BALONEY!

Fed interest rate statement

The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 2 percent.

Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.

Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook remains high. It will be necessary to continue to monitor inflation developments carefully.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Read it again. Do you see the word pause in there? Neither do I. A number of Tom, Dick, and Harry's in the financial media seem to have seen it in there:

Fed lowers rates, hints cuts may be at end
The Fed is "basically telling you that unless their outlook for the real economy deteriorates further, they will stay at 2 percent," Mohamed El-Erian, co-chief executive officer of Pacific Investment Management Co, told Reuters.

"This statement strongly implies that the Fed will be on pause for some time," said Joseph Brusuelas, U.S. chief economist at IDEAglobal in New York.
http://www.reuters.com/article/topNews/idUSN2932860320080430

Fed Trims Rate to 2%, Signals Ready to Consider Pause
``We do not expect to see a rate cut at the next few meetings without a substantial contraction of the economy,'' said Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``We are not yet to Memorial Day weekend, but the Fed effectively told us today to take the summer off.''

``The two dissents show they are still worried about inflation,'' said Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc. ``This is a Fed ready to watch from the sidelines.''
http://www.bloomberg.com/apps/news?pid=20601068&sid=aFMety04E3Vc&refer=home

Can you say "media hacks"? The headlines are completely misleading. How can they get away with it you ask. Simple. How many people actually heard or read the Fed's actual statement on interest rates today? Had you before you read it above? These clowns are simply towing the Fed's line, "everything will get better later this year". That's easy to say, much more difficult to make it happen.

The one sentence all of these hacks seem to be focusing on as "Fed Telepathy" is the first sentence in the last paragraph: "The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity," the central bank said. Hey, I'm sorry but that just doesn't seem to say "we're done cutting rates" to me. I'll tell you what it does say to me and what the fed should have said if they were honest [LOL]. It should have read this way: "The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, will help to promote considerable inflation over time and increase risks to economic activity." Because essentially that is what they are saying, that is what they have done, and this is what they are going to continue to do. How the fed can even suggest that they "expect inflation to moderate" going forward completely escapes me. How can it? They have done a great deal more to create inflation than have done to spur growth in the economy. The economy has turned into a minefield. Only a puppet would dare suggest that the Fed said anything regarding a "pause" in interest rates. If anything they said what they've said for months. They stand ready to do what they deem necessary should the need for them to do anything arises. In a nutshell, the Fed really hasn't changed a damn thing.

Yes, The aggressive rate cuts by the fed are probably over. They have now cut rates down to 2%. There is not a lot of room left to cut. If the Fed were to stop cutting rates, it certainly wouldn't be because they have succeed in "saving the economy". They'll stop because they will have foolishly succeed in raising inflation to historic heights. The economy remains in a bad way, and looks to be getting worse despite 1st Qtr GDP coming in miraculously at the exact same number as 4th Qtr GDP.

President George W. Bush on Tuesday said the economy faced a "tough time," a point underscored on Wednesday by a report that showed U.S. gross domestic product expanded at a slim 0.6 percent annual rate in the first quarter.


While the growth rate was a bit stronger than economists had expected, it reflected a buildup in inventories that may weigh on the economy in coming months.

Other details in the report were decidedly weak.


Consumer spending, which accounts for two-thirds of U.S. output, grew at the slowest pace since 2001, business investment fell and home building continued to nosedive, recording the biggest drop in 26 years.

The world's biggest financial companies have posted at least $312 billion in writedowns and credit losses since the start of last year as the subprime mortgage market collapsed.

U.S. foreclosure filings more than doubled in the first quarter as payments rose for subprime adjustable mortgages. One in every 194 U.S. households, or 650,000 properties, were in some stage of foreclosure during the quarter, according to Irvine, California-based RealtyTrac Inc., a vendor of data.

Oh yeah, the Fed has certainly fixed everything. Better dump that Gold and Silver and back up the truck to the Dollar Store. A lot of weaklings are kicking themselves at this hour. Their emotions won out over their convictions, and the TRUTH. 24 hours ago Gold was trading around 869. At this hour it is trading at +10 at 879. 24 hours ago Silver was trading around 16.50, it just hit 17. Is the correction in the Precious Metal over? Only time will tell.

Dollar Going Down
"Gold has a way of taking us right to the edge (as per Oct. 2006 or Aug. 2007), and then, when it has us scared to death, it makes a great move."
-Howard S. Katz
http://news.goldseek.com/GoldSeek/1209565357.php


Crisis Over, the Old Crisis Returns
So maybe a bigger crisis is developing on Ben Bernanke's watch; maybe the much-needed foreign bond-buyer is going on strike, just when the Treasury needs him most – to pony up for tax rebates, investment bank bail-outs, and the first raft of post-Election housing aid.

"Exploding fiscal deficits, the housing correction, protectionist threats and $200 billion in tax hikes scheduled for 2011 are fueling loss of confidence in the US Dollar," as John Chapman, a research fellow at the American Enterprise Institute, notes for the Wall Street Journal. "If foreign holders of Dollars or Dollar-denominated assets sell them, all the good effects of being the de facto international reserve currency start operating in reverse. Until fiscal and monetary policies change, all this implies future inflation and higher interest rates."
http://news.goldseek.com/GoldSeek/1209578556.php

Fed cuts again! Dollar doomed!
The Fed just cut interest rates by a quarter point, again!

But this time it's trying to turn up the volume a bit on its anti-inflation rhetoric — trying to send the message that it "really means it."

Baloney!
http://www.moneyandmarkets.com/Issues.aspx?Fed-cuts-again-Dollar-doomed-1723


HOW TO SELL THE DOLLAR, PART I
The dollar is the single biggest element of risk in the world of finance today. Rearrange the current system of world finance ever so slightly, let confidence in the greenback falter, and the mighty dollar could go up in flames. There are many ways to hedge against this risk. Better still, there are many ways to profit from the likelihood the dollar will fall. Some methods are direct, some indirect. Some are leveraged, some unleveraged. There is a methodology for every taste, but before explaining the specifics, we ask: What ails the dollar?


The dollar is a victim of its own success. It is America’s most successful export ever – more successful than chewing gum, Levi’s, Coca – Cola, or even Elvis Presley, Britney Spears, and Madonna put together. Trillions of dollars flow through the global financial markets every week, and they are readily accepted at large and small – and clandestine – business establishments from Kiev to Karachi.

Today, there are simply too many dollars in circulation for the currency’s own good. Why? Americans have been living beyond their means for more than two decades. The U.S. dollar’s problems stem from a single cause. “If there’s a bubble,” wrote David Rosenberg, chief economist at Merrill Lynch, “ it’s in this four – letter word: debt. The U.S. economy is just awash in it. ”


You’ve seen it firsthand: John Q. Public now holds more credit cards and outstanding loans – with a higher and higher total debt load – than ever before. Outstanding consumer credit, including mortgage and other debt, reached $ 9.3 trillion in April 2003 – a significant increase from its $ 7 trillion total in January 2000 – but by the third quarter of 2007, debt had nearly doubled since 2000, to $ 13.7 trillion. With consumer spending alone responsible for approximately 70 percent of U.S. GDP, that’s quite a hefty personal debt load.

The corporate debt picture is no better. American companies have never depended so much on sales of their corporate bonds. Between 2002–2007, investment – grade corporate bond sales increased nearly 60 percent, growing from $598 billion to $951 billion. But junk bond sales for that same period broke the bank, surging from $57 billion to $133 billion.


The third leg of the debt problem, following consumer and business debt, is Uncle Sam. Government debt as of November 7, 2007, officially passed $ 9,000,000,000,000. That’s about $ 30,000 for every man, woman, and child in the country. This total includes debt owned by many types of investors, from individuals to corporations to Federal Reserve banks and especially to foreign interests. (By 2004, foreign central banks had stockpiled more than $ 1.3 trillion worth of dollar – denominated Treasury bonds and agency bonds at the Federal Reserve. By 2007, foreign debt had nearly doubled, to $ 2.033 trillion.)

What the $ 7.8 trillion figure does not account for are items like the gap between the government’s Social Security and Medicare commitments and the money put aside to pay for them. If these items are factored in, the government debt burden for every American rises to well over $ 175,000.
http://www.dailyreckoning.com:80/

Still got yer Gold and Silver? Better git more.