Monthly Archives: November 2015

Why The Fed Will Stand Pat In December

In September the financial world was on pins and needles as to whether or not the Fed would raise rates by a quarter of a percent.  In the end, the Fed did not take the much anticipated step of increasing the benchmark rate due to global risks.  At the time, the Chinese economy and stock market was plummeting, so the Fed backed off due to this uncertainty.

Now the market is starting to buzz about a rate hike in December.  Minutes from the October Fed meeting have traders thinking the Fed will do a December rate hike.  The latest job report tells us that the job market is at full employment.    We are nearing perhaps the best of all possible economic worlds, yet I think the Fed will still leave rates at historic lows so as to not risk slowing growth.

Why?  A couple reasons.  The latest Retail Sales numbers show the consumer is not spending all this supposed wealth:

retailsales

 

Second, despite the massive fiscal stimulus modeled after the US strategy, Japan – the worlds third largest economy – fell into recession:

japanrecession

 

(source:  http://www.tradingeconomics.com/japan/gdp-growth)

So even though China appears to have stabilized, I think these new economic data points will be enough for the Fed to not do anything.  However, there is growing financial market clamor to get the Fed off the 0% overnight Bank Lending Rate, so it is possible that they will make this move in sort of a symbolic fashion.  But I am not looking for any meaningful short term rate hikes in the first half of 2016, even though the numbers tell us that the economy is firing on all cylinders.

I have been critical of the Fed’s policies in past posts – and how it has led to a malformed recovery.  How can we be at full employment and at historically low interest rates?  The Fed appears to be no longer data driven, and looking at worldwide soft indicators for guidance.   In the words of one Wall Street reporter, the Fed is winging it.  And that may be OK, since we are in economic times with no precedent.

The Growth And History of the CIA

In honor of CISA passing the senate, which is another nail in the coffin of the rule of law in exchange for homeland security,  I thought it would be a good time to post a lot of random stuff on how all the emphasis on intelligence by the CIA and others has grown over the last 60 years or so.

First off, a great read here on the architect of the modern day CIA – Allen Dulles:

http://whowhatwhy.org/2015/10/12/new-book-on-cia-master-plotter-dulles-sneak-peek-part-1/

Granted, this is a pretty evil account of Allen Dulles – who knows how much of it is true.  But given the fact that we already know Operation Northwoods and Operation Mockingbird was engineered by the CIA during Dulles tenure, it doesn’t seem like this account is too much of a stretch.

Speaking of Operation Mockingbird, I ran across this article from the 1970’s from none other than Carl Bernstein on how effective the CIA has been in partnering with the media.

http://carlbernstein.com/magazine_cia_and_media.php

Worth a read – a couple good outtakes:

The Columbia Broadcasting System. CBS was unquestionably the CIAs most valuable broadcasting asset. CBS President William Paley and Allen Dulles enjoyed an easy working and social relationship.

Time and Newsweek magazines. According to CIA and Senate sources, Agency files contain written agreements with former foreign correspondents and stringers for both the weekly news magazines.

Finally, here is a copy of the op-ed that Harry Truman wrote in 1963 regarding  his concerns about the CIA:

http://www.maebrussell.com/Prouty/Harry%20Truman’s%20CIA%20article.html

The last quote is particularly prescient:

 I never had any thought that when I set up the CIA that it would be injected into peacetime cloak and dagger operations. Some of the complications and embarrassment I think we have experienced are in part attributable to the fact that this quiet intelligence arm of the President has been so removed from its intended role that it is being interpreted as a symbol of sinister and mysterious foreign intrigue—and a subject for cold war enemy propaganda.