Terry Connelly is dean of the Ageno School of Business at Golden Gate University and is frequently quoted on business, financial, and economic issues by Bay Area local, as well as national, news media.
The vaunted removal of the phrase “downside risks to growth remain” from the Federal Reserve’s statement of April 30 accompanying its redtion in the benchmark Federal funds rate by 25 basis points is being overplayed by the media and commentators, and quite possibly the bond and stock markets, as a signal a new “pause bias” in the Fed’s thinking about rates.
It is entirely possible that, given the laundry list of concerns that the Fed specifically listed in its statement that it believes will “weigh on” economic growth going forward, they thought o remove the more generic downside risk statement simply because it was superfluous!
Thus mere correction of redundancy has been elevated to a notion of bias change. It is insterad apparent that the votes just were no there for a specific “pause bias” statement. Indeed, when the Fed wants to make such a bias clear, it knows exactly what to say and how to say it. See for example its Otober 31, 2007, statement referring to the risks of recession and inflation being evenly balanced.
Of course, that just didn’t turn out to be the case — so perhaps six months later the Fed did not wish to declare victory against recession prematurely. As a “forward looking” statement, the April 30 message leaves little risk that the Fed will “miss its forecast” and hardly gives the markets much to go on — as Warren Buffett says, “all the speculation is just speculation”.
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This is not a bash on “the poor”, it was an aatctk on the majority of people that either bought homes they knew they could not afford or on the government for not letting capitalism run its course. You cant tell me that even in good times, people lose their jobs and are foreclosed on. Rick said that we should let those people lose the homes and get owners in that CAN afford them…make sense to me. It might hurt in the short term…I should know, I am trying to sell my home, but that is the natural part of the process. Artificially supporting prices will only make this process take longer to get to the enevitable bottom.This is not a dig on the poor, dont you think there are stupid people on wallstreet that got used to the high salaries and bought homes they couldnt afford. They are right in there with the rest of us. Not to mention Wall Street and NYC/Chicago, with all the lay offs that have already happened or will happen, do you think their housing market is going to rebound any time soon. This is going to get much worse before we find a bottom and our markets start to heal themselves. Kudos to Santelli for speaking for the 92% of Americans that are doing the right thing and paying our mortgages. If you dont agree with me, you need to move to China where they are still socialist and dont believe in capitalism. Or better yet, pop out 4 or 5 more kids and sit on your ass collecting welfare to pay for your mortgage!