Why Are Democrats So Worried About A Fed Rate Hike?

Investors Business Daily ^ | 12/02/2015 | Editorial

[expat_panama]

Monetary Policy: Fed Chair Janet Yellen thinks the economy is so strong that the central bank can start raising rates this month. So why are Democrats alarmed? Because they know that the "Obama recovery" is hollow.

It's true there have been marginal improvements in key economic indicators since 2008, as would be expected following the worst downturn since the Great Depression.

But the "recovery" that was touted so loudly by Democrats until last year has also been the worst ever” 2% average growth. Now they're worried about the prospects of even a tiny hike in interest rates by the Fed.

[snip]

,,,a Politico headline bluntly asked, "Could An 'Accident' By Janet Yellen Derail Clinton?"

Yellen doesn't seem to think so.

[snip]

Contrary to what the Democrats say, the recovery was never that good to begin with. And contrary to Yellen, it's not that strong now. When the nation's top central banker touts a 5% jobless rate, she does so knowing virtually no economist treats that number as real anymore. Most agree the "real" unemployment rate is 10% or so.

Worse still...

[snip]

...for the future, things may not be so rosy.

-- Banking giant Citigroup says there's a 65% chance of a recession next year.

-- The Institute of Supply Management's manufacturing index has fallen to its worst level since 2009.

-- The Atlanta Federal Reserve's GDPNow index for the fourth quarter dropped to 1.4% this week, well below market forecasts of 2% to 3% GDP growth.

-- Brazil, Russia, India, China " the BRICs...

[snip]

Given so much doubt, now is not the best time for the Fed to start "normalizing" interest rates. And, no, we don't worry about "derailing" Clinton's presidential campaign. Voters will do that. We do worry about derailing what remains of the post-Obama economy.

[expat_panama]

Somehow I always thought that the Fed hike was needed to stop inflation as measured by the PCE. It's not there, so why is she talking hike talk?

[Alberta's Child]

The only way for the Fed to effectively prop up the economy is through interest rate cuts.

If interest rates are effectively 0%, then the Fed's interest rate policy is like a Ferrari without any fuel. It looks great, but it won't get you anywhere.

[Tax-chick]

“Why Are Democrats So Worried About A Fed Rate Hike?”

Because the economy, such as it is, is running on nothing but the fumes from effectively-zero interest rates.

[From The Deer Stand]

Democrats and their global-warming leader Obama own the economy. Period.

[Lurkina.n.Learnin]

At this point I wish the FED would take a vow of silence.

[expat_panama]

Oops --distribution day as stocks fall in rising volume!  Good morning everyone, and the count's now 7 for the NASDAQ and 6 on the S&P500.  Futures are whatever we want them to be as this page says they're tanking and this one's rosy.  So we can forget metals futures and just see that a downturn continues w/ gold/silver have now fallen to $1,050.90/ $13.99 (!).

For reports, today's claims day:

7:30 AM Challenger Job Cuts
8:30 AM Continuing Claims
8:30 AM Initial Claims
10:00 AM Factory Orders
10:00 AM ISM Services
10:30 AM Natural Gas Inventories

Elsewhere:

• Can Cruz close the welfare spigot enough to make illegals self-deport?
• Cutting government down to size   Republicans can take their cue from postwar Democrats
• Oil Speculators Risk a 'Short Squeeze'
• Gold Standard through Rose-Colored Glasses - Binyamin Appelbaum, NYT

[Diogenesis]

The hike is mentioned because the FED wants power.
There is no power now — except for rate hikes.

[wbarmy]

What is the Baltic Dry Goods (IIRC) index? That used to be a very good identifier of hard times coming.

[george76]

Same reason that arsonists carry gas cans and matches.

>> why is she talking hike talk?

[usconservative]

-- Banking giant Citigroup says there's a 65% chance of a recession next year.

We've been in a recession since 2007.

[cuban leaf]

I don’t believe they will raise rates. I think it will be an economy killer. I believe the only took they have left is to THREATEN to raise rates, trying to cause people And companies to borrow and consume and, in essence, get in before the 8spending rate hike. The thing is, if they don’t do it this time they will look like the boy who cried wolf. I.e. they can only do it once.

This month my theory will be tested. But if I’m right, the veil will be lifted on how the economy is REALLY doing.

[The Antiyuppie]

“Because the economy, such as it is, is running on nothing but the fumes from effectively-zero interest rates.”

And, we he some temporary immunity from high gas prices. Not too long ago, if someone farted in the Middle East, oil would go up $10.00/barrel. Without fracking, given the present state of the Mideast, oil would probably be $120/barrel.

[cuban leaf]

Took = tool

[uncommonsense]

When you are out of ammo, at some point you have to reload before the next emergency. It’s too late if the emergency is in place and we all know it’s been knocking at our door for quite some time.

[Lee'sGhost]

“We do worry about derailing what remains of the post-Obama economy.”

How do you derail something that is already derailed?

[Tax-chick]

The decline in gas prices may be all that saves this year’s end-of-year consumer spending blitz from a catastrophic shortfall. The real unemployment rate is dangerously high.

[AndyJackson]

Baltic Dry Index skidding along at the bottom.

[cymbeline]

Doesn’t the Fed’s low-interest policy mean that our economy is perceived to be in need of more and more borrowed money?

Our economy must be piling up debt.

How is this supposed to end? How is this a good thing?

The theory must be that once the economy is strong it will pay off the low-interest debt.

Couldn’t the amount of debt will get to a “point of no return”. Maybe not. Maybe we’ll become like a lawn with no fertilizer.

Something rotten is going on and I think Trump is the best guy to straighten things out.

[Fai Mao]

If the recession becomes obvious the democrats will lose all hope of winning a national election for years

[SoothingDave]

The low rates keep the cost of gov’t debt low. If rates go up, all budgets (such as they are) get thrown out of whack. The cost of debt service will force choices on spending and taxes that politicians don’t want to make.