Fed Whistling By The Graveyard

"There is nothing so bad that politics cannot make it worse."
- Thomas Sowell

Fed Keeps Rate at 2%, Cites `Upside' Inflation Risks
June 25 (Bloomberg) -- The Federal Reserve kept its benchmark rate at 2 percent and warned that faster inflation may accompany some strengthening of the economy.

``Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased,'' the Federal Open Market Committee said in a statement in Washington after a two-day meeting.

``The Committee expects inflation to moderate later this year and next year,'' the Fed said. ``However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.''
http://www.bloomberg.com/apps/news?pid=20601103&sid=a5IbJrNvHKak&refer=news

Ah Bumbling Ben, always the funny guy, talking out of both sides of his mouth.

"Although downside risks to growth remain, they appear to have diminished somewhat..."

Uhhh, what? Diminished?

"No, thanks, I'll pass." "You go ahead and take another hit man."

Diminished? What is he smoking? He actually believes people are going to believe that? Let's see now: Consumer Confidence hit a 16 year low and house prices fell the most on record just yesterday. Just today New Home Sales dropped again, and Durable Goods Orders are virtually nonexistant. Jobless claims are up on balance for the month, once again. NY Empire Stae Manufacturing -8.68, Philadelphia-Fed Manufacturing survey -17.1, Richmond-Fed manufacturing survey -12. All below expectations. Readings that fall below zero indicate contracting activity, and the lower the number, the greater the breadth of the decline. Capacity Utilization and Industrial Production, both down. Corporate profits expected to drop 10% in the second quarter. Diminished?

In its Wednesday statement, the Fed said recent information "indicates that overall economic activity continues to expand, partly reflecting some firming in household spending." The reasoning for this assertion is difficult to work out. Subtract the $600+ government handout individuals and families received over the past month, adjust for inflation, and retail sales STILL STINK! Most household spending can be attributed to rising consumer credit card debt, +$15 BILLION dollars in April, and $9 BILLION in May. Americans have been spending money they don't have for so long now, they can't stop. And now they have even less money they don't have, and are spending even more of it. The entire "boom" of the past ten years was built on false growth and a mountain of Debt. Can you say CATASTROPHE?

It should appear to anybody paying attention that not only do risks to growth exist, they are getting worse, NOT better. In fact, I don't think it to bold to suggest that the "bad" is only just now beginning, and "bad" is going to quickly get a whole lot worse. The economic data we are seeing now usually comes at the end of a recession, not the beginning. ...And yes, we are closer to the beginning of this recession [depression?] than we are the end.

The Dollar certainly showed it's lack of confidence in Bumbling Ben's tongue wagging, slipping below 73 again. Gold and Silver were oddly quiet today taking their cue to silence from minor weakness in Oil. Bumbling Ben is absolutely correct in his assertion that "upside risks to inflation and inflation expectations have increased". This comment alone should have sent Gold soaring. The Fed tried painfully hard today to give the impression that they are now inflation hawks. Nothing could be further from the truth. Chickens might be a better description. The Fed is in NO hurry to raise interest rates.

"The Committee expects inflation to moderate later this year and next year". That should read: The committee HOPES inflation will moderate later this year and next year. Sorry Buddy Ben, it's only going to get worse. Growth is going into the tank, and inflation is going skyward. They have a word for that scenario in your economic dictionary, STAGFLATION. I suggest you look it up, embrace it, and then get your ass out of Washington before the lynch mobs take to the streets chanting your name: "Pinocchio, Pinocchio, come out, come out, wherever you..."



Mortgage Bailout A Legislative Turd
The shaping of this legislative turd has been duly reported on the news pages of the Wall Street Journal, but you have to read Tuesday’s lead story to get a bracing whiff of it. What it will provide, first of all, are the kind of mortgage loans that led to the "subprime mess" in the first place -- which is to say, loans to homebuyers who cannot come up with a downpayment. The private sector is no longer making such loans, and the FHA itself has told its benefactors on Capitol Hill that it no longer wants to make them either. Of course, that didn’t prevent the bill from sailing through Congress. As Thomas Sowell once said, "There is nothing so bad that politics cannot make it worse."
http://news.goldseek.com/RickAckerman/1214460060.php


Silver Delivery "Delays"
By: Stephen Kovaka, CPA

In our politically correct world, there are always new words for everything. “Fat” became “overweight” or “obese”. When these people go to buy clothes, it’s at the “Big and Tall” shop. Cripples became “handicapped”, or “disabled”, then “differently-abled” or “special”, as in “Special Olympics”. A government agency states that it may not always be right, but it is NEVER wrong.

Language has been pressed into the service of denial, as spin has become more important than reality. And the most politically incorrect word of all? LIE. Today there are “untruths”, “exaggerations”, “perceptions”, and “stories”, but very few lies. Classifying statements as truth or lie is simply not done.

So it should be no surprise that rather than silver shortages, today we hear that there are merely “delivery delays”. We are told that this is in NO WAY a shortage, which God Forbid! There is plenty of “tomorrow silver”, just not much “today silver”, as though these were the same thing.

The fact is, the market for silver promises, also known as silver derivatives, is roughly 100 times as large as the market for delivered silver, according to Jeffrey Christian of the CPM Group, publisher of the annual CPM Silver Yearbook. CRIMEX silver futures, where the eight largest silver dealers were collectively promising to deliver 120 days of WORLD silver production last year, are just one example of such derivatives. Of course, this market also has stringent delivery limitations, so everybody knows that very little of this “silver” will ever actually be delivered from the CRIMEX warehouse. By comparison, the amount of silver actually in the CRIMEX storage facilities amounts to window dressing. This makes the CRIMEX a price setting mechanism, pure and simple, unrelated to deliverable supply.
http://news.silverseek.com/SilverSeek/1214312789.php

CRIMEX? Ya gotta love that! Henceforth the NY COMEX will be known only as CRIMEX.