A lot this year has been written about about oil and gas prices.
Oil prices recently fell below $50 a barrel, a far cry from the $90 a barrel the oil market was reeling in this time a year ago. With all that carnage you would've thunk central bankers and their economic brothers would be loving it.
After all, the point of these folks and their political shills was to put more lucre in consumer pockets and, Presto!, rally growth. Housing, equities and businesses were parts of that growth. Couple cheaper energy prices with what now amounts to a form of cosmic scale QE--the Fed, EU, Japan and China, to name the heavy hitters-- and the sickly, suffering patient was suppose to be checking out of the rehab ward some time ago.
The Fed claims it can't find any inflation or at least not enough to meet its magical two percent figure that will tell everyone it's okay to start cranking up interest rates. Maybe the Fed should check with Congress?
The current administration in Washington took its lead from the inept Fed and once again stuck it to the COLA crowd, putting a lid on any increase in Social Security payouts for the upcoming year. Meanwhile, Congress voted themselves a raise. It's a given that Congressional folk don't live on fixed incomes like many of their constituents.
Government revenue has to come from some place and pension funds of older retirees is as welcome a place to bureaucrats as any. Meanwhile, those wily politicians from Potomac Land are voting to push up the debt ceiling to cover up more of their bipartisan incompetence and absence of discipline.
One poor, misguided soul and apparent apologist for the bankrupt leadership at the Fed, today wrote:
It’s now clear that China’s economic weakness is having a significant impact around the world, but it is not causing anything remotely similar to a 2008 style financial crisis. In fact, US economic data has basically continued to muddle through. It’s weak, but it’s not catastrophic. And parts of the housing market actually look very strong. So, the Fed has tilted their position ever so slightly to set the table for the potential that they could raise rates later in the year or early 2016. I’d still err on the side of caution here and I probably would have communicated a 2016 potential hike more explicitly, but I think this statement is pretty prudent.
1. Let's take the first part of that paragraph. Where was the clarity back when nearly everyone and the camels they rode into Wall Street and the Federal Reserve on knew China was constructing all those huge people-less cities?
2. US economic data has continued to muddle through after nearly eight years in the face of one of the biggest giveaways in the history of quasi-capitalism and central banking. That should engender a real vote of confidence.
3. The comment that the Fed has tilted the table so slightly for a potential rate hike before year end is almost too ludicrous to deserve any attention. It is the hallmark of this Fed since this whole mess began--pathetic indecisiveness.
Naturally, there will be huge amounts of criticism over every bit of this statement, but let’s be honest – the Fed is navigating the same uncertain ocean the rest of us are and they’re doing the best they can. So far, I think they’ve done a prudent job. This was the right move in my mind and markets and commentators will overreact and read more into this than they should. After all, let’s remember – we’re talking about a 25 bps rate hike. It’s practically meaningless in the grand scheme of things….
4. Here is another fallacy in this person's position. The rest of us might be trying to navigate an uncertain ocean, but there's a major difference: Most of us have never pretended we knew what was going on. The Fed has and, in its arrogance, still does. In fact, that is what they supposedly get paid to do. Moreover, if this uncertain ocean at this point is as baffling to them as it is suppose to be to us, then why does anyone need the Fed?
5. Finally, the person destroys his own argument. If the 25 basis point hike will be no big deal and, after a short negative reaction, we agree, it won't, why has it taken so much Fed hand-wringing to pull the trigger?
Here's our two word answer: Clueless incompetence.
So soggy energy prices, runaway cheap money or whatever, this is a Fed that more than a year ago first brooked the idea of cranking of interest rates. The excuse then was to prime investors for the eventual fact.
Nearly 18 months later that priming is about as soggy as today's energy prices.
4. Here is another fallacy in this person's position. The rest of us might be trying to navigate an uncertain ocean, but there's a major difference: Most of us have never pretended we knew what was going on. The Fed has and, in its arrogance, still does. In fact, that is what they supposedly get paid to do. Moreover, if this uncertain ocean at this point is as baffling to them as it is suppose to be to us, then why does anyone need the Fed?
5. Finally, the person destroys his own argument. If the 25 basis point hike will be no big deal and, after a short negative reaction, we agree, it won't, why has it taken so much Fed hand-wringing to pull the trigger?
Here's our two word answer: Clueless incompetence.
So soggy energy prices, runaway cheap money or whatever, this is a Fed that more than a year ago first brooked the idea of cranking of interest rates. The excuse then was to prime investors for the eventual fact.
Nearly 18 months later that priming is about as soggy as today's energy prices.
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