Print This Post

Fed Speak

FED’S KOHN: Rating agencies got it wrong "badly".  AAA came to mean different things.
- Sovereign wealth funds play important role in recycling dollars back into US
- Says trying to avoid boosting inflation,; primary long term task is price stability, trying to avoid situation of too much credit
- Notes 1970’s situation ‘much more difficult’ than now, as 1970s saw build-up of inflation over time

FED’S POOLE: Inflation higher than they would like, but not a "blow out" situation. Sees no change in direction of Fed policy ‘yet’, notes the US economy is likely to avoid recession, housing to remain flat but, will have to look very carefully at impact of home price decline on value of GSE portfolios
- Says TIPS spread is ‘well within’ 2 year range
- Stagflation is possible, but not ‘best guess’, would not hesitate to use word ’stagflation’ if appropriate
- Notes monoline insurers ‘getting things straightened out’, financial markets are not healed
- Says there will be a ’stopping point’ in Fed cuts, and unclear when Fed’s easing policy will end as rate cuts have already made a very large difference.

FED’S FISHER: Inflation is a growing concern.  Rejects talk of recession and stagflation, but premature to talk about rate hikes.
- Expects subpar growth for couple of quarters or more, economy is ‘clearly anemic’
- Notes is worried that inflation expectations are rising, but expects growth to recover later in year

CNBC’S Gasparino is reporting that private equity, "unexposed" banks and exposed banks will be bailing-out Ambac. 

I will now refrain from making smart-ass remarks about all of the above.