Forum Post: When Doves Laugh: (1) Week Until The Quiet Coup In The Federal Reserve Gives QE3 A Green Light (?) /// Meet Jerome 'Jay' Powell, The Former Wall Streeter That President Obama Just Nominated To The Federal Reserve
Posted 12 years ago on Dec. 4, 2011, 10:30 p.m. EST by MonetizingDiscontent
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Meet Jerome 'Jay' Powell, The Former Wall Streeter That President Obama Just Nominated To The Federal Reserve
-Dec. 28, 2011-
(((MD: now just days away (?) 12/28/2011)))
The Latest Rumor: When Doves Laugh: 4 Weeks Until The Quiet Coup In The Fed Gives QE3 A Green Light
-12/04/2011-
(Tyler Durden) While the world continues to be hypnotically captivated with every word out of Europe, the ongoing fiasco in the insolvent socialist continent is a welcome diversion from our own issues here in the US, which as we noted yesterday, has not "decoupled" from the rest of the world's woes but merely is "lagging." http://www.zerohedge.com/news/china-services-pmi-crashes-us-lags-not-decouples ...After all the European recession is now guaranteed, and no matter how it is spun it will never amount to a positive GDP event for the US, even more when considering that the PBoC's recent resumption of monetary loosening will take at least several quarters to be felt globally. But a lag to what?
Why 2012 of course, and specifically the January 24-25, 2012 Fed statement... http://www.federalreserve.gov/monetarypolicy/fomccalendars.htm#11655 ...when as SocGen pointed out... http://www.zerohedge.com/news/socgen-sees-600-billion-qe3-starting-march-2012-sending-gold-between-1900-and-8500oz ...the Fed is most likely to announce yet another $600 billion episode of quantitative easing.
But why then? Why not at the December 13 meeting, the topic of Fed telegraph Jon Hilsenrath's latest piece... http://online.wsj.com/article/SB10001424052970204083204577078601620105164.html?mod=WSJ_hp_LEFTTopStories ...according to which the Fed will soon emphasize that it will never hike rates and as a result collapse all refi activity because who wants to go into a 30-year fixed at 4% when it will be available at 2% 3 months later, and at 0% 6 months after that?
Simple: the Fed's balance of power is about to shift substantially.
With under 30 days left in 2011, the current roster of 4 rotating voting Fed governors... http://www.federalreserve.gov/monetarypolicy/fomc.htm ...is about to be swept out, only to be replaced with 4 new ones. Yet as the chart below from SocGen shows, the rotation will probably be the most dramatic in Fed history as 3 die hard Hawks (and 1 dove) are eliminated only to be replaced with a panel which is almost exclusively Dovish. In fact, at the end of the day the only modest Hawk on the Fed's voting committee will be Richmond Fed's Jeffrey Lacker (the only member to vote against the drop in FX swap line rates: http://www.zerohedge.com/news/fed-made-decision-bail-out-europe-monday ), and even he in the past has shown his dovish wings.
Which means that for all intents and purposes, the major delay in global events, and market uncertainty, merely has to last until the end of the year when the doves take over. Furthermore to anyone who will point out that in 2012 virtually every single Hawk will be mysteriously out of the voting rotation, all we can say is: "you are correct." And if Europe or Iran or China or any other event serves as a welcome distraction for a few more weeks until the Fed once again does what it does best (and only), so be it.
(((See Voting Chart))) http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2011/12/2012%20Voters.jpg
The Doves Resume Their Crying: Fed's Evans Sees More Easing As Necessary To Avoid "Debt Trap"; Fed Must Act Now
-12/05/2011-
(Tyler Durden) While Italy's Mario Monti earlier said that the country with the still ridiculously high bond yields would be somehow able to avoid a debt trap on its own (for its second largest debt load in the entire Eurozone), the Chicago Fed's Evans just said that America, which has the lowest rates in the world (with the possible exception of Japan) just said that unlike Italy, the US apparently needs far more help, and "further monetary stimulus is needed" to avoid a relapse into the debt trap. This probably means that sooner or later Italy will follow through with statements that "Italy is not the US" - after all, they are perfectly ok as is.
Some other headlines form the just released speech by the crying dove who will not be on the FOMC voting committee next year: *Fed's Evans says employment and growth are stuck in neutral, inflation likely to remain moderate
Fed's Evans says US liquidity trap scenario 'more compelling'
Fed's Evans says imperative for Fed to undertake action now
Fed's Evans says without new developments or policy changes, US won't reach escape velocity anytime soon
Fed's Evans says Fed has fallen short in employment mandate, risks under running inflation goal
Fed's Evans says low rates should stay in place unless inflation breaches 3%
Full speech below... http://www.chicagofed.org/webpages/publications/speeches/2011/12_05_11_muncie.cfm ...for those who want a glimpse of what happens next year whent he FOMC has 9 doves and 1 dawk (a dove-hawk hybrid) on the voting board....
(((Continue Reading this article Here))) http://www.zerohedge.com/news/doves-resume-their-crying-feds-evans-sees-more-easing-necessary-avoid-debt-trap-fed-must-act-no
Separating Fact From Fiction on the Fed's Loans; How Much Was it?
Bloomberg Stands By Its Reporting
-December 08, 2011-
The Fed and the Wall Street Journal have both taken issue with Bloomberg's article Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html
In response to the above article, the Fed went on a publicity campaign, lashing back at Bloomberg and others (but did not mention anyone by explicit name) in this Memo to Congress. http://www.scribd.com/doc/74953881/Bernanke-12-6-11-House-Letter
This is like a full eclipse. I feel like Im about to have the opportunity to observe some form of astrological phenomena; the Federal Reserves board of rotating governors' movements and quirks, as the guard shifts ....and whether the print button gets the 'fat finger' again:
::::::::Treasury To Raise Debt Limit By Another $1.2 Trillion On Dec 30::::::::
http://www.zerohedge.com/news/us-hits-credit-ceiling-again-treasury-raise-debt-limit-another-12-trillion-december-30
Remarks by Governor Ben S. Bernanke Before the National Economists Club, Washington, D.C.
::::::::::::Deflation: Making Sure "It" Doesn't Happen Here::::::::::::
http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm
-November 21, 2002-
In this 2002 speech by then Federal Reserve Board Governor Ben Bernanke is saying that If he ever faced another Great Depression, he would do 5 things... and he has done everything he said he would do so far, now that he is at the helm, as Chairman! Accept for one final thing....
And the only thing left that Ben promised to do, that he hasn't done yet...
"Although a policy of intervening to affect the exchange value of the dollar is nowhere on the horizon today, it's worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt's 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly. Indeed, consumer price inflation in the United States, year on year, went from -10.3 percent in 1932 to -5.1 percent in 1933 to 3.4 percent in 1934.17 The economy grew strongly, and by the way, 1934 was one of the best years of the century for the stock market. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt's devaluation."
Folks should really take some time to read this speech.
Thanks for throwing real grist into the mill. Wish the comments around here were a fraction as informed and entertaining as that site's.
::::::::::::It's So Secret, Even the Fed Does Not Know Who It's Lending To::::::::::::
http://globaleconomicanalysis.blogspot.com/2011/12/its-so-secret-even-fed-does-not-know.html
-December 11, 2011-
Some might think the Fed would care where dollar swaps to Europe go. However, if the Fed cares, it doesn't know.
Bloomberg reports No One Telling Who Took $586 Billion in Swaps With Fed Condoning Anonymity.
http://www.bloomberg.com/news/2011-12-11/no-one-says-who-took-586-billion-in-fed-swaps-done-in-anonymity.html
Might I point out that US taxpayers never lost a cent on Fannie Mae and Freddie Mac either, until of course they lost $200 billion and counting.
::::::::::::::::Fundamental Problem::::::::::::::::
If banks are in such dire straits that they would be at risk if everyone knew they were using the discount window, then they are also in such dire straits the Fed ought not be lending to them in the first place.
Actually, the problem is more fundamental. There should not be a Fed at all. Banks might then think twice about being so freaking leveraged.
::::::::The Federal Reserve - Independence, Yes; But Accountability And Limits?::::::::
http://www.zerohedge.com/news/fed-independence-yes-accountability-and-limits
-12/06/2011-
At this point it is clear that there is no single person in America, and possibly the planet who can influence markets as much as the Chairman of the Federal Reserve Board. The president may have more overall power (possibly) but in terms of moving markets for weeks at a time, that power primarily belongs to Mr. Bernanke. An unelected official with almost total control over the “board” he chairs.
Some have argued whether the Fed should even exist. I won’t go that far (it is beyond my scope), and I even understand why the Fed needs some independence. But I don’t understand why he isn’t accountable or why there aren’t limits....
(((Continue Reading This Article Here)))
-Via Peter Tchir of TF Market Advisors- http://www.tfmarketadvisors.com/
Gotta love ZeroHedge. Incredible.