US economy: Ben Bernanke to give high profile speech

[Gerald]

The head of the US central bank, Ben Bernanke, is preparing to give a key speech that will be closely watched by markets for any hint of new stimulus.

He will speak at a meeting of central bankers in Jackson Hole, Wyoming.

Last year, his speech paved the way for $600bn (£368bn) of quantitative easing - injecting cash into the financial system to try to boost the economy.

This year, with the US again slowing sharply, markets are speculating that further QE may be round the corner.

Market anticipation:

Shares have rallied all week in anticipation that the Federal Reserve will act to reinvigorate the US recovery.

Earlier this month, stock markets plummeted as economic data pointed to sluggish or virtually non-existent growth in the US and Europe.

"Recent events have made it blatantly clear that the economy is in a funk," says Paul Dales, senior US economist at Capital Economics.

"The housing market remains at rock bottom and even the manufacturing sector, which had been the shining light of this recovery, has come off the boil."

Gold also hit a new record high on Tuesday, before falling back as stocks rallied.

Investors see gold as a haven in times of economic uncertainty, and QE is expected to depress the value of the dollar versus gold, which also makes the precious metal more attractive.

http://www.bbc.co.uk/news/business-14644827

Note: 26 August 2011 Last updated at 12:48 GMT

[CaptainHaplo]

Thankfully, no action will be taken. Weakening the dollar further (via quantitative easing) will not help the economy. Its incredibly short sighted while doing little to nothing in real terms to promote growth, yet sells long term future prosperity.

Because the Fed has not acted (a wise decision), expect the "policy" speech by the president to be significant in its calls for bigger government, specifically in regards to government getting even further into the housing business.

[STEED]

Thankfully, no action will be taken. Weakening the dollar further (via quantitative easing) will not help the economy. Its incredibly short sighted while doing little to nothing in real terms to promote growth, yet sells long term future prosperity.

Because the Fed has not acted (a wise decision), expect the "policy" speech by the president to be significant in its calls for bigger government, specifically in regards to government getting even further into the housing business.

Dose this mean a couple of days of big up's on the DOW before they cream it off with big falls next week?

That is just what happens here on the FTSE 100.

[AVGWarhawk]

Dose this mean a couple of days of big up's on the DOW before they cream it off with big falls next week?

This means the printing machine for dollar bills will be working overtime.

"Recent events have made it blatantly clear that the economy is in a funk," says Paul Dales, senior US economist at Capital Economics.

This guy has a profound grasp on the obvious. :doh:

"The housing market remains at rock bottom and even the manufacturing sector, which had been the shining light of this recovery, has come off the boil."

Manufacturing sector? Does he mean China?

Gold also hit a new record high on Tuesday, before falling back as stocks rallied.

Investors see gold as a haven in times of economic uncertainty, and QE is expected to depress the value of the dollar versus gold, which also makes the precious metal more attractive.

I see gold value dropping like a rock when we come out of this 'funk'. If we never come out of the 'funk' gold will be only worth what one is willing to pay.

[STEED]

This means the printing machine for dollar bills will be working overtime.



This guy has a profound grasp on the obvious. :doh:





When this happens as I said it's just a quick pound or buck in your case which means nothing as no one is able to do what must be done.

[mako88sb]

There was a interview with the president & CEO of a company called Methanix , back in late July that has some good things to say about the state of the US economy. Here's the interview but skip ahead to about the 5:30 mark to hear his views on US growth.

http://www.bnn.ca/News/2011/07/28/Methanol-demand-growing-Methanex-CEO.aspx

[CaptainHaplo]

What I meant regarding more "big government" initiatives is you can expect the President to suggest a goverment takover of the housing industry. By taking over Fannie and Freddie, banks won't be able to "compete" for what is now very low return, high risk loans. Right now banks are not itching to lend to high risk home buyers, but with a federal takeover of the 2 major high risk financiers, they will stop altogether. The government - through F&F, will offer lower interests rates to high risk lenders (in a gambit to promote the market) which will result in more people buying homes they cannot afford. Unfortunately, defaulting will then put all taxpowers on the hook (even more than they are because of the bailouts).

It won't be the printing of money this time, which devalues the dollar and increases inflation directly. This will be an increase in public / governmental debt - which still undercuts the dollar and causes inflation.Just not directly. So the end result is the same, the administration takes acts to further harm the economy while making the excuse they are trying to help.

If a doctor was treating you for an injury, didn't know what to do and continually did the wrong thing - you could sue them for malpractice. When the government does it, the people rise up. Of course, in today's world, when that happens in this country, they are mocked as "tea baggers", "cowboys", "bigots" and "extremists".

[Gerald]

(Reuters) - The heads of the U.S. Federal Reserve, IMF and OECD stepped up pressure on political leaders on both sides of the Atlantic to shake off their inertia and tackle urgent economic problems.

If politicians ignore their pleas -- including a blunt call from International Monetary Fund chief Christine Lagarde to "act now" -- the slowdown in world growth and debt turmoil in Europe could morph into a deeper crisis, top monetary officials and economists warned at an annual retreat here.

"I hope they listen," said Bank of Israel Governor Stanley Fischer.

Alarm over political deadlock was as obvious a backdrop to the annual meeting of policymakers in the wilds of Wyoming as the thunderstorms that rolled over the nearby Grand Teton peaks and dumped rain on the Jackson Lake Lodge.

"The governance right now is not going through a very brilliant moment, I have to say, neither in Europe nor in the United States," Angel Gurria, who heads the multi-nation Organization for Economic Co-operation and Development, told Reuters.

"The signals that are coming out of the short-term discussions is, 'We can't even agree on about the time of the day, even if there's a big clock telling us what the time of the day is.'"

In the United States, the political impasse has thwarted moves to tame massive budget deficits which brought the nation to the edge of a debt default and cost the United States its coveted AAA credit rating from Standard & Poor's.

In Europe, leaders are fighting over who should pay for the sovereign debt crisis in the euro zone, which has a unified regime for monetary policy but whose member nations run their own budget policies.

PHONE CALLS, SPEECHES

Lagarde, whose appearance on Saturday was a late addition and reflected her sense of urgency, delivered a hard-hitting pitch against braking spending too fast as nations struggle to rein in long-term budget deficits.

She was far from alone.

The Fed has slashed U.S. interest rates to near zero and bought $2.3 trillion in long-term securities in an effort to kick-start the recovery. With monetary policy stretched to its limits, fiscal policy is now key, Fed Chairman Ben Bernanke suggested.

"Although the issue of fiscal sustainability must urgently be addressed, fiscal policymakers should not as a consequence disregard the fragility of the current economic recovery," he said on Friday.

"Fortunately the two goals of achieving fiscal sustainability -- which is the result of responsible policies set in place for the longer term -- and avoiding the creation of fiscal headwinds for the current recovery are not incompatible."

Bernanke said battling long-term joblessness in the United States must be a top priority, and he called on the U.S. government to put a floor under the sagging housing market, remarks that Lagarde echoed forcefully on Saturday.

Bernanke's speech was "the shot across the bow of the government saying, 'don't keep layering expectations on the Federal Reserve, guys, you have a job to do,'" Columbia Business School Dean Glenn Hubbard said in an interview with Reuters Insider.

"The Fed is simply saying, 'We are monitoring the situation very carefully but would encourage the government, both parties, to get their act together and pass a long-term fiscal strengthening package and then perhaps short-term stimulus.

The calls from the world's economic policy elite may give some political cover to President Barack Obama, who faces a tough re-election fight next year with the U.S. unemployment rate stuck above 9 percent.

Obama is preparing for a speech after the September 5 Labor Day holiday in which he is expected to lay out proposals to boost hiring. He is reaching out to other world leaders too.

On Saturday, Obama spoke with German Chancellor Angela Merkel, and the White House said the two leaders vowed to act to shore up a global recovery that now looks at risk.

A day earlier Obama had called Lagarde to talk about fiscal policy. They agreed that the world economy needs further steps to boost growth.

Obama's potential presidential challengers, including leading Republican candidate Mitt Romney, have repeatedly blamed Obama's policies for impeding growth.

The U.S. economy grew less than 1 percent in the first half of the year and has yet to return to its pre-recession size.

http://www.reuters.com/article/2011/08/28/us-economy-global-idUSTRE77R1V020110828


Note. Update Record,Sun Aug 28, 2011 4:48pm EDT

[Skybird]

Bernanke? High profile speech?

If the sun sets and already is low over the horizon, then even dwarfs cast amazingly long shadows.

[mookiemookie]

buyers, but with a federal takeover of the 2 major high risk financiers, they will stop altogether. The government - through F&F, will offer lower interests rates to high risk lenders (in a gambit to promote the market) which will result in more people buying homes they cannot afford. Unfortunately, defaulting will then put all taxpowers on the hook (even more than they are because of the bailouts).

Fannie and Freddie are not "high risk financiers". They are not financiers at all. They are insurers, and they have specific guidelines as to the size, loan to value and borrower credit score of loans that they will insure. The majority of the subprime lending in this country that fueled the crisis was done by non-bank lenders who made loans that were sold directly to private label securitizers.

I would urge you to do a bit of research on the basics so that your opinion is a bit more informed.