The Rainbows and Unicorns of the Federal Reserve or The Falling Dominos?

Observation is not a talent or capability of any member of the Federal Reserve.

 June 11 (Bloomberg) — Federal Reserve Bank of Philadelphia President Charles Plosser said the U.S. economic recovery is broadening and that the central bank could begin to sell assets from its balance sheet “sooner rather than later.”

 http://www.businessweek.com/news/2010-06-11/fed-s-plosser-says-u-s-recovery-becoming-broader-update2-.html

 Back in the real world, the dominoes continue to fall.

 “Greece will eventually default on its debt because the country is highly indebted, Carl Weinberg, chief economist at High Frequency Economics, said on CNBC this morning.

 http://www.economicpolicyjournal.com/2010/06/analyst-to-money-managers-take-your.html

When he was Japan’s finance minister, Naoto Kan advocated loose monetary policy to end two decades of deflation.

But since his sudden promotion to prime minister, Kan has been crying out about public debt levels. Today, he even used the signal word for austerity: Greece.

“Our country’s outstanding public debt is huge. Our public finances have become the worst of any developed country. We cannot sustain public finance that overly relies on issuing bonds. As we can see from the eurozone confusion that started in Greece, there is a risk of default if growing public debt is neglected and trust lost in the bond market.

http://www.businessinsider.com/japan-pm-abandons-talk-of-deflation-warns-of-greece-like-crisis-2010-6#ixzz0qYPmedRP

An economy based upon consumerism can not recover without growing retail sales.

“— Retail sales unexpectedly tumbled in May in their biggest drop in eight months, raising an ominous question for the nation’s still-shaky economy: If consumers are not going to lead the way back to prosperity and stimulus spending by the government is fading, who’s going to keep the recovery alive?”

http://www.chicagotribune.com/business/feed/sc-biz-0612-retail–20100611,0,1110540.story

If the Federal Reserve mouthpieces would take a trip through reality once and a while they would see that fear is still the order of the day and investors are still concerned how to protect wealth.  This would not be the case if the market was sold on the speeches by the Federal Reserve.

“Speaking at the FT Silver conference in London yesterday, lead-off speaker John Levin, HSBC Bank’s Managing Director, Global Metals and Trading (HSBC is one of the world’s top precious metals traders and its vaults in the U.S. and Europe hold huge holdings of gold and silver bullion) recounted conversations with some of the U.S.’s top asset managers controlling massive amounts of capital asking if HSBC had the capacity in its vaults to store major gold purchases.  On being told that the bank’s U.S. vaults had sufficient space available he was told that they did not want their gold stored in the U.S.A. but preferably in Europe because they feared that at some stage the U.S. Administration might follow the path set by Franklin D. Roosevelt in 1933 and confiscate all U.S. gold holdings as part of the country’s strategy in dealing with the nation’s economic problems.”

http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=106063&sn=Detail

If the Federal Reserve actually believes we are in recovery and begins to lighten their balance sheet, raise rates and contract the money supply you will see a sharp rise in gun, ammo and long term storable food sales.

I wear many hats but history, economics and political observance have always been a passion. I am a graduate of the University of Cincinnati College of Business with a degree in Information Systems and Digital Business with a minor in European History. I work for a small mom-and-pop IT consulting and software design company. We deal in servicing mostly government funded non-profit mental and behavioral health care agencies in the state of Ohio. In this I deal with Medicaid and Medicare funds and have a little insight on the boondoggles of government there. Thankfully the undemanding nature of my daily profession gives me ample time to read and stay aware of our current state of affairs which I find stranger than fiction in many instances. In addition to being in the IT field, I have also been self employed with a small contracting company so I might know a thing or two about the plight of small business that employs 71% of the American workforce. I however don't draw my knowledge from my day jobs, which I have had a few; I draw it from an intense obsession with facts and observation about the world in which I live. I do have formal education in things such as history, economics and finance particularly as it pertains to global issues, but I have come to find much of what I thought I knew from the formalities of a state university I had to unlearn through much time and independent research. I hope you enjoy what I bring you which is not often heard in the mainstream news outlets. I would like to think my own personal editorializing is not only edifying but thought provoking while not at all obnoxious. That last one may be a hard to achieve.

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