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alstry (35.75)

Which Fed Governor is Lying to Us????? Chairman or Vice Chairman???

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April 18, 2009 – Comments (6)

Bernanke:

April 17 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the collapse of U.S. lending will probably cause “long-lasting” damage to home prices, household wealth and borrowers’ credit scores.

VS......

Kohn:

April 18 (Bloomberg) -- Federal Reserve Vice Chairman Donald Kohn said that while the central bank’s emergency lending programs aren’t creating a significant risk for U.S. taxpayers, they may be channeling credit to some lenders more than others.

And then Fed Gov. Kohn states the following:

“We are not trying to favor some sectors over others,” Kohn said in a speech today in Nashville. Still, “we have recognized that the resulting effects can be uneven” across credit markets and “this outcome is not a comfortable one for the central bank.”

Can someone explain what the heck he means???? 

Alstrynomic Clarification:  We are not trying to favor the banking sector, but we know what we are doing is favoring the banking sector and we are worried what Americans might do to us once they figure it out.

Now it appears the two top Fed Governors can't keep a consistent story.  Which is it....long lasting damage as the Chairman says or no significant risk as the Vice Chairman says???

As the sheep getting slaughtered.................

Any thoughts whether unemployment will be around 17% when numbers come out in a few weeks???  At that point, just 13% away from 30% unemployment.

 

6 Comments – Post Your Own

#1) On April 18, 2009 at 3:14 PM, alstry (35.75) wrote:

Venture Capital Investments Plunge 61%.

GM Bankruptcy Could Cost Hundreds of Thousands of Jobs

BestBuy Cutting Wages or Firing Almost 10,000

Los Angeles Releasing Thousands of Teachers

Tens of Thousands of Retailers shutting down

 

We are reaching the epicenter Concentric Contraction.  Most uses for money no longer provide a satisfactory hurdle rate of return with appropriate risk to cover the cost of capital.

It is no longer feasible to build a shopping center, or office building, or housing development, or retail store, or restaurant or most other uses for capital that funded the growth of America's economy.

As a result, instead of borrowing money, businessmen are scrambling to liquidate assets and pay back debt as the cost of debt is much higher than the returns on investments.

We are seeing liquidations all over the country which is causing prices to be depressed further causing even more defaults and more liquidations.

We still have Trillions and Trillions of stressed debt out there....

This process has a long long time to play out before we come close to a bottom...but once we do, Alstry will be a bull.

Based on my current calculations, when we hit bottom we will likely be at between 30-50% unemployment, commercial vacancies will be above 25%, and 70-90% of America will have been forced into or near bankruptcy.

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#2) On April 18, 2009 at 3:32 PM, alstry (35.75) wrote:

DAVID WALKER:  EXPECT YOUR TAXES to DOUBLE!!!!!!!!!!!!!!!!!!!!!!!!!

(CNN) -- Even under the best of economic circumstances, tax season is a tense time for American households. The number of hours we collectively spend working on our returns is probably a lot more than government agencies claim.

The burden in financial terms is even greater: A recent independent survey found that the average American's total federal, state and local tax bill roughly equals his or her entire earnings from January 1 up until right before tax day.

Now imagine that tax bill doubling over time.

In recent years, the federal government has spent more money than it takes in at an increasing rate. Total federal debt almost doubled during President George W. Bush's administration and, as much as we needed some stimulus spending to boost the economy, the nonpartisan Congressional Budget Office now estimates total debt levels could almost double again over the next eight years based on the budget recently outlined by President Obama.

Regardless of what politicians tell you, any additional accumulations of debt are, absent dramatic reductions in the size and role of government, basically deferred tax increases. Remember the old saw? "You can pay me now or you can pay me later, with interest."

To help put things in perspective, the Peterson Foundation calculated the federal government accumulated $56.4 trillion in total liabilities and unfunded promises for Medicare and Social Security as of September 30, 2008. The numbers used to calculate this figure come directly from the audited financial statements of the U.S. government.

If $56.4 trillion in financial commitments is too big a number to digest, think of it as $483,000 per American household, or $184,000 for every man, woman and child in the country.

http://www.cnn.com/2009/POLITICS/04/15/walker.tax.debt/index.html

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#3) On April 18, 2009 at 3:57 PM, checklist34 (99.80) wrote:

my calculations suggest 81.38%, mandatory bankruptcy for all, and a giant interdimensional vortex opening somewhere near radio city music hall in manhattan.  probably some multi-limbed greenish monster types come flowing through the vortex and probably no more than 11% of the population of earth survives. 

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#4) On April 18, 2009 at 5:00 PM, devilinside (72.06) wrote:

Has anyone ever heard anything come out of the mouths of Gov't (Politicians, Treasury, Feds; Dems or Rep's alike) that has ever made any sense? They live in a dream world all their own. Our Gov't has not truely taken the best course of action for the benefit of all in the last 50 years. There are exceptions, but far to few.

We have swung from the hardline Left to the hardline Right over that period. And ideology and the hunger for power has over taken "Common Sense." And the American citizen over reacts taking sides with issues that they think benefits them individually. It's just human nature.

The answer to your question is this. In the end things will work themselves out. The only Question is, "How much pain must we suffer, before we take control of our Governent? The best way to do that is at the ballet box. I get tired of hearing people complain about their Gov't, when it is they that elected their representatives. And all too often when I ask if they voted, they say "No." So I say to them, "Who is really to blame." We need to quit voting for extremism and vote for common sense. As with investing, if it sounds to good to be true, it probably is.

Now for some economics. Here are some things that we can look forward to over the next 18 months or so.

1. High inflation due to the devaluation of the dollar (printing to much money).

2. Higher interest rates to counter the inflation.

3. Lower home prices. There is much more pain to come in forclosures as the unemployment rates continue to rise. (I don't think we will hit 17% but 12% would not be unrealistic, but I hope it doesn't reach 12%).

4. Banks will continue to struggle due to mortgage and credit card defaults over the next 8 to 12 months, due to a continued rise in unemployment. It takes 90 days before a mortgage can be declared in default and another 90 days to forclose on a mortgage, 6 months total. Don't be fooled by their most recent profits. They did't come from earnings on current and new loans. Credit Default Swaps and the new rule change from Mark-to-Market made the books look better. In other words they are cooking the books legally. And only now is the commercial Real Estate Market beginning to show it's ugly head.

5. We will see another recession starting at the end of 2010 to the beginning of 2011 just as Bush's tax cuts expire. The tax payer is going to have to pay the deficiet off on the tax payers money lent to those taking the bailout. How good is that? Just think, we get to bail ourselves out of the mess that our Gov't put us in.

 All is not glumy or dooms day. The citizens of this country are beginning to wake up and want to be heard. They come from every walk of life and all political parties. And they will get louder in the coming months. In spite of those that think the TEA parties were only a one day event, I see it as only the beginning.

Our opportunity in these unpresedented times.

1. We will prevail in the end. As the TMF has prescribed to us, there is opportunity when others are fearful and blood is running in the streets.

2. Stay away from finacials for the time being. Seek out strong companies that have strong balance sheets and can weather the storm.

There is great opportunity in the following sectors:

1. Basic consumables.

2. Basic materials.

3. Energy.

4. Health care.

 I'm very pleased with the performance of my portfolio since reentering equities in Sept. To date I'm up 67% but I think the markets are overvalued and do not reflect reality at this time. So I do see another down turn in the current quarter. That doesn't bother me as I just see it as another opportunity to add to my current positons and add a few more to the portfolio.

I would like to thank the community at MotleyFool for all your insight.

Happy investing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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#5) On April 18, 2009 at 8:01 PM, MasterMind1234 (27.14) wrote:

Federal Reserve = Evil Bastards

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#6) On April 18, 2009 at 10:25 PM, devoish (98.75) wrote:

Devilinside,

And all too often when I ask if they voted, they say "No." So I say to them, "Who is really to blame." We need to quit voting for extremism and vote for common sense. As with investing, if it sounds to good to be true, it probably is

Voting in Democrats in 2006 and 2008 was just a beginning and is not enough. It removed the worst culprits from Government, but they were leaving anyway. President Obama's selection of GS exes for positions of authority and decision making at Treasury was at best a blunder, at worst complicit. The results of the continuation of the Bush Gov'ts policys has cost him support, and America time. The losses must be taken, they should be taken by the investment banks. The US had no responsibility to Fannie/freddie and especially AIG, whose management should be prosecuted for selling a guarantee they could not honor. Far from a bailout, far from keeping bonus's these people should be facing jail time, and the best reason to free the potheads is to make room for the managers.

In 1970-something Fannie Mae was seperated into two entitys. Fannie, a private corporation with access to inexpensive US Gov't money in exchange for keeping stricter lending standards and Ginnie Mae a branch of the US Gov't to maintain the guarantee on previously lent FMA money and provide a conduit for guaranteed US money. But at that seperation, the US Gov't no longer guaranteed Fannie Mae. It said so on their website, and probably in their paperwork. On the Ginnie Mae website it said "These are the only loans guaranteed by the US gov't. Everyone who sold Fannie Mae loans professing they had the backing of the Federal Gov't misrepresented the product and should be looking at jail time.

Regardless, voting is not enough. If you are not calling your Representative and Senator, able to explain what you are talking about you are not doing enough. The lobbyists are calling every day.

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