by Bill McBride on 9/12/2012 12:01:00 AM
Wednesday, September 12, 2012
On QE3 from Binyman Appelbaum at the NY Times: Economic Stimulus as the Election Nears? It’s Been Done Before
In September 1992, the Federal Reserve culminated a long-running effort to stimulate the sluggish economy by cutting its benchmark interest rate to 3 percent, the lowest level it had reached in almost three decades.Monetary policy impacts the economy with a lag, and it is too late to have an impact before the election - so politics shouldn't be a consideration.
The cut was avidly sought by the administration of President George H. W. Bush, but it was not enough to change the course of the presidential election. Years later, Mr. Bush told an interviewer that the Fed’s chairman, Alan Greenspan, had cost him a second term by failing to act more quickly and more forcefully.
Experts say Fed officials are sensitive to the danger of a political reaction. But Randall S. Kroszner, a Fed governor from 2006 to 2009, said the Fed’s current chairman, Ben S. Bernanke, has concluded that the best defense of the Fed’s independence is to demonstrate its value by reaching decisions on the economic merits, then offering clear explanations to politicians and the public. “Any decision the Fed will make will make someone unhappy, but what you want out of an independent agency is a careful deliberative process,” said Mr. Kroszner, a professor of economics at the University of Chicago Booth School of Business.
“Providing as much substantive economic explanation as possible for the actions that the Fed is taking, that’s the best way to maintain the Fed’s independence,” he added.
The iPhone 5 is almost an economic event, from the WSJ: Expectancy Builds Up For Apple's New iPhone
The next iPhone, which has been referred to internally by the code name N41, has been in the works for more than a year, a person familiar with the matter said. Apple is expected to tweak the smartphone's shape with a slightly larger screen and a different shell, and it will work with wireless carriers' fastest LTE networks and run new mobile software. That software, iOS 6, includes improvements to voice-activated assistant Siri, a new digital-coupon-and-passes service called Passbook, and new call-blocking features, among several others.On Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index.
• At 8:30 AM, Import and Export Prices for August will be released. The consensus is a for a 1.5% increase in import prices.
• At 10:00 AM, Monthly Wholesale Trade: Sales and Inventories for July. The consensus is for a 0.4% increase in inventories.
Posted by Bill McBride on 9/12/2012 12:01:00 AM