Another Fed President Signals Recession

[marmar]

from 24/7WallStreet:



Another Fed President Signals Recession
Posted: September 8, 2011 at 6:35 am


One by one, Federal Reserve regional presidents have begun to admit that another recession has started, or at least is on the horizon. Some have made suggestions about what can be done, but none of these ideas seems compelling.

Charles Evans, the chief of the Chicago Fed, said in a speech recently that, “In the summer of 2009, the U.S. economy began to emerge from its deepest recession since the 1930s. But today, two years later, conditions still aren’t much different from an economy actually in recession.”

That is an odd way to frame the issue. Either the economy is in a recession or it is not.

Evans is among the members of the Fed who believe the agency should take “strong action.” This could mean the purchase of more Treasury debt in the open market. It is hard to see what the central bank can do beyond that. Fed chairman Ben Bernanke insists that it falls to Washington, and new legislation, to fix the economic growth problem. Many politicians believe the Fed must act first, and perhaps alone. ...........(more)

The complete piece is at: http://247wallst.com/2011/09/08/another-fed-president-signals-recession/#ixzz1XTAwQNBq

[DJ13]

1. It is hard to see what the central bank can do beyond that

Well, the Fed has many options within what they're allowed to do under "emergencies".

For one thing, they are allowed to circumvent the traditional banks and make loans to the private sector.

If they went that route they could prime the small business sector by making low interest loans directly, which seems one area the banks arent interested in now.

They could also offer low interest consumer loans (to those currently unable to qualify through traditional lenders), which would spur much needed consumer spending.

Part of the reason the Fed seems impotent now stems from their reluctance to use their authority to deal with an economic crisis that doesnt also funnel money into the banking sector.

Theres a lot of things they CAN do, but they need to put aside their ideology of representing only the banks long enough to actually do things that will have the most impact.