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Posts Tagged ‘Thomas Hoenig’

America Needs to Listen to Thomas Hoenig

Posted by Larry Doyle on February 26th, 2011 2:07 PM |

I am not sure if anybody got the license plate of the truck that ran over me and then backed over me this past Wednesday. In any event, in between my various rounds of medication for the flu during the last few days, I watched a man whom I have referenced previously but to whom America needs to really pay attention. I am speaking of Thomas Hoenig, Chair of the Kansas City Federal Reserve.

I think very highly of Mr. Hoenig. He embodies the essence of ‘sense on cents.’ I welcome sharing a recent interview Hoenig provided to The Wall Street Journal’s Market Watch.

Savor this like a fine wine. Unlike most in Washington or around our nation, Hoenig not only ‘gets it’ but he has no problem in ‘telling it like it is.’ (more…)

What Is a ‘Walking Pneumonia’ Economy?

Posted by Larry Doyle on September 22nd, 2010 5:12 AM |

Almost three full years from the official start of The Great Recession and fifteen months from its end, and our economy continues to limp along and languish amidst the weight of ongoing — even unrecognized — debts. Can we take a double dose of Nyquil, chase it with some Irish Mist, and hope we wake up feeling better in the morning? If it were only that easy.

The simple fact is our economy is battling a serious bout of seemingly terminal ‘walking pneumonia.’ How might we diagnose that malady? All we need to do is read yesterday’s Release from the Federal Reserve:

Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. (more…)

Sense on Cents 2009 Halls of Fame and Shame

Posted by Larry Doyle on January 4th, 2010 9:47 AM |

For those who missed last evening’s No Quarter Radio’s Sense on Cents with Larry Doyle Hall of Fame and Shame Induction, I am compelled to provide a recap and listing of all those honored or dishonored — depending on one’s perspective. What was the measuring stick to make these assessments? Very simply, the pursuit and promotion of truth, transparency and integrity as we navigate the economic landscape.

Some names you will immediately recognize, others you may not. Additional information about these individuals can be found via the search window (located above the right sidebar) at Sense on Cents. The names appear in no specific order of priority or importance. With no further adieu . . .

Sense on Cents 2009 Hall of Shame Inductees

1. Bernie Madoff
2. Nicholas Cosmo: ran financial scam at Agape World
3. Tim Geithner: tax cheat amongst other things
4. Larry Summers: arrogant, condescending, and sleep deprived
5. Auction-Rate Securities dealers and managers, especially Oppenheimer Holdings, E-Trade, Schwab, Pimco, Van-Kampen, Blackrock
6. The Wall Street Journal
7. George Soros
8. Chris Dodd (D-CT): reasons too numerous to mention
9. The Board of FINRA
10. Franklin Raines and Leland Brendsel: former CEOs of Fannie and Freddie
11. Wall Street management, especially Lloyd Blankfein of Goldman Sachs
12. Frank Dipascali: a special place in hell for Madoff’s CFO
13. Rahm Emanuel
14. Jimmy Cayne: CEO of Bear Stearns
15. Dick Fuld: CEO of Lehman Bros.
16. Congress collectively
17. Barney Frank (D-MA): reasons too numerous to mention, but start with “I want to roll the dice…”
18. Bank Stress Tests: a total sham
19. Allen Stanford
20. Steven Rattner: car czar
21. Bruce Malkenhorst: receiving a 500k pension from Vernon, CA
22. Barack Obama: just another politician (more…)

Fed Doves Promoting More Socialized Housing

Posted by Larry Doyle on October 14th, 2009 4:17 PM |

Could the S in USA be changing from ‘states’ to ‘socialist?’ Maybe that is overly aggressive, but why do I ask?

If the markets are an indication of an incipient rebound in economic health, then why would certain Federal Reserve governors want to increase the Fed’s quantitative easing program? Is that accurate? Is the Fed actually looking to inject even more capital and liquidity into our housing market over and above the $1.25 trillion commitment they have already made? Recall that the Fed informed the markets that it would extend the current purchase program of MBS (mortgage-backed securities) until the end of the 1st quarter 2010, while not increasing the dollar commitment.

Also recall that there had been an increase in Fed-speak by certain Fed representatives (Kevin Warsh, Thomas Hoenig) about the need for an increase in rates ‘sooner rather than later,’ along with the need for a defined exit plan by the Fed from its massive injection of liquidity into the markets.

Well, take those comments with a large grain of salt. Why? Today we learn that there are ‘doves‘ within the Fed who believe the Fed should commit even more money to support our housing market. Bloomberg provides insights on this topic by writing, Fed Says Some Officials Were Open to Buying More MBS:

Some Federal Reserve policy makers were open last month to boosting the central bank’s $1.25 trillion mortgage-backed securities purchase program to stimulate the economy amid concerns the recovery may fade.

“Some members thought that an increase in the maximum amount of the committee’s purchases of agency MBS could help to reduce economic slack more quickly,” according to minutes of the Federal Open Market Committee’s Sept. 22-23 meeting released today in Washington. One member said the improvement in the outlook could warrant a reduction in purchases, the minutes said, without identifying the policy maker.

Having read and reviewed more Fed statements  than I care to remember, each and every word in a Fed statement is very carefully chosen. Why? The Fed is attempting to manage market expectations. The fact that the Fed chose to release these comments about mortgage purchases is an indication that the Fed will not only keep the liquidity spigot on for an ‘extended’ period but also may increase the flow of liquidity into the economy via increased purchases of mortgage securities. What does that mean? They view the economy as still having real weakness, especially in housing. And what does that mean? Little concern of inflation in general and likely deflationary pressures within housing.

To fight the deflationary pressures, the Fed will continue to pump liquidity. Are there any costs to this increased liquidity? The equity markets are rallying so it must be good. Well, not so fast. Actually, the costs are in the form of ongoing weakness in the dollar. The U.S. Dollar Index moved lower by another .65%  today.

When you truly look at the economy and the markets, think of things in terms of purchasing power. The dollar is now down approximately 7% on the year. I would encourage people to more actively assess the value of the dollar in terms of asset returns and incorporate that into the cost of products.

Those dollar weighted returns and dollar weighted costs in the context of a global market and global economy are truly the proper perspective.

LD






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