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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (117442)	7/24/2012 7:51:08 PM
From: Broken_Clock	Respond to of 149317

germany is smart and wants to save itself.

To: tejek who wrote (117442)	7/25/2012 3:20:02 PM
From: RetiredNow	Read Replies (3) \| Respond to of 149317

The problem with Germany is that they don't have the deep pockets necessary to bail the rest of Europe out. So Merkel is in a real pickle. Did you like that alliteration? Anyway, the German people want her to continue being a hardass toward Europe and the big German banks are very levered up themselves. So there's not much ammo left to help others. Rome is burning alright and the firemen are nowhere to be seen. BTW, remember how we've all been so happy that the Fed's actions haven't produced hyper inflation yet? And as I posted awhile ago, I explained that one of the major reasons hyper inflation has not occurred is because although the Fed is indeed creating trillions out of thin air, the TBTFs are simply holding that newly created currency in the Fed's reserve accounts, earning a tax free return/subsidy. Inflation is created when those newly printed dollars hit the economy in the form of new loans businesses and individuals. Well, check out the quote from the Wall Street Journal below. If the Fed lowers IOER to zero or makes it negative even, then you will see banks flood the markets with hundreds of billions in new loans. This very well may lead to an immediate recovery, but it will also mean massive short term inflation, which could very well lead to double digit inflation not seen since the Carter days. Would Bernanke do it? You bet your ass he would. He fears deflation more than anything else in the world, including more than double digit out of control inflation. Get ready, the probability just went up dramatically that this will be the outcome in the next year or so. -------------- 08:12 Former Fed Vice Chairman Blinder says Fed should cut IOER -WSJ Former Fed Vice Chairman Alan Blinder, in an opinion piece, said the Federal Reserve has many weapons left to provide a boost to the economy, but the most powerful tool would be lowering the interest rate on excess reserves (IOER) held by banks. Blinder said Operation Twist, QE3, and forward guidance are weak weapons that won't be as effective as cutting the IOER to zero, and if nothing goes wrong, to -25bp. He argues that doing such would provide a powerful incentive for banks to put some of their idle reserves to work, possibly lending it out or putting it in the capital markets. Fed Chairman Ben Bernanke said last week that the Fed still has a number of tools available should it decide to implement additional stimulus, including its balance sheet, communications strategy, IOER and the discount window.