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NYT Says QE1, QE2 Failing To Fulfill Promise

A very reluctant admission from the New York Times:

Fed’s 3-Year Rescue Plan Falling Short of Promise

By BINYAMIN APPELBAUM
June 21, 2011

WASHINGTON — The Federal Reserve hoped that its three-year-old economic rescue campaign would reach a climax at the end of June. It hoped that consumers and businesses by now would be spending more and more, and the central bank could start doing less and less.

But, of course, none of that is happening. What a shock.

That peak now looks like a long plateau. The Fed still is expected to announce Wednesday that it will halt the expansion of its aid programs at the end of June, as scheduled, when it completes the purchase of $600 billion in Treasury securities. But growth is sputtering, and economists now expect that the Fed will leave its $2 trillion of bandages, props and crutches untouched until next year.

The pace of economic expansion has repeatedly fallen short of the Fed’s predictions, and the central bank is expected to lower its eyes [sic] once again when its releases a new forecast after a two-day meeting of its policy board, the Federal Open Market Committee.

Economic forecasters, many of whom also thought 2011 would be a more prosperous year, say that they underestimated the impact of the Japanese earthquake on the production of cars and other goods

Mr. Bernanke will again answer questions from reporters Wednesday afternoon, part of a new practice the Fed has initiated to explain its policies and defend its judgments

Even beauty pageant contestants get tougher questions than Mr. Bernanke gets from the press.

Since 2008 the central bank has taken a series of unprecedented steps to arrest the financial crisis and then to restore growth. It is holding short-term interest rates near zero, and has tried to reduce long-term rates by purchasing huge quantities of mortgage-backed securities and Treasuries. The final installment of those purchases is scheduled to take place next week…

And these steps don’t seem to have made much of a difference one way or the other.

Moreover, a number of studies have concluded that the Fed’s efforts have had only a modest impact on the economy. Stock prices have climbed. Corporations have rarely been able to borrow money more cheaply. Mortgage loans have seldom been available at such low interest rates. But companies are hiring few new workers, and people are buying few new homes. Almost 25 million Americans cannot find full-time work, a number that is rising again after declining modestly over the last year.

When the economy faltered last summer, the Fed announced a giant stimulus program. This year, the leaders of the central bank have shown little appetite for another intervention

It sounds like the Fed is officially out of arrows.

The Fed also is waiting to see what Washington will do about its own financial problems. A failure to raise the debt ceiling, the maximum amount the government can borrow, could precipitate a financial crisis. Mr. Bernanke has said that short-term spending cuts could weaken the economy, while a long-term plan to reduce spending could increase growth

It’s the same old story. Democrats are always for spending cuts in the future. As long as that future never comes.

This article was posted by Steve on Wednesday, June 22nd, 2011. Comments are currently closed.

7 Responses to “NYT Says QE1, QE2 Failing To Fulfill Promise”

  1. Liberals Demise says:

    STOP THE PRESSES!!!!!!
    NYT does the runaway slave act from the Obamao Plantation. Albeit looking over their shoulders.
    No wait…..did I wake up in a parallel universe?
    I’ll know for sure if they endorse a Conservative for President or out dingleBarry for the ass he is.

  2. Petronius says:

    Bernanke may have painted himself into a corner. He has loudly proclaimed the end of quantitative easing (QE2 set to end on 30 June) just as the economy hit a “soft patch.” So will he backtrack and leave the door open for more stimulus? Or will he follow through on his promises?

    Liberals claim all of the various stimuli are not enough. Paul Krugman and Larry Summers both want more. While, on the other hand, the regime claims the economy is in recovery mode, and that green shoots are erupting all over the country.

    Since there is a 6 to 12 month lag, there is still hope in some quarters that we may yet see some stimulus from QE2. And if not there is always QE3 . . . QE13, QE14, etc.

    There is an election next year … or at least there is supposed to be an election. Therefore, I believe the odds favor more quantitative easing, although they may call it something else to disguise what they are doing.

    The good news here is that it is becoming more difficult for them to blame everything on Bush. Thus as we see in this article (following the lead of Austan Goolsbee), they blame the current economic downturn on external factors like the Japanese earthquake, bad weather, and oil prices.

    If only we could all live in a perfect Liberal world, a world where earthquakes don’t happen, where the weather is always lovely, and where there are gobs of oil just waiting to be drilled.

    “Stock prices have climbed.”

    But have they really? The S&P 500 is today about where it was in January 1999. And although stocks have risen in the last few years, this is only true in US dollars. In foreign currency terms, US stocks have actually lost value.

    We might also note that the stock market has retreated for seven weeks in a row, the longest slump since 2002.

    With the end of QE2, we might ordinarily expect the US dollar to rally and stocks, commodities, and even the metals to fall. But gold continues to move from strength to strength.

    Things are about to get interesting.

  3. TerryAnne says:

    Perfect place to post this.

    On my way in to work this morning, I saw this gem of a sign:

    Recession 101

    Interesting facts about recessions:

    …they end.

    —–

    I was so dumbfounded that I forgot to check who sponsored it; hope to catch that this afternoon or tomorrow morning. Either way, it has to be some left-ist, Zero campaign donator.

    • TerryAnne says:

      Just tried to find some info out on these things. I can only find out happy-go-lucky, feel-good stories about them; stuff along the lines of “it’s to make people feel better during these hard times”.

      I think they’re a load of crap and very, very misleading and dangerous (see the one that gives a whole load of dates on former “recessions”). How jovial would these stories have been perceived under a Republican president?

      Hate people meter moved another notch.

  4. xqqme says:

    What did they think was going to happen when the ‘diagnosis’ was wrong all along. tptb still treat this crisis as a liquidity crisis instead of the solvency crisis it is.

    “Dude, where’s my recovery?”
    http://www.debtdeflation.com/blogs/

  5. Rusty Shackleford says:

    “When the economy faltered last summer..”

    ‘Scuse me? I thought last summer was a “recovery summer”. You mean to tell me, NYT, that the suck-conomy “faltered”? I’m devastated to find this out now. I mean, I put all my hope and faith into the QE1 and QE 2 ideas and invested heavily in GM andChrysler. I applied for many business loans to begin my all-natural green products line of hemp clothing.

    So, now that won’t be coming to any fruit? Jeez, Louise…..I’m so discouraged. I’m glad the NYT tells me how I should feel.

    (sarc)

  6. proreason says:

    Dick Morris strikes out his share, but he hits a homer with this one.

    This is his theory about what motivates Obamy. It sounds spot on.

    http://www.youtube.com/watch?v=LdTyUvY66Mw

    In a nutshell, deep socialist thinkers know that socialism doesn’t work when there is a haven for capital…which the US has been for decades. Spike’s mission is to eliminate that haven to pave the way for worldwide socialism.

    It makes more sense than anything else I’ve heard, except that I think there is a large does of america hatred thrown in the mix, since he hasn’t had an acquantance or relative in his life that hasn’t been filled with hatred for this country.


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