Housing.com News, Analysis & Opinion: Fed Watch: All Eyes On Ben

Or do they stay the course, putting into effect one final rate hike for good measure before sitting back and taking in the economic and inflation scenery?

It really comes down to what the Fed deems is the most important issue facing the economy--high prices or little growth. As I've said before, an increase in wages would help cushion the multiple body blows of rising energy costs, consumer debt, and so on. Unfortunately, this analysis from Peter Cohan paints a much gloomier picture of where Ben's head is at:

If Bernanke cared about consumer price increases, he would keep raising interest rates. However he cares about wage inflation. Thanks to bankruptcies in the airline and auto parts industries, layoffs in the auto industry, a rise in outsourcing, and competition from China and India, employers have been able to keep wage increases to a minimum.

Bernanke's obssession with the last war is why Bush chose him--his policies are all about ensuring companies stay solvent and have hoards of capital to amass, while consumers continue to take the shock to the 'nads.

Given that, this video from the Columbia Business School folks about the guy who got passed over for the nod as Fed head in favor of Bernanke is not only even more prescient, but funny as all hell:

Trackback Pings

TrackBack URL for this entry:
http://weblog.housing.com/cgi-bin/mt/mt-tb.cgi/213

The latest paltry job and growth numbers are leaving the chattering class more and more convinced that Bernanke will guide the Federal Reserve to...well...they're not sure: You now have a feel for the Fed's new conundrum. The economy is slowing, enough that the Fed could hold off raising rates, but inflation just won't cooperate. Does the Fed gamble that inflation is indeed lagging the economy and hold off raising rates on Aug. 8? Or do they stay the course, putting into effect one final rate hike for good measure before sitting back and taking in the economic and inflation scenery? It really comes down to what the Fed deems is the most important issue facing the economy--high prices or little growth. As I've said before, an increase in wages would help cushion the multiple body blows of rising energy costs, consumer debt, and so on. Unfortunately, this analysis from Peter Cohan paints a much gloomier picture of where Ben's head is at: If Bernanke cared about consumer price increases, he would keep raising interest rates. However he cares about wage inflation. Thanks to bankruptcies in the airline and auto parts industries, layoffs in the auto industry, a rise in outsourcing, and competition from China and India, employers have been able to keep wage increases to a minimum. Bernanke's obssession with the last war is why Bush chose him--his policies are all about ensuring companies stay solvent and have hoards of capital to amass, while consumers continue to take the shock to the 'nads. Given that, this video from the Columbia Business School folks about the guy who got passed over for the nod as Fed head in favor of Bernanke is not only even more prescient, but funny as all hell: