Homer Simpson Doh

Sensible move for US Fed

It was a sensible statement from the Fed this morning.

They have acknowledged their growth forecasts have been too optimistic and that the so-called recent "transitory factors" only explain some of the recent weakness in economic growth.

The US was going into another soft patch for growth regardless of the Japan earthquake, the weather disruptions and high commodity prices constraining household budgets. Those factors have simply served to exacerbate current weakness. To go down that step, the Fed needs to believe their dual mandates of full employment and price stability are at threat.

At this point the Federal Open Market Ccommittee (FOMC) "expects a somewhat slower pace of recovery over coming quarters...and anticipates that the unemployment rate will decline only gradually..."

On inflation, the FOMC "anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate..."

Those views, with which we concur, are not consistent with another round of quantitative easing. However, we have no doubt the Fed will go down the QE3 path should that need arise, but that's a debate for later. What they have done is put a time frame on their previous comments around the expected "extended period" for exceptionally low interest rates: "The Committee currently anticipates that economic conditions...are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."

This has led to a further rally in the short-end of the US yield curve from what were already expensive levels. It's incredible that only a few short months ago markets were pricing in a rise in fed funds later this year. Anything to say to that Homer?

DEMS BEGINNING TO FEAR THAT OBAMA IS UN-ELECTABLE ...

DEMS BEGINNING TO FEAR THAT OBAMA IS UN-ELECTABLE: JEFF DUNETZ

By Ruth King on August 10th, 2011

http://yidwithlid.blogspot.com/2011/08/dems-beginning-to-fear-that-obama-is.html?utm_source=The+Lid+List&utm_medium=email&utm_campaign=a9b510496a-RSS_EMAIL_CAMPAIGN

According to a report in the Daily Telegraph, many Democrats are beginning to wake up and smell the lousy economy. Not only are the party insiders beginning to doubt Obama’s re-election prospects but they are beginning to reconsider whether Hillary Clinton would have made a superior president. In the words of the great political commentator Homer Simpson “Doh!”

One big reason is for the party malaise was Obama’s performance during the debt ceiling debate. The party faithful was upset that the President agreed to widespread cuts in government spending without winning any revenue increases in exchange.

Finding it hard to defend his often listless and repetitive performances, Democratic strategists and commentators are privately agreeing with Republicans and comparing Mr Obama to Jimmy Carter, another Democrat who remains the post-war benchmark for a failed president.

“He is a do-gooder at heart,” said Morris Reid, a Washington consultant and former Clinton official. “He thinks everyone has the same agenda to do the right thing, but other people don’t have the same agenda. Their agenda is to score points and get their party re-elected.

Gary Pearce, a Democratic strategist in North Carolina, a swing state Mr Obama is likely to struggle to retain in 2012, said: “Democrats are worried. He looks weak, he doesn’t say anything that grabs you, and people are looking for some kind of magic.”

He said some activists were asking “do we need someone tougher to fight the tea party?” “You see a yearning for a Bill Clinton-type approach and Hillary would reflect that. Obama is just a different political animal, he is a low-key guy,” he added.

A 2012 primary challenge by Mrs Clinton is currently regarded as unlikely, but growing number of party activists and old hands are hoping that she changes her mind.

On his nightly television show, liberal host Bill Maher dismissed Mr Obama as a Republican, and asked his panel if Mrs Clinton would have made a better president.

“Yes,” replied astrophysicist Neil deGrasse Tyson, an African American astrophysicist and broadcaster, adding that the Secretary of State would have been “a more effective negotiator in the halls of Congress.

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