Either Way, Bases Are Covered

The “rebounding” housing market (?) is going to drive interest rates higher, as the Fed pulls out of its massive purchasing program of government and mortgaged-backed securities.  So things are definitely getting better.  Heating up.  Better get down there and take out that loan, rates will never be this low again.

That’s CNN’s take on one page.

On another page, CNN’s take is that employment remains at a 30 year low.  Hard to see where all that demand for loans comes from when nearly half the adult population doesn’t have a job, thus no income to service a loan.

Does this seem a little inconsistent to you?  Or a lot?

Following the media’s reporting on the ‘financial crisis’ is liable to lead to a case of cognitive dissonance.

Here’s a better take.  The Fed is not going to pull out of its “easing” any time soon, precisely because of the employment situation.  If they did, there’s no one to fill the gap at current interest rates much less higher ones, which is why the Fed is engaged in easing in the first place.  The article to the contrary is a fairly sophisticated come-on for people to borrow, because practically no one in the private sector is borrowing, which is again why the Fed has been easing for years now.

The banksters, meanwhile, are aware of what the Fed is doing because it’s their business to know.  They will, of course, remain reluctant to do much lending anyway at very low interest rates, especially with the Fed threatening to manipulate rates higher, because if a bank is loaded up with low interest loans on its books and interest rates rise the bank takes a big balance sheet hit.  Maybe a fatal one, unless they are bailed out again.

Maybe that’s the plan, who knows.  A bailout, I mean.

But only the too-big-to-fail get bailed out.

Of course, if the Fed entices people to borrow by hanging the prospect of higher interest rates over everyone’s head, and then on the other side pressures lenders to lend through brow-beating and regulatory coercion, maybe they can inch up the money supply enough to ward off a discussion of deflation, or disinflation.  A temporary balancing act, in other words.  Like so much that has gone on already.

I don’t know, this is getting increasingly weird.  Much of this is inside baseball between the banksters themselves, jockeying for position to see who takes the fall for the next leg down in the crisis.  Which, strategically placed propaganda news stories notwithstanding, continues apace.

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Filed under financial crisis, Media incompetence/bias

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