Consumer confidence

Consumer confidence

fiction
edward w pritchard

The fed can give the Bankers a gift by keeping short term interest rates low for two years. Meanwhile longer term rates slowly drift up due to inflation silently orchestrated by the Fed to support and whittle away the huge US deficit. Banks borrow low and then exploit the steep yield curve to make "no brainer" profits. Banking's new opportunity is good for politicians about to get un-elected by angry voters; they have a job to go to, especially ex regulators. Meanwhile interest rates on CD's and things stay about zero for older Americans lucky enough to have any money. Longer term loans if any are made by banks stay expensive because of the large spead which Banks keep in place because of perpetual fear of risk in the economy caused by scrutiny and regulation against smaller banks far from Wall street . Competiton between lenders in the economy to make loans to worthy borrowers doesn't seem to bring down rates on car loans and other consumer loans.    

Meanwhile consumer confidence will be submarined. Watching wall street today and the government squabble recently will send consumer confidence skidding. Watched Wall Street for two days, day one they  got their tails kicked and seemed anxious about what the bond market was saying about the growth forecast, day two business as usual as the Fed took good care of their boys. The  issue of jobs and zero growth ahead quickly forgotten . Now watch oil quickly move back up on the prospects of better growth in the fall of 2013.

One needs a shower after watching this stuff. I need to get back to the real world; Hogan's Heroes re-runs on cable tonight.