Come on everybody!
Clap your hands!
All you looking good!
I’m gonna sing my song
It won’t take long!
We’re gonna do the twist
and it goes like this:
Come on let’s twist again,
like we did last summer!
Yeaaah, let’s twist again,
like we did last year!
Do you remember when,
things were really hummin’,
Yeaaaah, let’s twist again,
twistin’ time is here!
Heeee, and round and round and up and down
we go again!
Well, no QE. Instead, dear reader, it’s Operation Twist – the Chubby Checker monetary strategy.
(Reuters) – The US Federal Reserve on Wednesday delivered another round of monetary stimulus and said it was ready to do even more to help an increasingly fragile US economic recovery.
The central bank expanded its “Operation Twist” by $267 billion, meaning it will sell that amount of short-term securities to buy longer-term ones to keep long-term borrowing costs down. The program, which was due to expire this month, will now run through the end of the year.
Fed Chairman Ben Bernanke, speaking at a news conference after a two-day policy meeting, said the central bank was concerned Europe’s prolonged debt crisis was dampening US economic activity and employment.
“If we are not seeing sustained improvement in the labor market that would require additional action,” he said. “We still do have considerable scope to do more and we are prepared to do more.”
The Fed slashed its estimates for US economic growth this year to a range of 1.9 percent to 2.4 percent, down from an April projection of 2.4 percent to 2.9 percent. It cut forecasts for 2013 and 2014, as well.
Hiring by US employers has slowed sharply, factory output has slipped and consumer confidence has eroded, with Europe’s festering crisis and the prospect of planned US tax hikes and government spending cuts casting a shadow on the recovery.
The economy grew at only a 1.9 percent annual rate in the first quarter – a pace too slow to lower unemployment – and economists expect it to do little better in the second quarter.
C’mon everybody…clap your hands! The Fed is prepared to do more…damage!
But what’s this? You just can’t please some people. The New York Times tells us about the complainers…
Throughout the Great Recession and the not-so-great recovery, the most commonly discussed measure of misery has been unemployment. But many middle-class and working-class people who are fortunate enough to have work are struggling as well…
We won’t keep you in suspense. They’re struggling because real, hourly wages are going down. Back to the TIMES:
These are anxious days for American workers. Many…are underemployed. Others find pay that is simply not keeping up with their expenses: adjusted for inflation, the median hourly wage was lower in 2011 than it was a decade earlier, according to data from a forthcoming book by the Economic Policy Institute, “The State of Working America, 12th Edition.” Good benefits are harder to come by, and people are staying longer in jobs that they want to leave, afraid that they will not be able to find something better. Only 2.1 million people quit their jobs in March, down from the 2.9 million people who quit in December 2007, the first month of the recession.
“Unfortunately, the wage problems brought on by the recession pile on top of a three-decade stagnation of wages for low- and middle- wage workers,” said Lawrence Mishel, the president of the Economic Policy Institute, a research group in Washington that studies the labor market. “In the aftermath of the financial crisis, there has been persistent high unemployment as households reduced debt and scaled back purchases. The consequence for wages has been substantially slower growth across the board, including white-collar and college-educated workers.”
The unease of voters is striking: in a New York Times/CBS News poll in April, half of the respondents said they thought the next generation of Americans would be worse off, while only about a quarter said it would have a better future.
What’s the matter with these people? Can’t they hear the music? Don’t they want to join the party?
for The Daily Reckoning Australia
From the Archives…
The Disconnect Between US Household Wealth and GDP Growth
2012-06-15 – Bill Bonner
Playing The Financial Markets – The Greatest Game of All
2012-06-14 – Greg Canavan
The RBA’s Mortgage Market Denial
2012-06-13 – Dan Denning
Spanish “Assistance” or “Bailout”
2012-06-12 – Satyajit Das
Priming Your Investment Returns
2012-06-11 – Nick Hubble