Friday, September 25, 2009
Rep. Alan Grayson: "Has the Federal Reserve Ever Tried to Manipulate the Stock Market?"
This is a true American representative. Imagine if all of the politicians questioned and challenged the big boyz like this.
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The question of whether the Fed has manipulated the stock market sets new records for dumb questions.
Why? Some people don't believe anything is true until they see an "authority" talk about it. And they still might refuse to accept the truth.
Virtually every action of the Fed has an impact on the stock market or segments of the stock market.
Thus, there is only one answer to the question. But the question has no meaning or relevance.
Actions at the Fed also affect the bond market and the money market.
What financial market is NOT affected by Fed moves?
If you are attempting to make some goofy claim that Tim Geithner is using the Fed to manipulate the stock market and profit illegally, you are out of your mind.
No that wasn't my intent. So what's your outlook on the economy for the next 3-4 years?
jay midnyte,
My outlook for the next four years?
The country will have recovered from the credit crisis of 2008. But the recovery is contingent on the failure of most of Obama's insane spending plans.
As we saw a couple of days ago, Obama's GM plan has begun to fail. GM was unable to find a buyer for Saturn, which makes cars that go more than 30 miles per gallon, run well and are inexpensive.
In other words, the demand for cars like Saturns is not as high as Obama wishes. People want what they want, and if there's going to be a recovery it will result from consumer buying. That means giving the customer what HE wants. Not what Obama thinks HE should want.
If Obama fights for and gains more government control of the economy, the country will stagnate. If that happens, Obama will lose in 2012.
He may lose anyway. At this point Obama wants more control of banks. But the nature of the control will lead to reduced lending, which will prolong the housing problems.
Bottom line: I think capitalism is more powerful than the Obama administration and it is the capitalistic spirit that will revive the country, no matter how hard he tries to get in the way.
OK now we have something real to disagree on.
In 4 years the foreclosure crisis will have just BEGUN to cool off. I have posts about this on this site. The commercial real estate, Prime, option ARM, and Alt-A collapse will have wiped out 1000 banks or more.
At the same time hyperinflation will kick in because your boys at the FED do not want to allow any body to default. So they will cover any "systemically important" banks...
Also, unemployment will be at 20% using the fake government numbers and real unemployment will be near 40%.
The government will be MUCH bigger than it is now because Americans always fall for the solutions provided by people who do not know any history about economics and government.
And consumers have already been sucked clean for all they have. There is no way in 2012 the consumption based economy will be up and running again.
And the dollar will not be the world reserve currency.
If you have a narrow view, you blame all this on Obama. If not, you blame it on the FED, fractional reserve banking, and central banks.
"Bottom line: I think capitalism is more powerful than the Obama administration and it is the capitalistic spirit that will revive the country, no matter how hard he tries to get in the way."
Are you just wishing and hoping for this or do you have any evidence you can point me to?
jay,
With respect to real estate, the default problem is concentrated among those borrowers who purchased property without collateral.
The No-Downpayment Loans are the problem.
Sub-prime and Alt-A themselves are NOT the problem. The history of these loans in the US is as old as lending itself.
The risks in these loans are easily managed when adequate downpayments are made. Problems arise when money is loaned recklessly.
Why did this happen? Because the government wanted credit extended to EVERYONE. This condition is the outcome of the Community Reinvestment Act legislated by Jimmy Carter during his administration.
If government regulation had prohibited high Loan-to-Value borrowing, there would be no credit crisis.
As for bank failures, you wildly overestimate the meaning and impact.
There are 8,000 Commerical Banks in the US and about 2,000 Savings Banks. Meanwhile, there are over 9,000 Credit Unions.
Believe it or not, but most have run their businesses in a relatively sound manner. Thus, the banking system can withstand the loss of quite a few without horrible consequences.
As for what the government wants with respect to default, well, the best bet is to keep interest rates as low as possible to enable homeowners the chance to refinance at low rates.
Some people are worried about high inflation -- in other words, excessive price increases. But all I see are prices going down.
Houses, if they sell, are selling at prices well below those of the last few years.
Rents are going down. Sales are everywhere. Walmart is doing well. High-end stores are closing. A lot of NY City's finest -- and most expensive -- restaurants have closed in the last couple of years.
I wrote:
""Bottom line: I think capitalism is more powerful than the Obama administration and it is the capitalistic spirit that will revive the country, no matter how hard he tries to get in the way."
You asked:
"Are you just wishing and hoping for this or do you have any evidence you can point me to?"
Oh nothing. Just 225 years of American history.
The US survived the Civil War.
When the liberal high-tax nitwits are kicked to the curb the economic bust will end and the recovery will get going. When the idiots opposing the use of oil, gas, coal and nuclear power stop their nonsense, things will improve.