Powell's Fed Has NO Business Propping Up Trump Or The Markets - With Interest Rate Cuts

"Cripes, I don't know how to control this stupid asshole! I guess I'll just give in."


Barely 4 days ago, I was unable to believe my eyes as I read:

Web results

Fed Begins Debate on Whether to Cut Rate as Soon as June - WSJ

https://www.wsj.com/.../fed-faces-challenging-rate-decision-at-june-meeting-115598337...

Web resultThis was not a headline designed to inspire confidence among ordinary citizens - especially dedicated savers  not prepared to gamble their money in Maul Street's casinos.  Thus, we were not encouraged on reading (ibid.)Barel"A month ago, Fed Chairman Jerome Powell played down speculation of a rate cut this summer. Now officials at the central bank face a darker economic outlook and heightened trade tensions, making a rate cut possible—if not at their meeting on June 18-19, then in July or later."

"A month ago, Fed Chairman Jerome Powell played down speculation of a rate cut this summer. Now officials at the central bank face a darker economic outlook and heightened trade tensions, making a rate cut possible—if not at their meeting on June 18-19, then in July or later."

This was appalling news especially for dedicated savers. Worse, it portends an ill financial wind for all Americans if it helps to accelerate the economy toward recession rather than improve it. That happens as the Fed seeks to stimulate an economy already over leveraged (deeply in debt) and with employment near full capacity.   But the word is that Powell and others on the Fed Board are "puzzled as to why inflation hasn't risen more".  (Rising inflation would signal a need to raise interest rates.)  Well, there are two reasons: 1)Wages remain stagnant so the usual inflation driver of higher wages in flush times isn't there, and 2) The Fed continues to use an inflation index that's out of date, not factoring in food price increases or medical inflation, especially for meds.

 Barely two weeks earlier, one read ('Investors Expect Rates Cuts By Year's End Despite Data', WSJ, May 16, p. B 10):

"Federal funds futures suggest investors are more convinced than ever that the Federal Reserve will lower interest rates multiple times by the end of the year. Economic data suggest that is too drastic a bet."

Adding:

"Fed future data show the market pricing in a 26 percent chance of the Fed lowering rates twice by the end of 2019 and a 7.5 percent chance of the Fed doing it three times. That is up from 6.7%  and 0.3 % a month ago.

The numbers seems to stand at odds with economic data which overall have shown a strong labor market, inflation expectations that are tame, and modest profit growth well into the economic expansion.  After all, the last time the Fed cut rates was in 2008 - when policy makers were in the midst of grappling with the worst financial crisis since the Great Depression and financial markets were tumbling..

And more recently (June 10) our memories were refreshed (WSJ, 'Business and Finance', p. B8):  

"Then there was the Fed rate cut in September, 2007, which gave the DOW Jones Industrial Average its biggest one day percentage gain since 2003.  Fast forward one year and the U.S. was in the teeth of the financial crisis."


All of which shows me the Fed may be tempted to hit the 'chicken switch' before it's necessary and trigger what it's trying to avoid. Indeed, digging an unnecessary rate hole that may well be needed  (i.e. to really lower rates) if and when a recession does hit - as something like 70 percent of economists are forecasting now - by next year. 

Indeed, signs we're hurtling toward recession were amplified in the more recent article  ('Sluggish Jobs Data Push Treasury Yields Toward 2 Percent', WSJ,  June 8, p. A2) which ominously reported:

"Worries span the globe. The yield on 10 year German government debt Friday declined to record lows below negative  0.2 %.  Japanese government bonds of the same maturity traded below negative 0.1 %.  About $11 trillion of bonds around the world, concentrated in Europe and Japan, carry negative yields now accounting for about 20 percent of all debt world -wide according of Torsten Slok - chief economist at Deutsche Bank Securities."

This debt bogeyman is for real and people would do well not to minimize it.  Indeed, as far back as two years ago The Financial Times reported on the IMF's growing concern about exploding global debt (April 17, ('IMF Sounds Alarm On Excessive Global Borrowing') :

"The world's $164 trillion debt pile is bigger than at the height of the financial crisis a decade ago, the IMF has warned, sounding the alarm on excessive global borrowing.  The fund said the private and public sectors urgently need to cut debt levels to improve the resilience of the global economy, and provide greater firefighting ability it things go wrong.

Fiscal stimulus to support demand  is no longer the priority the IMF said Wednesday in a report published at its spring meetings in Washington. "


But instead of heeding that warning, the Fed appears hell bent on ignoring it to placate and feed investors' addictions to the already senescent BULL market while appeasing Trump.  This is the swine who's berated the Fed incessantly about lowering rates,  going so far as  to try to tilt the Federal Reserve Board with two unqualified lackeys: Herman Cain and Stephen Moore.  Fortunately, after much media heat centered on their woeful and clown -like backgrounds both backed out. But Dotard never let up on his Fed attacks, and in previous posts I worried about Fed Chairman Jerome Powell bending to the fake Fuhrer's will.  

We also are well aware here - as Trump likely is - the only way we may see the end of this orange fungal infection is if the economy crashes. It's now on the verge of doing that (via a potential recession) but any Fed intervention will try to interfere to halt that.  Will the Fed deliberately be trying to help Trump stay in office? Not likely, because there's no way in hell Powell is eager to take 4 more years of Trump's temper tantrums than the rest of us. No, he'd likely want to try to avert a recession - with the best of intentions - except that "the road to hell is paved with good intentions."

However,  the very act of the Fed interjecting with  lower rates may well preordain two hellish consequences: 1) a Trump re-election,  and 2) Ultimately a much worse recession especially if a re-elected Trump  returns to his tariff terrorism - which has already wrought untold havoc. (See e.g. today's lead WSJ Editorial, 'Paying for  Mexico's Wall', noting: "Trump's use of tariffs as a bludgeon on migrants has economic costs. The threat of 25 % tariffs on Mexican exports is gone for now, but businesses can't be sure it won't come back."  )

Never mind the last minute phony end to the Mexican tariffs.  Which we now know Mexico had agreed to months ago, so Dotard manufactured this latest tariff crisis on his own. As usual,  employing chaos and threats to advance his feral agenda, while keeping businesses and American consumers off balance.  Former Obama CIA official Ned Price has this scum pegged perfectly, noting in a recent (June 9)  NY Times piece:

 "He manufactures a crisis, galvanizes his base around the challenge, leaves the definition of success undefined, pretends to play hardball and, lo and behold, finds a solution that entails little more than window-dressing, if that. For Trump, it’s a win-win. But the loser tends to be the American people, oftentimes Trump’s base first and foremost,” 

Why doesn't Trump's base see they are his tackling dummies, used for sport whenever he feels the urge?  Well, because they believe they are "in on the secret" and hence accept whatever drubbing he delivers so long as they might get to see the 'snowflakes'  cry.   Call it schadenfreude but with a nasty blowback.

As for the stock market, Powell wouldn't be doing it or investors any favors by jazzing it up with a rate cut. While it will temporarily boost share prices, it will he at the expense of a mammoth asset bubble. Also, an asset bubble leveraged into being by massive debt, creating an even more unstable financial system.

To fix ideas, let's note here that "support demand" (see FT  quote) refers to support of  "aggregate demand", i.e. getting citizens to spend more - which was the basis for the Trump-GOP tax cuts. This was an incredibly bad play given how much the tax cuts have already added to the debt, and the deficits going forward.

Economist and former Clinton Treasury Secretary Robert Reich warned on 'All In' Friday:

"With all the ancillary damage from these tariffs, and threatened tariffs (against Mexico) you could find the economy in recession before the election."

Chris Hayes then asked if the threats are large enough to knock us from an expansion into a recession, i.e. what's the case if it could.  To which Reich responded:

"Well, it's the interaction between the tariffs and the slowdown that's almost inevitable given how long this recovery has gone.  I mean recoveries don't go forever, they eventually slow down. Also American companies and American individuals are deep in debt, which is another thing that's not talked about very much.

But that debt is also a problem. Then, you have that tax cut for big corporations and for the very wealthy that did not trickle down. it just added two trillion dollars over the next ten years to our debt.

Now put all of that together and you get an economy that is very, very vulnerable."


Reinforcing this take, as The Denver Post noted (June 9. p. A):

"Recessions typically result when the Federal Reserve tightens monetary policy to cool an overheating economy. ..The past two recessions came on the heels of financial excesses, a massive stock market bubble in the early 2000s and an unprecedented housing bubble that triggered the financial crisis in 2008."

Yet now Jerome Powell's Fed seems intent on producing an even bigger bubble, by juicing stocks using interest rate cuts.  Has he been intimidated by Trump into choosing this unwise route? We don't know but the signs are not good. Following the track of the last eight months - and Trump's numerous eruptions - it really does look like Powell has caved. Both to greedy Maul Street investors pressing for more cheap money crack,  and to Dotard.

The questions then become: a) Is it better to cut rates now and in so doing create an asset and debt bubble with even worse effects later, or b)  allow financial destiny to unfold as it will, which may mean a recession - but it will effectively help get rid of the disease called Trump.  I vote for the latter out of plain common sense.

I mean, as NY Times columnist Michelle Goldberg put it on the same 'All In' show, how much more can we take?  Millions of citizens are already tuning out, and despairing that nothing can remove the national disease emanating from the White House.  This is especially after Trump's despicable and dishonorable performance for the D-Day commemoration on Thursday (insulting a real warrior, former Marine Robert Mueller, as well as disparaging Nancy Pelosi - in the shadow of the grave markers at Normandy. This from a coward who used 'bone spurs' to escape from the draft at least 5 times.)

And then we learned in the aftermath that this preening orange, 2-legged maggot wants to insinuate himself into the Independence Day celebrations!  Where does it end? Has Dotard not yet learned Presidents are to be seen and only occasionally heard - generally in their State of the Union spiels?  Four more years of this fuck-turd! Give me a recession anytime!  We need a total disinfection and fumigation of the country. 

So no,  Fed chairman Powell, no rate cuts! Stay your hand and allow the course of history to do what it will. If it means Trump's lone re-election benefit has evaporated, so be it. If it means investors are crying in their beer, we can live with that.  


See also:

P.M. Carpenter

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Donald Trump | Mexico | Trade

Trump's Mexico/Tariff Scam

And:

Economic Policy | Foreign Policy | Trade

Trump’s Mexico Tariffs Are About White Nationalism, Not Trade

McMaster Shows Himself Another Puppet By Denying, Spinning Trump's Latest Intel Transgression

Trump divulged highly classified intel to Lavrov (L) and Kislyak last week.

"We can't have someone in the Oval Office who doesn't understand the words 'confidential' or 'classified'." - Donald Trump in campaign speech last year, in regard to Hillary Clinton's handling of classified information on a private server.

The banner headline for The Washington Post story released last night read:

'Trump Revealed Highly Classified Information To Russian Diplomats'

Ought to send chills down the spines of all true American patriots, not the paper type who wave their little flags, chant "USA! USA!" but can't even recite three of the Bill of Rights, or name the branches of government - but the real patriots. That is, those who know their leaders are not laws unto themselves and must be held to account.

The lead story in the Post reported on Monday that Trump shared details of intelligence gathered about an Isis threat that had been closely guarded within the United States government and among close US allies. The report stated that while Trump did not describe the specific sources or methods used to gather the intelligence, he provided highly classified details, apparently connected to an Isis plot related to the use of laptops on board passenger aircraft.

Naturally the lying, spinning Trump did not take kindly to these revelations and so dispatched his pressured toadies to try to spin them all the way (at the same time it was reported that Sean Spicer, Sara Huckabee Sanders and Steve Bannon went on a screaming binge in one room as the TVs  played the snafu over and over.)

Then there was none other than the new head of the NSC, H.R. McMaster, who we all expected to be the "adult in the room" keeping the POTUS steady on his daily political 'potty' training.  But once again, that fell through, the evidence being H.R. had to go out in front of the press and channel Sara "Huckster" Sanders, morphing into yet another coverup spinner of misinformation. In his blustering denial McMaster blathered:

"The story that came out tonight as reported is false.... At no time were any intelligence sources or methods discussed and no military operations were disclosed that were not already known publicly,..”

But this was not the point and McMaster damned well knows it. The point was in Trump failing to adhere to specific talking points (always prepared before contact with foreign diplomats) and going off script, blabbering, bragging about the intel he gets then divulging classified information. This did not concern sources and methods, which the WaPo article clearly pointed out.  But that doesn't matter, the information embodied critical intelligence.  The Russians are smart enough to be able to 'reverse engineer' what was given them to ascertain the location of the source and likely the identity of the "code word source".


McMaster obfuscating and spinning last night.  He's no longer the "adult" in the room but another sycophant and stooge.

McMaster then, by his willing duplicity, made Arlen Specter of  'Magic Bullet' Warren Commission fame look the very picture of decorum and probity by comparison.  While Specter tried to feed us the bunkum that one bullet made 7 wounds  and escaped virtually unscathed, McMaster tried to feed us the 'Magic Intel' bunkum.  That is,  POTUS-leaked intel information prepared by an ally (and not to be disclosed without said ally's consent) was not a real misfire at all, and will cause no lasting damage.

Why such a big deal? Because Trump, in a spasm of boastful egomania,  blabbed what was classified beyond even Top Secret, e.g. (SCI  or 'secret compartmentalized information')  via an information-sharing arrangement considered so sensitive that details have been withheld from allies and tightly restricted even within the U.S. government. This according to  current and former U.S. intelligence officials, specifically that what Trump did was violate a sharing agreement with a key ally.  As Ned Price, former CIA analyst pointed out in an interview last night:

"There is a core assumption that undergirds our intelligence the world over.  This includes our sharing relationships with friends, allies and even at times with adversaries. And that is, we will share with you if you will share with us, with a reciprocal understanding that we will safeguard each other's information. And there is not to be onward passage of that information without explicit consent of the country that gave us that information. So, if the details reported are true, President Trump betrayed that core premise under which all our intelligence are forged.....This will infuriate the ally that gave us the information but a much greater threat is that countries around the world will think more than once about sharing information with us."

Former CIA deputy director Mike Morrell also pointed out this morning (CBS) that Trump's disclosure puts the source at risk if the Russians are able to figure out who it is.  Morrell also pointed out it was McMaster's job to get Trump to pay attention to the nature of critical intelligence (in his prep briefing book) and what may be disclosed in contacts with foreign agents or personae and what cannot.  Morrell was even more direct in terms of Trump's first words of boasting on the intel: "Once the President started going down this road it was H.R. McMaster's responsibility to redirect the conversation."

All of which portrays an eye-popping Trumpian transgression even for mealy mouthed sycophants like McMaster or Rex Tillerson to try and spin -  who may insist Trump (as President) had the "right" to do it.  But no executive order delivers such right, since as I noted previously, executive orders aren't provided for under the constitution.  Oh, and no President is himself above the law, meaning above the oath by which he swore to defend the Constitution.

What makes it even more scandalous, is that this latest Trump fuck up -the only appropriate word to use- is about the fourth in a week. This includes firing James Comey and threatening him with release of "tapes" - means intelligence gathering allies will be even less likely now to share highly critical information with us. Why would they when we have such a jackass, blabbering resident, and also howling dog puppets to try to cover his tracks - none of whom can evidently be trusted.  As the WaPo report noted:

"The partner had not given the United States permission to share the material with Russia, and officials said Trump’s decision to do so endangers cooperation from an ally that has access to the inner workings of the Islamic State."

I mean imagine the implications here! This dumbass fool who promised to get rid of Isis during his campaign actually divulges classified content that could have assisted in ultimately (with allies' cooperation) bringing them down.   The same bombastic birdbrain yelped constantly during the '16 campaign that "no one should be in the Oval Office who doesn't understand the words 'confidential' or 'classified'."

Imagine then what would have happened to Hillary had she been President and blabbed such confidential material to foreign actors and especially those deemed to be high level adversaries. Hell, the hearings that would have ensued would have made Benghazi look like a  Disney cartoon, plus the articles of impeachment would already be getting drafted.

Of course, none of this may matter in the long run because right now Trump regards himself as "the law" and so do his puppets. Just two days ago, UN ambassador Nikki Haley opining on the Comey firing asserted without a blush: "He  is the CEO of the country. He can fire anyone he wishes!"  Yeah, well Nikki, first let me inform you that we have no "CEOs" running the nation. We have Presidents who preside at the behest and will of the PEOPLE not the other way around. Also, our nation is not a goddamned corporation based on a corporate charter, but a federal union of states operating under a Constitution. And just because Trump thinks he can "fire anyone he wants" doesn't mean it's necessarily "constitutional" if done for nefarious motives, say to snuff an investigation.

For almost anyone in government, discussing such matters with an adversary would be illegal, and as one commentator put it last night - if Trump were an ordinary citizen he'd be tried for treason.  But as our "President" Trump automatically was granted a (temporary)  'get out of jail free' card his sycophants think they can twist facts any which way they want. . Thus, the latter insist that by occupying said office Trump has broad authority to declassify government secrets, making it unlikely that his disclosures broke the law.  

Let me rephrase that for better perspective: Trump can impulsively blab away specialized classified content  (SCI) to foreign adversaries, realize later what he did was unlawful or treason - then, invoking his office, retroactively "declassify" the SCI already divulged. Neat trick,  eh?

Cutting through all the discharged crap and spin, here's the central point that bears emphasis as numerous talking heads attempt to dilute or diminish Trump's latest transgression:  According to U.S. Intelligence sources, Trump actually revealed the city in Islamic state held territory where the U.S. intelligence partner detected the threat.  As Morrell said this morning, this level of specificity is "what the Russians will go to school on" i.e. to find out more. That source then is now imperiled as well its ongoing intel, because a blabbermouth blowhard without the slightest sense of propriety saw fit to divulge intelligence to a foreign adversary. At the very least, this reckless moron needs to be impeached, and as soon as possible. He is a liability to the nation, to its intelligence services and to all our global partners invested in securing a better world.

See also this link which suggests he may have to be removed for his own good under the 25th amendment:

http://smirkingchimp.com/thread/kali-holloway/72836/the-video-that-suggests-trump-is-suffering-from-alzheimers

Excerpt:

“I'm not saying that Donald Trump has dementia,” Joe Scarborough said during a recent segment on Trump’s mental state, “but my mother has dementia. She lives in the moment. She forgets what she said a day ago, a week ago. We can't have presidents that do that."