Baseball91's Weblog

January 31, 2010

When Statistics Stole the Show

Filed under: Banking,Business,currency,Current Affairs,TARP — baseball91 @ 7:34 PM

The “statistical economic recovery, with a human recession.” And so the story in February 2010.

Accumulating cash and highly liquid securities protects banks from the volatility of credit markets and prepares the bankers for stricter liquidity requirements expected from regulators, the chief executive of Wells Fargo noted during the conference call with brokers on Wednesday. Those banks had the rationale to hold back. The real worry is that WHEN INTEREST RISE, and it will happen, rising short-term rates over the life of a loan will eat away the banks’ profits, IF a bank made the loan in the first place.

The real story of the decade was the ongoing off-budget black holes in the budgets. The Iraq War has been one such ongoing black hole responsible for the eroding value of the dollar.

POST SCRIPT: The Federal Reserve would consider, it was announced on February 5, 2010 by William Dudley of the New York Federal Reserve Bank, IF interest rates spiked or the economy showed new weakness, reopening the $1.25 trillion purchase in mortgage-backed securities scheduled to end on March 31, 2010 which has been propping up the economy. Dudley said the time is right to end the program because the economy is growing, and because expanding the purchases would make it harder for the Fed to unwind its support down the road.

The meaning of the puzzle? This one piece of the puzzle suggests more Fed printing is on deck. The Federal Reserve within the first quarter of 2010 would announced that it was extending and expanding its money printing operation to support a failing economic system. As the European Union was wrestling with the economies of Poland, Ireland, Greece, and Spain, the United States was trying to finance wars overseas which have not been part of any reported deficits spending by Washington, along with dealing with the credit derivative scandal.


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