American Spirit Emerging Against Socialist Obama Government PoliciesSubmitted by northstar on Thu, 08/20/2009 - 01:55
Despite growing concerns about the growth in Federal spending, voiced this week by none other than Warren Buffett, Washington seems determined to keep its foot on the money pumping accelerator for as long as it can. But even though Washington continues to ignore the realities, alarm bells are beginning to ring at town halls across the country.
Last week the Fed left its key short-term rates frozen at 0 to 0.25 percent, enabling banks to borrow at near zero and reap spreads as high as 6 to 24 percent. The Fed also continued its policy of paying interest on banks' reserves, further boosting Wall Street's bottom line. The government has decided to save the banks, no matter how much the public has to suffer.
Worse still, the Administration has been largely silent over the obscene bonuses paid by banks to the very executives whose 'casino' mentality caused a financial crisis that the IMF now estimates has cost the world some $7 trillion. At financial firms that have received bailout money, it has been estimated that thus far in 2009 bonuses paid to executives have exceeded profits.
However, with the pedal still hitting the metal, the Fed has begun to discuss plans of a so called "exit strategy" that would pave the way toward higher interest rates.
These statements of economic neutrality were based upon the Fed’s impression that the recession is ending. But the Fed has not yet taken any meaningful actions to curb its potentially inflationary policies.