He who asks timidly makes refusal easy.
Words, Too Many Words: The Fed announced it would sell short-term notes and use the funds to buy longer-dated Treasuries. It will also roll the proceeds from maturing mortgage and agency bonds back into the mortgage market. The object is to hold down long-range interest rates to give CPR to the housing industry while covertly making asset purchases (via MBS) to further prop up the banks. Bernanke said this would cure all our problems. The market was not impressed. Don't worry, be happy!
Here's The Plan: International experts say the best way to use less gasoline is to turn off the engine. Likewise they are again urging Greece to shrink its “public sector” even further (that's bankerspeak for cutting jobs, cutting wages, cutting pensions, cutting social support programs), to raise taxes and sell off the family farm. The austerity previously imposed has driven Greece's debt upwards of 200% of GDP and now they're told to cut even more. In olden times, the barbers recommend bloodletting.
Hush Money: After watching democracy and revolt sweep through Egypt, Tunisia, and Libya, spread to Yemen, Syria, and Bahrain, and threaten Saudi Arabia itself, the oil dictatorships of OPEC are bribing their citizens in hopes of clinging to power a bit longer. Saudi Arabia is doling out $43 billion, Kuwait is feeding everybody free for a year, Algerians got a 34% pay raise, and the UAE is offering uninterrupted free electricity.
Sales, Sailing: According to the NAR, existing homes sales rose 7.7% m/m and were 18.6% above a year ago. But 31% of these sales were cash transactions for 'distressed' properties. Despite the increase in sales, prices for existing houses declined 1.7% m/n and were down 5.1% y/y.
Essay Question: Polls show that 36% of South Carolina Republicans believe President Obama not born in U.S. Usual prize for best explanation as to why these people are allowed to
Nostalgia: The US poverty rate is back to Johnsonian levels - 15% and rising. Median household incomes are back to 1997 levels and 37% of young families with children are living in poverty - it was just 20% when Bush took office. The right takes this data and data that shows the elderly have taken less of a hit and use it to argue that the old folks are getting too much and Social Security and Medicare must be slashed. The truth is just the opposite. The elderly are doing passably because of the social support systems. That makes a fine argument for extending the safety net to other classes of the needy. Can we afford it? Wrong question. Since the US is one of the lowest taxed of the rich nations, how can we afford not to?
Baloney: The GOP leadership's mini $3.7 billion version of disaster relief funding was voted down by a coalition of Tea Partiers who don't want any spending on silly things like rebuilding the infrastructure, and Democrats who didn't want to off-set the expenditure by killing government support for the development of fuel-efficient vehicles. The government's main disaster relief program could run out of money early next week for victims of Hurricane Irene. FEMA has already held up thousands of longer-term rebuilding projects like repairs to roads, sewer systems, bridges , and parks.
Worthy: Before you can get food stamps in Michigan, you have to divest yourself of all your money and most of your property. You get to hold $5,000 in assets such as a beat-up old car, but your retirement funds (!) will not be confiscated.
The rule about groveling and wearing sackcloth and ashes was dropped.
Sadly: The unraveling of the Eurozone that is now underway should not come as a shock. All the hocus pocus around Greece was just pantomime - Greece was never going to be bailed out and will eventually default. A lot of European banks will flail about for a bit and be rescued by their respective Central Banks, which will be bailed out by the the German taxpayers, backed by the US Fed. And neither the Lone Ranger nor the Chinese will come to the last minute rescue. This isn't a movie.