Informal Poll: Interest rate hike?

[RandomGuy]

Just out of curiousity:

Will the Fed raise interest rates at the next meeting or keep them unchanged?

(long odds on reducing rates for those of us who dare to tread that direction)

[RandomGuy]

My bet is on another 1/4 point hike.

[boutons_]

hmm, in June, personal spending sluggish, new housing way down, and all that depends on housing down.

======================

August 1, 2006
Treasury Secretary Sees Inequities in U.S. Economy
By STEVEN R. WEISMAN

Treasury Secretary Henry M. Paulson Jr., delivering his first public remarks since taking office last month, pledged today to work with Democrats to revamp Social Security and Medicare, and in a gesture aimed at Bush administration critics he said he recognized that the economy was not benefiting all Americans.

“Amid this country’s strong economic expansion, many Americans simply aren’t feeling the benefits,” Mr. Paulson said in a speech at Columbia Business School. “Many aren’t seeing significant increases in their take-home pay. Their increases in wages are being eaten up by high energy prices and rising health care costs, among others.”

( feigning concern, but it won't fucking work. "trickle down" from the insanely rich shown again to be pure bullshit. The entire game is rigged from top to bottom. )
It was a somewhat unusual concession from an administration that has spoken only glowingly of recent economic gains and has generally joined with Republicans in Congress in dismissing Democratic concerns about growing economic equality in the United States as “class warfare.”

Mr. Paulson made no reference to specifics, particularly the debate in Congress over tying an increase in the minimum wage, as advocated by Democrats, to sharp cuts in the federal estate tax, as pushed by Republicans. Democratic leaders in Congress accuse the Republicans of cynical politics in packaging the two proposals to get Democratic support.

He said that the most recent estimate of economic growth in the second quarter of this year, of 2.5 percent, was below what “most economists” were expecting and seemed to indicate that the economy was “transitioning to a more sustainable rate of growth” than the higher rate of nearly 5 percent earlier in the year.

On a separate matter, Mr. Paulson offered a hint that he might become more active than his predecessor to deal with tensions with China over Chinese currency levels, which many economists say are too low and seem aimed at spurring exports to the United States.

He said that while “a strong dollar is in our nation’s interests,” currency levels “should be determined in open and competitive markets in response to underlying economic fundamentals.”

Under Treasury Secretary John W. Snow, the Bush administration repeatedly called on China to move to more “flexible” exchange rates as determined by market forces, which most economists interpreted as meaning that it should let the dollar fall in value in relation to the Chinese yuan.

Aides to Mr. Paulson said he did not intend to change the Bush administration’s currency policy, but some economists, anticipating his trip to China in September, are looking for any sign that he might be more aggressive in pressing to do more. Over the last year, the yuan has risen only about 2 percent in value against the dollar.

Under normal circumstances, economists say, countries with large current account surpluses resulting from exports, and with high-growth economies, often see the value of their currencies appreciate.

Many listeners took Mr. Paulson’s comments about “underlying economic fundamentals” to suggest that he might use his contacts with the Chinese leadership, developed after many years as head of Goldman Sachs, to encourage the Beijing government to let the dollar slip in value against Chinese and other currencies in Asia.

“It wasn’t very explicit, but I think there was a suggestion in his comments that he expects some currencies to rise against the dollar,” said Robert D. Hormats, a Goldman Sachs vice chairman who was among many from Wall Street who traveled through sweltering heat to the Columbia campus to hear Mr. Paulson.

Mr. Paulson is a highly respected figure among many in the financial world of New York, and many corporate leaders showed up for his talk and for a luncheon afterwards. He stuck to generalities on most subjects and never deviated from firmly defending such Bush administration priorities as tax cuts and budget restraint.

Though he spoke of economic inequalities, for example, he did not offer any hint of lack of enthusiasm for the administration’s record on tax cuts. He also praised Mr. Bush for “political courage and willingness to address entitlement reform.”

( aka, fuck over the poor and needy, while enriching and protecting the rich, powerful, corps )

That comment was at odds with some of the tough criticism that Mr. Paulson received from Democrats on the Senate Finance Committee at his confirmation hearings last month. Though several supported his nomination, they warned him not to present anything resembling past administration proposals on Medicare and Social Security.

Several Democratic senators went further, accusing the administration of bad faith in avoiding “reform” of these retirement systems in favor of what they said was “privatizing” them by setting up private retirement accounts and health savings accounts to undercut two programs that are the pillars of the New Deal and Great Society.

Mr. Paulson said then that he would listen to the Democrats but make not specific pledges on ideas he might embrace. But aides said that his commitment today to a bipartisan approach was sincere and that he did not want to duplicate the administration’s record of failure in an atmosphere of partisan recrimination.

“The president has instructed me to work with Congress on a bipartisan basis to find workable solutions,” Mr. Paulson said. “These solutions should be built on what we can agree on, not what divides us.”

[RandomGuy]

There has been a big bag of completely mixed news, with increasing energy costs really carrying a lot of weight.

Still haven't had anybody weigh in.

Maybe a VBookie event?

[Nbadan]

I'm kinda thinking with you that there will be another 1/4 hike, but the latest economic growth numbers seem to suggest that we are closer to the top of interest rate hikes for now than to the bottom. Bernake's latest statements seem to echo that sentiment. Still, the U.S. has to keep borrowing for the war on terra and Dubya's tax cuts and there has to be a reward for the risk factor in lending to a country with $8 trillion dollars in outstanding debt.

[RandomGuy]

I did read that the Bush administration is still "strongly committed" to a strong dollar policy.

Propping up the dollar will do nothing but continue to erode US manufacturing jobs. Were I a conspiracy theorist, I would almost say that this was being done to sabotage union power by the right.

A weak dollar would mean inflation in the short term, but would provide some real relief for the US manufacturing sector and in the long run this would benefit the US much more than artificially propping up our currency.

(edited something of a typo)

[Nbadan]

I did read that the Bush administration is still "strongly committed" to a strong dollar policy.

Actions speak louder than words, and this administration has done everything it can to weaken the dollar.

[RandomGuy]

Actions speak louder than words, and this administration has done everything it can to weaken the dollar.

That is what I have read. I find the disconnect odd. Several things have been happening to weaken the dollar, and then suddenly you get the new treasury secretary commenting on a commitment to a strong dollar.

Were I to bet, I would bet on a further weakening of the dollar. Time to invest in Europe and Asia to rack up the built in gains? (sigh) If only I had the cash flow to be able to do so.

[Nbadan]

Were I to bet, I would bet on a further weakening of the dollar. Time to invest in Europe and Asia to rack up the built in gains? (sigh) If only I had the cash flow to be able to do so.

...and I think you would be absolutely right to bet on a weaker dollar. However, the dollar does make the whole world economy run much more stable, so even Middle East countries like the U.A.E. which are flourishing with U.S. capital thanks to oil sales have a vested self-interest in seeing that the dollar doesn't completely collapse.

This is what the whole rumors of war with Iran and Syria are really about, it's not about nuclear threats or aiding and abetting terraists, it about getting them to join the rest of the world's monetary policy through the World Bank so that the rich can get richer off their resources and everyone else gets bent.

[boutons_]

August 4, 2006

Slow U.S. Job Growth Signals No Change in Interest Rates

By JEREMY W. PETERS

Employers added a surprisingly low number of jobs to the U.S. economy in July, offering another sign that economic growth is slowing and providing encouragement for investors and economists who hope interest rates will remain at current levels.

The Labor Department said today that 113,000 new jobs were added in July, the fourth straight month of lackluster employment growth. That follows the addition of 124,000 new jobs in June. The monthly totals are well below the 150,000 mark that economists say is necessary to keep pace with the growth of the economy.

At the same time, the government’s measure of unemployment rose to 4.8 percent, the highest rate seen in five months.

The jobs report, which was released before the stock market opened today, apparently gave investors the assurance many of them have been seeking about what will happen at next week’s meeting of the Federal Reserve’s rate-setting committee. Stocks rose in early trading.

“Following another set of weak payrolls figures for July, there can be little doubt now that the Fed will pause at the August meeting, and leave rates unchanged,” Rob Carnell, an economist with ING, wrote in a research report today.

Copyright 2006 The New York Times Company

[Nbadan]

Interest rate report comes out today with many paid pronosticators predicting the feds will hold for now...


WASHINGTON (AP) - The Federal Reserve may finally be ready to halt its two-year campaign to raise interest rates, but with soaring energy prices threatening to make inflation worse any pause may be temporary.

The central bank has not missed a chance to boost interest rates since it started the current credit tightening campaign in June 2004, the longest stretch of Fed rate hikes in recent history.

It has nudged the federal funds rate up by a quarter-point at each of 17 consecutive meetings, going from a 46-year low of 1 percent to the current level of 5.25 percent.

That trend could change Tuesday.

LV Sun (http://www.lasvegassun.com/sunbin/stories/bw-other/2006/aug/08/080805943.html)

A six month freeze would not surprise me a bit given the slowing housing market.

[RandomGuy]

I wonder if one can find the Vegas odds on it. Heh, interesting betting pool I would imagine.

[boutons_]

Fed May Be Finished Raising Rates

By MARTIN CRUTSINGER
The Associated Press
Tuesday, August 8, 2006; 7:28 AM

WASHINGTON -- The Federal Reserve may finally be ready to halt its two-year campaign to raise interest rates, but with soaring energy prices threatening to make inflation worse any pause may be temporary.

The central bank has not missed a chance to boost interest rates since it started the current credit tightening campaign in June 2004, the longest stretch of Fed rate hikes in recent history.

It has nudged the federal funds rate up by a quarter-point at each of 17 consecutive meetings, going from a 46-year low of 1 percent to the current level of 5.25 percent.

That trend could change Tuesday.

Many analysts believe Fed Chairman Ben Bernanke and his colleagues will decide they don't need to raise rates further, at least for now, because of growing signs that the economy is slowing.

Last week, the government reported a fourth straight month of weak job growth, with the unemployment rate rising from 4.6 percent to 4.8 percent in July. Another report showed the overall economy, after racing ahead at an annual rate of 5.6 percent in the first three months of the year, slowed to less than half that pace _ 2.5 percent _ in the spring.

"I think the weakening economy will trump the fear of accelerating inflation and they will pause," predicted Mark Zandi, chief economist at Moody's Economy.com.

Bernanke raised expectations of a pause when he delivered the Fed's latest economic forecast to Congress last month, saying the central bank believed that a slowing economy would lower inflation pressures over the next two years.

Before those comments, financial markets were putting odds of an 18th rate hike as high as 90 percent. By Monday, that expectation had fallen to 20 percent, as judged by a federal funds futures contract traded on the Chicago Board of Trade.

But there is still some uncertainty over the Fed's next move because while the economy has been slowing, inflation pressures have been rising.

The 5.25 percent federal funds rate, the overnight rate banks charge each other, stands at the highest point in more than five years. The funds rate influences other interest rates _ including mortgage rates, indirectly _ and is the Fed's main tool for influencing economic activity.

Commercial banks' prime lending rate _ for certain credit cards, home equity lines of credit and other loans _ has moved up step-by-step with the funds rate and is currently 8.25 percent.

The Fed's favorite inflation gauge, which is tied to consumer spending, showed core inflation _ excluding energy and food _ rose by 2.4 percent in the 12 months ending in June, the fastest clip in 11 years, and above the Fed's comfort zone of 1 percent to 2 percent.

There was more bad news on the inflation front this week when an oil pipeline shutdown in Alaska sent crude oil prices soaring by more than $2 per barrel to close at $76.98 in New York trading, near the record of $77.03 set July 14.

Many economists believe the rising inflation pressures will mean the statement issued at the end of Tuesday's meeting will spell out that the central bank stands ready to push rates higher if inflation threatens to get worse.

Some analysts are forecasting that the Fed could raise rates one or two more times this fall.

"It is our view that they are going to have to hike again because there are going to be some pretty unpleasant surprises in the inflation numbers," said Nariman Behravesh, chief economist at Global Insight, an economic forecasting firm. "Inflation is likely to get worse in the next few months and the Fed can't sit on its hands."

David Jones, chief economist at Denver-based DMJ Advisors, said if higher oil prices prompt the Fed to raise the funds rate three more times to 6 percent, that would greatly increase the chances that the economy could tumble into an outright recession next year.

"What will be crucial will be the negative impact on the economy of the tightening moves that have already occurred," Jones said.

David Wyss, chief economist at Standard & Poor's in New York, said he believed the Fed has not overdone the tightening moves and that a slowing economy will bring inflation back to a more moderate level in the coming year.

Wyss predicted that the Fed's next move will be a rate cut, probably sometime next summer, as it responds to the moderating inflation and a slowing economy that he expects will occur over the next year.

___

On the Net:

Federal Reserve: http://www.federalreserve.gov/

[RandomGuy]

HAA!!!!

I wuz right.

"Fed leaves key interest rate unchanged" from Yahoo.news posting of an AP article.

[1369]

HAA!!!!

I wuz right.

"Fed leaves key interest rate unchanged" from Yahoo.news posting of an AP article.


My bet is on another 1/4 point hike.

:lol

[Nbadan]

Interest rates can't stay even for long with the weak dollar and the U.S. still borrowing billions for Dubya's war and the tax cuts. Still, it gives consumers with outstanding debt balances a bit of a break at a time when the FEDS are reporting record levels of consumer borrowing (likely to pay for higher gas prices).

[T Park]

(likely to pay for higher gas prices).

or maybe people are stupid and wont save their money? of course not....


and the tax cuts

Yeah, just horrible people keeping more of their own money.

Just criminal.

[RandomGuy]

:lol


ARGH.

Thanks for pointing that one out. When I originally posted the thread, it looked to me if the balance favored another increase.

I also kept reading and changed my mind as I read more opinions from the other fed cheifs, and more info that the economy was slowing a bit. (sighs)

That's what I get for leaping without looking.

[RandomGuy]

or maybe people are stupid and wont save their money? of course not....

Yeah, just horrible people keeping more of their own money.

Just criminal.

There was an article out listing that personal credit card debt was double what was forcast by the gov't for last month(quarter). We haven't been saving much of our money anyways.

The dumb thing about the second sentiment is that we keep more of our money for now, but since spending wasn't cut back at the same time as revenue, you will end up paying far more.

The tax cuts were irresponsible boondoggles precisely because they were financed by massive debt issues, and contributed to a rather alarming run up in overall federal debt.

[Nbadan]

The tax cuts were irresponsible boondoggles precisely because they were financed by massive debt issues, and contributed to a rather alarming run up in overall federal debt.

Exactly. I've always said that a tax-cut while deficit spending is really a tax-deferment, unless you cut spending dollar for dollar at the same time.