Americas
still shaken by 2008 financial crisis - (www.washingtonpost.com) The
2008 Lehman Brothers collapse and ensuing financial cataclysm have left a
lasting mark on the public and shaken confidence in the country’s ability to
avoid another crisis, according to a new Washington Post-ABC News poll. More than six in 10 Americans say they are
not confident that the country will be able to avoid another collapse, with a
majority saying Washington and Wall Street have not done enough to thwart one. The
pessimistic outlook is colored by a dour take on progress: 54 percent of
Americans say they sense little or no economic improvement since the worst of
the financial crisis, and only one in 10 believe the economy is “a great deal”
better. Despite sweeping action by lawmakers and the Federal Reserve to
stabilize markets and banks, roughly two-thirds say the federal government has
not taken adequate measures to prevent another crisis. Almost as many, 62
percent, say U.S. banks and financial institutions have fallen short in
protecting against a repeat of what happened in 2008.
Fed recoils from 1937 tightening error as jobs
evaporate - (www.telegraph.co.uk) The
American economy has shed 347,000 jobs over the past two months, roughly
comparable with the rate of loss seen during the Great Recession. It is
remarkable that the US Federal Reserve should even have been thinking of
phasing out life-support in such circumstances. The Fed's tough talk has
already led to a 140 basis point rise in US 10-year Treasury yields, the
benchmark price money for US mortgages and for the world (ex-China). It might as
well have raised rates six times. The shock decision on Wednesday night to put
off tapering bond purchases is a recognition of what should have been obvious.
Rising mortgage costs and the "tightening of financial conditions"
could slow growth, it said. Indeed. The net loss of jobs over the summer months
has been entirely among men, mostly aged 25 to 54 and university educated. The
cohort aged over 55 has been growing, so this is not happening because baby
boomers are retiring early and happy to grow cantaloupes in Arkansas, or to
play golf at Torrey Pines.
Eurosceptics
poised for German breakthrough, hurting Merkel - (www.reuters.com) A
new Eurosceptical party is on the brink of entering the German parliament for
the first time, an opinion poll showed, casting doubt on Chancellor Angela
Merkel's bid to maintain her center-right coalition and complicating her euro zone policy. Merkel still looks set to secure
a third term in Sunday's general election. But the Alternative for Germany,
which has risen on a tide of public hostility to bailouts of indebted southern euro zone countries,
could further fragment the lower house, forcing her into a right-left
"grand coalition". A breakthrough for the party, which advocates
forcing weaker members out of the single currency area, would send shock waves
around Europe and could spook financial markets,
even though its voice in parliament would be small.
Fed postpones the moment of truth - (www.marketwatch.com) The
Federal Reserve kept the punch bowl spiked a little longer in a surprise decision that postponed investors’ day of
reckoning. On Wednesday, the Federal Open Market Committee voted to maintain its $85-billion monthly bond buying
program, defying expectations of two-thirds of economists polled by The Wall Street Journal, who
were looking for the central bank to begin “tapering” its extraordinary bond
purchases at this month’s meeting.The reason? The FOMC just hasn’t seen the
kind of economic growth many gurus and pundits have. “The Committee sees…
growing underlying strength in the broader economy,” its statement said. “However, the Committee decided to await more
evidence that progress will be sustained before adjusting the pace of its
purchases.”
Fleckenstein
- Fed Announcement Shows They Are Trapped - (www.kingworldnews.com) In the aftermath of today’s historic Fed
decision, the man who correctly predicted last week, “as the fantasy dies,”
panic will ensue and gold will soar, warned King World News that in the wake of
this Fed disaster there is now a great danger that “all hell is going to break
loose.” Below is what Bill Fleckenstein, who is President of Fleckenstein
Capital, had to say in this powerful interview.
Eric
King: “Bill, in the aftermath of the Fed
decision gold has exploded on the news of no tapering.”
Fleckenstein: “Well,
I think there have been a lot of delusional people. And nobody
exemplifies this better than the Goldman Sachs policy, which they have
articulated all year, that ‘The economy is going to be stronger and the Fed is
going to be tough.’ They’ve been saying that for nine months now.... “Over and over and over again we see people
who do not understand how the economy really works. They don’t understand
these Fed policies only misallocate capital and create inflation. These
policies don’t create any sustained economic activity, and yet they keep making
the same mistakes. A lot of those people want to believe that everything is
going to be OK because they want to believe in the silly concept of
‘Goldilocks.’ So all of these people were rooting for the Fed to tighten
today because they believed it would have meant that they were right, when it
doesn’t. So, now there are a lot of people that were wrong. The question
is, how are the markets going to finally react? We are going to get to
see how high the bond market can rally in the wake of no tightening, but most
importantly, where it fails. That’s going to be the most interesting
thing to see from a big, macro standpoint. Obviously from a positioning
standpoint, people who have not believed in the Fed, and who have metals, they
ought to finally start getting rewarded.
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