pushing down prices. The 3.8 million homes for sale in June would take
9.4 months to sell at the current pace of transactions, according to the
National Association of Realtors. The inventory turnover rate averaged
4.5 months in the six years from 2000 to 2005.....More than 18.7 million
homes, including foreclosures, residences for sale and vacation homes,
stood vacant in the U.S. during the second quarter. That compared with
18.6 million a year earlier, the U.S. Census Bureau said July 24
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- Total home sales fell 23.7 percent in June versus a year
earlier." Bloomberg)
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