Fed Day

Today is Fed Day (FOMC day, Federal Open Markets Committee day), and everyone is expecting a rate cut. I don't know what that's worth anymore with the Fed not even attempting to defend 1% (actual overnight rates are hanging around .15% - maybe it'll drop to zero) which means the US is already effectively in a liquidity trap. Bloomberg News talks about some of the "alternative" tools the Fed has been following.

Inflation is not on the radar anymore; core CPI in November was flat, and adding food and energy made it -1.7% in November, that's negative, and the lowest number since 1932. 1932 was not a good year. Dr. Roubini of RGE Monitor talks about deflation here, and also here, tho' I don't know if the latter is visible without subscription.

Housing starts fell 18.9% in November, to the lowest since World War II, which is as far back as records go. (And you have to go to secondary records to go back that far. Main numbers stop in 1959.) Overall industrial output also fell in November, by 0.6% month-to-month, or 7.3% since November 2007, the worst decline since 1980. Mish notes that much of the remaining strength is in defense, and may contract as the Iraq war finally winds down.

Washington Post surveying says most Americans oppose the automotive industry bailout, with more significantly more strongly opposed than strongly supporting. Moody's thinks prepackaged bankruptcy is on the way, but the White House says it's still working out a plan. Senator Levin (D-MI) thinks it'll look like the original Congressional plan, but I think he's wrong. There is something of a consensus emerging regardless that the GOP is insisting that the UAW be broken as a prerequisite to stepping in.

Many states are already running out of funds for unemployment insurance, and are scrambling to find new ways to recover the shortfalls. Unemployment is one of several factors starting to hit housing again; Alt-A mortgages are deteriorating much more rapidly than consensus expectations, which means the second wave of housing fallout is probably underway.

Brad Setser has a bit of analysis on the agencies/treasuries numbers I talked about yesterday, calling it a "crisis... in the balance of payments data" and going into details.

And that's all I have time for right now. Good luck.

today's torture update

Cheney Admits Central Role In Torture For First Time, says the Huffington Post. The only problem is that the LA Times story they're referencing, like so many other stories, refuses to all torture torture, using instead the euphemism "severe interrogation methods." Worse, note this paragraph, written by the LA times:

His comments come on the heels of disclosures by a Senate committee showing that high-level officials in the Bush administration were intimately involved in reviewing and approving interrogation methods that have since been explicitly outlawed and that have been condemned internationally as torture.

WRONG. WRONG, YOU FUCKS. They were already illegal and already defined as torture in both US and international law. Period. Full. fucking. stop. Stop spinning for them and start acting like goddamn journalists instead of PR flacks, you despicable clowns.

In other "lying bullshit" news, watch National Review lie about the bipartisan Senate report showing Mr. Bush and Mr. Rumsfeld directly signed off on illegal torture and tossing of the Geneva Conventions.

Chief Executive Bush has a contemptable "so what?" when it's pointed out that the only reason there's an Al Qaeda presense in Iraq is because of his fucking invasion. Enjoy Sullivan's comment here. Meanwhile, the Iraqi journalist who has shown more moxie than any American news source, the guy who threw his shoes at Mr. Bush during a press conference, reportedly got the shit kicked out of him, and sources say the Americans did it. Later reports say he was indeed beaten, but it was apparently Maliki government thugs, rather than US government thugs. Maybe rendition was involved. Heh.

Oh, and finally, watch the US Army support fundamentalist evangelicals as embedded evangelists in Afghanistan.

FedDay.

Good evening.

Whelp, the US has a Zero Interest Rate Policy, or ZIRP. We've already been effectively there for over a week, with actual overnights in the .15% range, so this isn't a big number difference, but still, having it official is kind of scary. Here, have some spicy meatballs:

• Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.
  
  Translation: DEFLATION O SHI
  
  
• As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities
  
  Translation: We'll print and print and print and print and print 'till the dollar goes down.
  
  
• Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses.
  
  Translation: Welcome to Bank of Fedmarica Financing, the Lender of Only Resort.
  
  
• Cramer said this today on CNBC: The Fed announcement today shows that it is doing everything it can possibly do -- lowering rates from 1% to between 0% and 0.25%, continuing to buy large amounts of agency debt and mortgage backed securities and evaluating whether to buy long-term securities. This is an amazing announcement, and the market should be higher than the 300- point gain in the Dow we're seeing. Bernanke is clearly doing whatever he can to fix this economy and the markets, and eventually it is going to work.
  
  Because apparently if you fall far enough down the cliff you end up back on top! ATTENTION, CRAMER: THIS IS NOT DRIVING TO AWESOME THROUGH STUPID. THIS IS DRIVING TO STUPID THROUGH STUPID. Jesus.
  
  
• Peter, one of the Minyans at Minyanville: Lest there was any doubt, the Fed just made it absolutely clear that they will trade a weaker dollar in exchange for zero out the Treasury curve as far as the eye can see. A word to the wise, don't get in the way. The Fed has the world's largest SIV and they are not afraid to use it.
  
  Translation: Duck!

The US dollar index dropped below 80 before bouncing just back above, a nice 2.3% move in TWENTY MINUTES. The Yen is up sharply, trading around 88.9 to the US dollar, having moved a similar 2.3% today. The Swiss Franc spiked 3.51% with a lot of Europe closed for the day; numbers against the rest of the basket severe also severe but will be even more interesting once Europe wakes up tomorrow morning. Tonight, though, the JCB says it's not going to intervene; hey, they've had their Round One and are heading in for Round Two, so why bother? Paul Krugman notes we've gone the way of Japan now. Having lost most of one decade in the first part of this downtown, well, this would mark the start of a second.

In side-effects news, many money market funds now have negative yields. Yay.