Why I like blogs

I was going to post a comment or two about the FOMC statement earlier, but someone did it much better already, so I will just quote him. Comment found on  MarketWatch :

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In case the Federal Reserve Press Release was difficult to understand, a plain English translation has been added for the main points.

1. Fed: “Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing.”

Translation: We’re still falling out of control, but we can see the ground now. Flapping our arms seems to help some.

2. Fed: “Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit.”

Translation: Being out of work or afraid of being out of work keeps that wallet shut, especially with the credit cards and home equity loan canceled, and being upside down on the house so you can’t move or relocate to take a new job out of town is also a hard thing to take.

3. Fed: “Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales.”

Translation: Sales aren’t covering the price of ordering more inventory.

4. Fed: “Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.”

Translation: See item #1.

5. Fed: “The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.”

Translation: See #3.

6. Fed: “In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”

Translation: See #1.

7. Fed: “As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn.”

Translation: The Federal Reserve will not have to find new collateral for the currently owned or the new $1.45 trillion in mortgages mentioned above, since the change in the mark-to-market rule took effect. The Fed will also own a lot of worthless paper that will need to be recycled.

8. Fed: “The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.”

Translation: Lunch is here, wrap this up.

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The guy posting it goes under the nickname Wile-E-Coyote. Now, this is why I think that the blogs and online community is here to stay : Because you usually get a lot of sane, logical opinions out there. Oh sure, there are the crackpots and leftist propagators, the nonsense-junkies and the “look-at-my-picture-of-an-imaginary-gnome” people, but if you go to the more serious sites and blogs, you’ll often find vast lines of logical thinking in the comments section.

Also, I find it amazing how many people that know the US economy is officially doomed, yet mainstream media is too scared to even consider bringing it up.