Comments on: Federal Reserve’s Fisher says tightening will be aggressive

By: Edward Harrison

Edward Harrison — Wed, 07 Oct 2009 23:25:50 +0000

I don't really buy it either. Let's wait and see. You may have heard about the comments from Bill Dudley at the NY Fed. He was talking in a very dovish way. See my comments on that here:

http://www.creditwritedowns.com/2009/10/the-lat...

As for the debt burden, it is the private sector where the levels are most acute. The Federal Government has ample room for maneuver. See this post:

http://www.creditwritedowns.com/2009/10/a-brief...

By: kbob

kbob — Wed, 07 Oct 2009 19:10:50 +0000

I have a hard time believing Fisher. Some people use words and other people use actions…I think Fisher falls into the former. Or maybe, as you mention, he speaks for himself. Two factors strongly discourage increasing interest rates: the fragility of the economy and the fear psychosis of another sharp contraction (which I believe is inevitable at some point despire “recovery” talk). Also, the debt burden is unprecedented as a percentage of GDP. This was not the case in the 1990's. The US government can ill afford to service the the higher debt burden with higher interest rates today. When Volker raised interest rates to 20% in the 80's, this debt burden was not a significant concern.

By: Edward Harrison

Edward Harrison — Wed, 07 Oct 2009 17:25:50 +0000

I don't really buy it either. Let's wait and see. You may have heard about the comments from Bill Dudley at the NY Fed. He was talking in a very dovish way. See my comments on that here:

http://www.creditwritedowns.com/2009/10/the-lat...

As for the debt burden, it is the private sector where the levels are most acute. The Federal Government has ample room for maneuver. See this post:

http://www.creditwritedowns.com/2009/10/a-brief...

By: kbob

kbob — Wed, 07 Oct 2009 13:10:50 +0000

By: Bearish on bank stocks - Credit Writedowns

Bearish on bank stocks - Credit Writedowns — Mon, 05 Oct 2009 18:29:07 +0000

[...] cards, you are not too thrilled to have to pre-pay your FDIC insurance premiums. Then you hear Dick Fisher of the Dallas Fed and Don Kohn the Fed Vice Chairman jawboning in a hawkish way like they are going [...]

By: Edward Harrison

Edward Harrison — Wed, 30 Sep 2009 16:12:52 +0000

Just so it's clear, I don't buy this one bit. Fisher is jawboning because the Fed can't be seen as too easy. This was the same tactic they used in 2008 as oil prices rose out of control.

In my view, jawboning is ineffective when rates are zero percent. It really should be a case of watch what I do, not what I say. I will believe the rhetoric when we see action. Until then, one must assume the Fed will remain easy.

By: David

David — Wed, 30 Sep 2009 11:49:24 +0000

Does hot air still rise or have they found a way to hedge that? I used to think of the 3 Stooges as Paulson, Bush & Bernanke. That's now morphed into Sumners, Geithner plus one balding dwarf. Interest rates are going nowhere and the only tightening that's going to happen is the noose around the average citizens neck. Like everything from the trash heap left over from the Bush administration Bernanke is, was and will continue to be a disaster.