Please give me a moment to ask Jon Hilsenrath what the hell is he thinking. The WSJ’s Federal Reserve mouthpiece penned a somewhat poison-pen letter to the American consumer chastising them for not doing their fair share to help Hilsenrath’s “bosses” at the Fed with an economic recovery.
I use the term bosses, because Hilsenrath will post a 700-word story on Fed actions 2 minutes after the announcements. Either he is a fast typist or he is briefed on the play of the story in advance.
Anyway, back to the letter. Hilsenrath writes:
The sun shined in April and you didn’t spend much money. The Commerce Department here in Washington says your spending didn’t increase at all adjusted for inflation last month compared to March. You appear to have mostly stayed home and watched television in December, January and February as well. We thought you would be out of your winter doldrums by now, but we don’t see much evidence that this is the case.
He can’t be serious suggesting that a seasonal mood light is all the US economy needs at this point. The words clueless and out of touch seem to be very appropriate here. As I have been writing for sometime now, the dwindling middle class in America is in dire straits and no change in the start of day-light savings will save them.
The middle class aspired to grab a little something for themselves, when Fed chief Alan Greenspan unleashed low borrowing costs. By using cheap money from their homes to further their families they were doing exactly what the Fed wanted. Spend to pull us out of the dot-com bubble.
It was Wall Street banks that preyed on them with no-doc loans to binge on the subprime scam and fuel the tremendous bonuses on Wall Street, that created the dire straits the middle class find themselves in today.
And yet he belittles that aspiration, while ignoring the Fed’s role in all this.
We know you experienced a terrible shock when Lehman Brothers collapsed in 2008 and your employer responded by firing you. We know stock prices collapsed and that was shocking too. We also know you shouldn’t have taken out that large second mortgage during the housing boom to fix up your kitchen with granite countertops. You’ve been working very hard to pay off this debt and we admire your fortitude. But these shocks seem like a long time ago to us in a newsroom. Is that still what’s holding you back?
Countertops my ass, look at the value of Hampton’s homes since these people put in “granite countertops,” which they lost to foreclosure.
And in this passage he refers to his “bosses”:
The Federal Reserve is counting on you too. Fed officials want to start raising the cost of your borrowing because they worry they’ve been giving you a free ride for too long with zero interest rates. We listen to Fed officials all of the time here at The Wall Street Journal, and they just can’t figure you out.
Really, if that is tongue-in-cheeck no one is laughing.
And the Fed can’t figure it out, because like Hilsenrath they are clueless to the plight of the middle class. The financial chasm between the 1 percenters and the middle class is humongous as compared to 2008. But how would Yellen and her cohorts — including Hilsenrath — know that, since they believe us poor folk don’t like to go out in the snow.
So lets say ECB President Mario Draghi is little bit behind the easing curve since the Europeans started much later with fertilizing its imaginary green shoots.
Draghi sent the government bond markets into a selling frenzy with his comments.
It seems Draghi is up to 2009-2010 in Ben Bernanke’s tenure as Fed chief. The former Goldman Sachs banker, Draghi pronounced that he sees inflation and his team expects consumer prices to rise 0.3% this year.
Another central banker attempting to jawbone the economy back to growth, just like Bernanke’s “green shoots” and Janet Yellen’s 2015 rate rise.
All these government yields will snap back to previous levels in short order, due to the market realizing there’s no price inflation due to stagnant wages.
On yesterday’s column pointing out the disconnect between the US 10-year note and the GDP, the 10-yr hit 2.4% as bond prices fell again.
This appears to me to be large banking institutions shaving their sovereign debt positions, knowing that interest rates in the US will remain zero-bound for sometime to come.