The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
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Compare and Contrast

I’ve been reading Fed announcements for decades but found yesterday’s to be as inscrutable as any.  They recognized the economy is weaker than they expected.  They said they were still expecting greater growth.  They didn’t raise interest rates.  They didn’t promise any more quantitative easing.  They didn’t promise anything, other than to keep interest rates low until mid-2013. That made interest rates drop immediately, as it reduced the possibility of loss from bonds for the next two years.  They did admit they discussed other policy tools they have available, if growth doesn’t resume, but didn’t suggest what the tools might be.  Finally, there was a small rebellion in that three members of that committee (FOMC) voted against Bernanke.

Today, I watched an interview with Jamie Dimon, CEO of giant JPMorganChase.  As you know, I don’t like money center banks, as that invisible “great white shark” known as derivatives could take them down with little notice.  Nonetheless, I respect Mr. Dimon.

He was straight-forward and clear.  America has hit a soft patch, and our best days are still ahead of us.  He described the debt-ceiling debacle as a shot in the foot.  He sees so many good things as he visits bank facilities and clients across the country that he thinks we need to pay less attention to Washington and the stock market.  The greatest constraint on our economy is the cumulative effect of regulation, not taxes nor spending but regulation.  Excessive regulation creates too much confusion, increasing uncertainty. 

Jamie for President!!