Federal Reserve intended to hold short-term interest rates near zero, Fed does not expect the economy to complete its recovery from the 2008 crisis over the next three years
For those Americans who continue to believe words speak louder than actions, president Obama's State of the Union speech was a smash hit. In fact on Wednesday, CBS News cited an online poll conducted by Knowledge Networks immediately following the president's address, which claimed 91 percent of those who watched the speech approved of the proposals Mr. Obama put forth. That was up from a "paltry" 83 percent who approved last year's speech. This is the words part of the equation.
The action part? That occurred yesterday when "Uncle Ben" Bernanke announced that the Federal Reserve intended to hold short-term interest rates near zero "at least through late 2014." From the New York Times: "The decision means that the Fed does not expect the economy to complete its recovery from the 2008 crisis over the next three years. By holding rates near zero, the Fed hopes to hasten that process somewhat by reducing the cost of borrowing."
For those of you insufficiently attuned to ongoing attempts by the New York Times to understate any bad news that accrues to Obama and Company, let me translate: the economy has stunk since 2008, it stinks today, and we expect it to stink until almost 2015. It's so stinky that even when the Fed is letting you borrow money for nothing, it can't generate enough demand to turn anything around, even in a seven-year time frame.
As for the Federal Reserve itself, here's their take: "While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated," the Fed said in a statement released after a two-day meeting of its policy-making committee. "Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed."
For those of you insufficiently attuned to "Fed-speak" as well, translation number two: despite the "green shoots" b.s. all over again, millions of people can't find jobs, businesses have little incentive to pour additional money into physical assets such as machinery, land, buildings, installations, vehicles, or technology, and the housing sector could make a cameo appearance in AMC TV's "Walking Dead" series. Or maybe not. At least the zombies are walking. The housing market is flat on its back.
Yet for the true-believers and their hack media cheerleaders, none of it matters. Happy Talk wins the day. Here's some of that Happy Talk--with my reality checks in italics:
"Think about the America within our reach: A country that leads the world in educating its people." (That would be our union-dominated public school system that has promised to reform itself for fifty years with no success. The one producing "graduates," 75 percent of whom need remedial intervention in math, reading and writing to attend a university system. The would be a university system steeped in left-wing ideology, subsidized by taxpayers on the hook for student loan liabilities totaling a trillion dollars). "An America that attracts a new generation of high-tech manufacturing and high-paying jobs." (Not with the second highest corporate tax rate in the world, unknown Obamacare costs, and thousands of incomprehensible regulation's courtesy of FinReg legislation).
"A future where we're in control of our own energy, and our security and prosperity aren't so tied to unstable parts of the world. (From the president who promised to be Brazil's "best oil customer," killed the Keystone Pipeline, had his Energy Department pour billions into solar companies that went bankrupt, withdrew our troops from Iraq prematurely, facilitated the Muslim Brotherhood's ascendancy in Egypt, and refused to "meddle" in the 2009 Iranian election)
"An economy built to last, where hard work pays off, and responsibility is rewarded." (A false economy built on massive debt and Quantitative Easing, where hard work takes a back seat to an administration that picks winners and losers. One where irresponsibility is both encouraged and subsidized, from "too big to fail" banks, to tossing primary creditors aside and handing the auto companies over to the UAW, to 155 weeks of federal unemployment benefits).
Two more sentences: "I will work with anyone in this chamber to build on this momentum." (From the same president whose idea of working with the opposition came down to two words: "I won," and whose idea of building momentum has consisted bypassing Congress completely via his Czars and agency heads). "But I intend to fight obstruction with action, and I will oppose any effort to return to the very same policies that brought on this economic crisis in the first place." (Obstruction is a Democratically-controlled Senate that has refused to pass a budget in over a thousand days despite numerous submissions of same from the House, a Justice Department still pursuing banks that fail to make sufficient numbers of mortgages available to the same unqualified borrowers that precipitated the last housing crisis--and the ongoing incarnations of Keynesian economic "stimulus" policies that have racked up more debt in three years than the last president did in eight. The eleven years worth of massive deficit spending? Approved by then-Senators Barack Obama and Joe Biden right through their ascension to the president and vice-president, respectively).
I could go on, but those who get it don't need me to, and those who do are likely unreachable. Memo to the latter group: Go ahead and believe this president if you want to. Just remember--or, for the oh-so-many of the historical illiterates produced by the aforementioned school system, learn--the last time interest rates were kept this low for this long was during the Great Depression. That may not be Happy Talk, but it's a fact. And nothing is more toxic to this president's re-election chances than facts. Whether a majority of American people are still interested in facts is yet another critical issue that will likely be resolved by the 2012 election.
