"The financial system is riskier that it was than before the 2008 crisis..."
In Stunning Decision, EU Orders Germany To Start Onboarding "Bad Debt" To Sovereign Balance Sheet: RBS, Fannie, Freddie Next?
They day has arrived..Make your voice heard...
Action Speak Louder Then Words...PLEASE JOIN THOUSANDS OF PATRIOTIC CITIZENS FROM AROUND THE WORLD, IN SENDING BANKERS A CLEAR MESSAGE ON AUGUST 12th...
On August 12th 2010, citizens around the world will be withdrawing $ 500.00 each from their local ATM's...
This action will cause no problems with the financial institutions, but will send a clear message to the Banks...
PLEASE HELP, This is one simple way to have your voice heard, where it will do the most good...
***PLEASE forward this to family and friends.
http://www.wethesheeplez.blogspot.com
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Jim Sinclair’s Commentary
Here is a song from Bill Carleton’s album, Squeeze the People, titled Banksters & Co. Now Hiring
Jim Sinclair’s Commentary
On Bloomberg today, Professor Kotlikoff spoke on the bankruptcy of the US. Randall Kroszner, a former member of the Fed Board was introduced in all probability to give the other side of the story. Actually he didn’t, but in his words said the same thing.
The key point was that inflation is the inescapable result of creating money to the degree already done and to the degree forthcoming.
The name of this type of inflation is Currency Induced Cost Push Inflation.
Laurence J. Kotlikoff is Professor of Economics at Boston University. One of the nation’s leading experts on fiscal policy, national saving, and personal finance, Kotlikoff is the author of Essays on Savings, Bequests, Altruism, and Life-Cycle Planning (2001), Generational Policy (2003), The Coming Generational Storm (2004), all published by The MIT Press, and other books.
More…
Jim Sinclair’s Commentary
Do you need more evidence of what is coming?
How do you help one state and not the other? If you fund California and Illinois how do you tell New York to take a long leap off a short dock?
This is the slipperiest of slippery slopes that we are now embarking on.
House gives needy states $26 billion for Medicaid, teachers By Tami Luhby, senior writer
August 10, 2010: 3:34 PM ET
NEW YORK (CNNMoney.com) — Cash-strapped states are one signature away from getting $26 billion in federal funds to shore up their budgets.
The House voted 247-161 Tuesday, with support from the Democrats and overwhelming rejection from the Republicans, to send $16.1 billion in additional Medicaid money and $10 billion to prevent layoffs of teachers and first responders. In an unusual move, representatives returned from their August recess to approve the measure…
President Obama, who urged lawmakers to pass the bill, signed it later Tuesday.
Speaking from the Rose Garden earlier in the day, the president said the bill will "save hundreds of thousands of additional jobs in the coming year." He added that it will not add to the nation’s deficit because it "is fully paid for, in part by closing tax loopholes that encourage corporations to ship American jobs overseas."
Speaker Nancy Pelosi, D-Ca., flanked by several teachers and PTA members during a press conference following the vote, called the measure "good news for children," as it saves over 300,000 jobs that are provide education and safer communities.
More…
Jim Sinclair’s Commentary
States need not waste time testing. Even the sleeping Sheeple will wake up on this red herring. Pension funds have been the wastebaskets of Wall Street for years.
States test whether public pension benefits given can be taken away By Stephen C. Fehr, Stateline Staff Writer
Tuesday, August 10, 2010
State legislators are beginning to challenge one of the ironclad tenets of public pension policy: that states cannot legally reduce pension benefits for current and future retirees.
Lawmakers in Colorado, Minnesota and South Dakota voted earlier this year to limit cost-of-living increases they previously had promised to thousands of current and future retirees, who courts historically have protected from benefit reductions. Not surprisingly, retirees in each state have filed lawsuits asking judges to restore their annual benefit increases to what they were previously.
Lawmakers, state retirement systems, public employee unions and others in the pension policy arena are closely watching the outcome of the legal challenges. If the courts do not reinstate the retirees’ benefits, a flood of states could follow the lead of Colorado, Minnesota and South Dakota. The reverse also would be true. “If the plaintiffs are successful, it may discourage legislators in other states from attempting to diminish benefits,” says Keith Brainard, research director at the National Association of State Retirement Administrators.
California Governor Arnold Schwarzenegger and New Jersey Governor Chris Christie, among other officials, favor scaling back pension benefits already promised to current employees and retirees. And a lively debate on the issue is underway in Illinois, where lawmakers reduced the cost-of-living adjustment for newly hired workers. Interest is keen everywhere: Lawmakers from around the country packed a session on modifying public pension benefits at the recent annual meeting of the National Conference of State Legislatures in Louisville.
More…
Jim Sinclair’s Commentary
Countries do not go broke. Countries do not fail on their debt. Countries simply restructure their debts, declaring that to be the end of their problems.
What countries do is deck their currencies as a public company doing the same would deck their share values.
On a significant basis the result is "Currency Induced Cost Push Inflation."
U.S. Is Bankrupt and We Don’t Even Know: Laurence Kotlikoff By Laurence Kotlikoff – Aug 10, 2010 6:00 PM MT
Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.
What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.
Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”
But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”
The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.
More…
Jim Sinclair’s Commentary
The final Pillar in gold lies within the condition of longer term government bonds.
Taleb Says Government Bonds to Collapse, Avoid Stocks August 11, 2010, 10:25 AM EDT
By Renee Bonorchis
(Adds context in third paragraph and Taleb comment in fourth.)
Aug. 11 (Bloomberg) — Nassim Nicholas Taleb, who warned that unforeseen events can roil markets in “The Black Swan,” said he is “betting on the collapse of government bonds” and that investors should avoid stocks.
“I’m very pessimistic,” he said at the Discovery Invest Leadership Summit in Johannesburg today. “By staying in cash or hedging against inflation, you won’t regret it in two years.”
Treasuries have rallied amid speculation the global economic recovery is faltering, driving yields on two-year notes to a record low of 0.4892 percent today. The Federal Reserve yesterday reversed plans to exit from monetary stimulus and decided to keep its bond holdings level to support an economic recovery it described as weaker than anticipated. The Standard & Poor’s 500 Index retreated 16 percent between April 23 and July 2, the biggest slump during the bull market.
The financial system is riskier that it was than before the 2008 crisis that led the U.S. economy to the worst contraction since the Great Depression, Taleb said.
In February, he told a conference in Moscow that “every single human being” should bet U.S. Treasury bonds will decline. It’s “a no brainer” to sell short the debt, he added. Since then, 2- and 10-year notes have rallied.
More…
Posted: Aug 11 2010 By: Jim Sinclair Post Edited: August 11, 2010 at 12:45 pm
Filed under: General Editorial
Posted: Aug 11 2010 By: Jim Sinclair Post Edited: August 11, 2010 at 12:44 pm Filed under: General Editorial
Dear Fellow CIGAs,
Perhaps today might be a good time to review Jim’s words of wisdom about precious metals shares while "sitting tight!"as winter arrives for the U.S dollar and the Gold season heats up.
CIGA “The Gordon”
Evaluation of Precious Metal Shares in Today Marketplace Posted: Oct 21 2009 By: Jim Sinclair
Dear CIGAs,
I shared the matrix of categories of gold shares with you because if you understand this concept you will understand the thinking strategies of company management that wish to grow as well as the mind of the short that wishes to profit.
At lunch today with a professional investor we discussed the use of the gold share matrix. It is the mission of the short seller to push a situation down the six categories of companies to profit. It is the mission of the company intent on significant success to move up the line of six categories to the top most position. This is why I have said that it is progress on the ground that is the viable tool for market placement.
If you understand or can get expert input into the reports of companies you can gauge where they will stand on the six basic positions of the matrix and therefore in the marketplace.
You will also see even if Canada is no longer the center of finance for any other than the major producer top half of category number one, old habits die slowly. That means that the Canadian analyst at least reads the materials that have the blessing of a 43-101 geological stamp on it to see what a company is.
Hedge funds and speculative activity elsewhere seem much less discriminating. They may even start to believe in the charts that they themselves made happen.
One of the keys to this is to watch the legal short position in any issue and the release by that issue of 43-101 blessed material in Canada versus the US. Canada actually reads this stuff and understands it. The time honored resource center of the Republic of South Africa, for all intents and purposes, is out of the business on the mining finance side and has never been the wild financial center that North America is and China now is becoming.
So in giving you the matrix of gold share categories, you can begin to place the issues you own in the position that the market presently perceives them to be or to which they have been manipulated to be.
You can watch their on ground progress to determine, if they are moving up and down the scale and therefore be able to predict the direction of price with accuracy. If you can get some help to understand the fuller meanings of the reports you can actually get a degree of directional move in terms of the present market climate.
For instance, 100,000 ounces of mineable on surface gravel is worth (net cash flow terms) as much as 1,000,000 ounces of deep gold mineralization. Borrowing funds to build a new mine that requires an OTC derivative short of gold in place is a faster way to production than earning your way to it, but carries much greater financial risks.
A category three situation wishing to move into upper category two, regardless of being a royalty company or a pure exploration company, must see some property in production with respectable net cash flow ramifications.
So on it goes, up and down the category scale that will equate to market value and acceptance.
To review the basic article defining the gold share evaluation matrix please consider printing this article out and filing it under market evaluation of precious metals shares.
The Shift Between Gold Share Categories Posted: Oct 19 2009 By: Jim Sinclair
Dear Friends,
There are various categories of gold shares.
1. The most popular are the majors.
The least understood part about them is their serious short of gold derivative problem, and the balance sheet and price of cover implications thereof. No one will deny that they get the most attention because they have the capitalization required and the brand name that invites institutional buying.
Not much attention is being paid to the fact that they have sold their gold years into the future at prices well under $400. Their calculations on their sales price of the short of gold adds in the interest paid to short of physical bullion over the period of the short position into present time calculations as per their risk disclosure filings. Yes, if you sell physical you get paid interest, and if you buy physical on the cuff you pay interest in all the major cash markets. OTC derivative short of gold factors interest, yet to be earned, into the reported sales price going out in time. When they close the transaction before maturity, as is happening now, the debit does not include unearned interest and therefore charges at the real lower sales price. That is why the majors are borrowing their billions. This will limit their gain versus the gold price as it rises.
2. Junior producers are entities that have opened production facilities which are modest or not yet at full capacity. In the main they have the same problem but it is less visible. Recently the trend has been to bury the OTC short of gold derivatives in the loan documentation, but it is still there with somewhat the same effect. What matters is when the loan was made. The more recent it is the higher the short strike price in the OTC derivative and therefore the less the loss the company faces.
3. Exploration and development issues have been the favorite of the mix of all gold share categories for short operations. The gold explorer business is capital intensive, so if the price can be depressed, the short starves the company of its ability to finance. Before you can have production you must pay all the costs of exploration which usually comes from seed capital. In the last five years there has been practically NO seed capital anywhere for gold.
There are other categories and as a company transmutes between categories. In this unprecedented gold bull market price adjustments should occur with category transmutation of gold entities as they climb the ladder of success.
There is a separate group known as Senior and Junior Gold Royalty companies that will generally outperform as hyperinflation that impacts mining costs occurs. This outperformance should be a product of the cost of production falling upon the royalty partner, not the royalty holder whose participation is an amount of the gross production.
There is the exploration company that begins production and therefore moves up the scale toward the category of junior producer. Usually this is accompanied by improvement in price as many investment entities will not buy non-producing exploration companies.
There is the exploration company that has success and will be evaluated by the quality of its success and deal making. Historically success and deal making for such a company increases interest in the company.
It has been almost 30 years since any meaningful segment of the general marketplace has taken an interest in gold shares. Most mineral underwriters have moved away from all but the Major Producer category. When was the last time you saw any known, respected mineral underwriter working for companies in the bottom half of the Junior Producer or any Gold Exploration entities?
The only money available to the exploration Gold Exploration entities has been PIPEs which when participated in were the start of the company’s death spiral.
At the beginning of a gold bull market it is gold itself, then Major Producers that perform.
As gold makes its way past $1000 to $1650 and beyond, the order up to now has been Major Producers and the top half of Junior Producers benefitting with while the short attacked the bottom half of Junior Producers and all of Gold Exploration entities. Watch closely now as a shift takes place.
No short of any viable gold share can be happy this evening even though across the board they are still short and in some cases still sitting on the price.
You might have noticed recently in the heavily shorted gold situations in the bottom half of the Junior Producers and many of the viable Gold Exploration entities that there was an at the close and after close attempt to destroy prices when in some instances million of shares were sold and bought. This occurred in some cases on volumes 18 times larger (volume on the day) than the previous norm. Exchange short figures indicate that these were long buys and only minimal short covering.
The leverage is always on the bottom side of the category scale, so I anticipate that the bottom half of Junior Producers and the viable companies in Gold Exploration entities to outperform the top half of Junior Producers and Major Producers as the price of gold continues higher in late 2009 and 2010.
History tells us this is how it has always happened, and I believe it will again.
That is called leverage coming out higher gold prices, high in ground values, higher profits in the start up mining and in many cases much less shares outstanding than in the Major Producers and the top half of Junior Producers.
Gold shares presently in the more leveraged categories have practically no participation compared to other hard asset equities such as energy thanks to the action of the shorts.
In general it is more than likely the wrong time for a long suffering long to throw in the towel, but many are and will.
That is also the way it happens and explains the deluge of questions coming in today about the more leveraged gold shares.
Respectfully,
Jim
Link to original article…
Perhaps today might be a good time to review Jim’s words of wisdom about precious metals shares while "sitting tight!"as winter arrives for the U.S dollar and the Gold season heats up.
CIGA “The Gordon”
Evaluation of Precious Metal Shares in Today Marketplace Posted: Oct 21 2009 By: Jim Sinclair
Dear CIGAs,
I shared the matrix of categories of gold shares with you because if you understand this concept you will understand the thinking strategies of company management that wish to grow as well as the mind of the short that wishes to profit.
At lunch today with a professional investor we discussed the use of the gold share matrix. It is the mission of the short seller to push a situation down the six categories of companies to profit. It is the mission of the company intent on significant success to move up the line of six categories to the top most position. This is why I have said that it is progress on the ground that is the viable tool for market placement.
If you understand or can get expert input into the reports of companies you can gauge where they will stand on the six basic positions of the matrix and therefore in the marketplace.
You will also see even if Canada is no longer the center of finance for any other than the major producer top half of category number one, old habits die slowly. That means that the Canadian analyst at least reads the materials that have the blessing of a 43-101 geological stamp on it to see what a company is.
Hedge funds and speculative activity elsewhere seem much less discriminating. They may even start to believe in the charts that they themselves made happen.
One of the keys to this is to watch the legal short position in any issue and the release by that issue of 43-101 blessed material in Canada versus the US. Canada actually reads this stuff and understands it. The time honored resource center of the Republic of South Africa, for all intents and purposes, is out of the business on the mining finance side and has never been the wild financial center that North America is and China now is becoming.
So in giving you the matrix of gold share categories, you can begin to place the issues you own in the position that the market presently perceives them to be or to which they have been manipulated to be.
You can watch their on ground progress to determine, if they are moving up and down the scale and therefore be able to predict the direction of price with accuracy. If you can get some help to understand the fuller meanings of the reports you can actually get a degree of directional move in terms of the present market climate.
For instance, 100,000 ounces of mineable on surface gravel is worth (net cash flow terms) as much as 1,000,000 ounces of deep gold mineralization. Borrowing funds to build a new mine that requires an OTC derivative short of gold in place is a faster way to production than earning your way to it, but carries much greater financial risks.
A category three situation wishing to move into upper category two, regardless of being a royalty company or a pure exploration company, must see some property in production with respectable net cash flow ramifications.
So on it goes, up and down the category scale that will equate to market value and acceptance.
To review the basic article defining the gold share evaluation matrix please consider printing this article out and filing it under market evaluation of precious metals shares.
The Shift Between Gold Share Categories Posted: Oct 19 2009 By: Jim Sinclair
Dear Friends,
There are various categories of gold shares.
1. The most popular are the majors.
The least understood part about them is their serious short of gold derivative problem, and the balance sheet and price of cover implications thereof. No one will deny that they get the most attention because they have the capitalization required and the brand name that invites institutional buying.
Not much attention is being paid to the fact that they have sold their gold years into the future at prices well under $400. Their calculations on their sales price of the short of gold adds in the interest paid to short of physical bullion over the period of the short position into present time calculations as per their risk disclosure filings. Yes, if you sell physical you get paid interest, and if you buy physical on the cuff you pay interest in all the major cash markets. OTC derivative short of gold factors interest, yet to be earned, into the reported sales price going out in time. When they close the transaction before maturity, as is happening now, the debit does not include unearned interest and therefore charges at the real lower sales price. That is why the majors are borrowing their billions. This will limit their gain versus the gold price as it rises.
2. Junior producers are entities that have opened production facilities which are modest or not yet at full capacity. In the main they have the same problem but it is less visible. Recently the trend has been to bury the OTC short of gold derivatives in the loan documentation, but it is still there with somewhat the same effect. What matters is when the loan was made. The more recent it is the higher the short strike price in the OTC derivative and therefore the less the loss the company faces.
3. Exploration and development issues have been the favorite of the mix of all gold share categories for short operations. The gold explorer business is capital intensive, so if the price can be depressed, the short starves the company of its ability to finance. Before you can have production you must pay all the costs of exploration which usually comes from seed capital. In the last five years there has been practically NO seed capital anywhere for gold.
There are other categories and as a company transmutes between categories. In this unprecedented gold bull market price adjustments should occur with category transmutation of gold entities as they climb the ladder of success.
There is a separate group known as Senior and Junior Gold Royalty companies that will generally outperform as hyperinflation that impacts mining costs occurs. This outperformance should be a product of the cost of production falling upon the royalty partner, not the royalty holder whose participation is an amount of the gross production.
There is the exploration company that begins production and therefore moves up the scale toward the category of junior producer. Usually this is accompanied by improvement in price as many investment entities will not buy non-producing exploration companies.
There is the exploration company that has success and will be evaluated by the quality of its success and deal making. Historically success and deal making for such a company increases interest in the company.
It has been almost 30 years since any meaningful segment of the general marketplace has taken an interest in gold shares. Most mineral underwriters have moved away from all but the Major Producer category. When was the last time you saw any known, respected mineral underwriter working for companies in the bottom half of the Junior Producer or any Gold Exploration entities?
The only money available to the exploration Gold Exploration entities has been PIPEs which when participated in were the start of the company’s death spiral.
At the beginning of a gold bull market it is gold itself, then Major Producers that perform.
As gold makes its way past $1000 to $1650 and beyond, the order up to now has been Major Producers and the top half of Junior Producers benefitting with while the short attacked the bottom half of Junior Producers and all of Gold Exploration entities. Watch closely now as a shift takes place.
No short of any viable gold share can be happy this evening even though across the board they are still short and in some cases still sitting on the price.
You might have noticed recently in the heavily shorted gold situations in the bottom half of the Junior Producers and many of the viable Gold Exploration entities that there was an at the close and after close attempt to destroy prices when in some instances million of shares were sold and bought. This occurred in some cases on volumes 18 times larger (volume on the day) than the previous norm. Exchange short figures indicate that these were long buys and only minimal short covering.
The leverage is always on the bottom side of the category scale, so I anticipate that the bottom half of Junior Producers and the viable companies in Gold Exploration entities to outperform the top half of Junior Producers and Major Producers as the price of gold continues higher in late 2009 and 2010.
History tells us this is how it has always happened, and I believe it will again.
That is called leverage coming out higher gold prices, high in ground values, higher profits in the start up mining and in many cases much less shares outstanding than in the Major Producers and the top half of Junior Producers.
Gold shares presently in the more leveraged categories have practically no participation compared to other hard asset equities such as energy thanks to the action of the shorts.
In general it is more than likely the wrong time for a long suffering long to throw in the towel, but many are and will.
That is also the way it happens and explains the deluge of questions coming in today about the more leveraged gold shares.
Respectfully,
Jim
Link to original article…
Filed under: Jim's Mailbox
Follow the Secular Trends While The Headline Dog Chases Its Own Tail CIGA Eric
Like a dog chasing its own tail headline commentary tries associate short-term market movements with explanation, connected money repositions into weakness for the September-October advance. The inconsistency of day-to-day explanations creates only confusion.
August 10th, Headline: Gold Rises on Speculation Federal Reserve Debt Purchase to Spur Inflation
The dollar climbed for a third day against the euro on concern the economic recovery is waning. Bullion typically moves inversely to the greenback. The Federal Reserve yesterday said “the pace of economic recovery is likely to be more modest in the near term than had been anticipated,” and reversed plans to exit from aggressive monetary stimulus.
August 11th Headline: Gold Falls in London as Stronger Dollar Cuts Investment Demand
Gold declined in London as a strengthening dollar curbed demand for the precious metal as an alternative investment.
The dollar climbed for a third day against the euro on concern the economic recovery is waning. Bullion typically moves inversely to the greenback. The Federal Reserve yesterday said “the pace of economic recovery is likely to be more modest in the near term than had been anticipated,” and reversed plans to exit from aggressive monetary stimulus.
Volatility spawned from confusion is an important tool.
Gold London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:
Silver has more work to do than gold, but its setups can occur with shocking speed.
Silver London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:
Why do you think the Fed has talked about stepping into the bond market? Probably most important, as Jim suggests, the final pillar in gold lies with in the condition of longer term government bonds. Also, the Fed "sees" the short positions building in the bond marketand has decided to attack them with words.
Headline: Taleb Says Government Bonds to Collapse, Avoid Stocks
Nassim Nicholas Taleb, who warned that unforeseen events can roil markets in “The Black Swan,” said he is “betting on the collapse of government bonds” and that investors should avoid stocks.
“I’m very pessimistic,” he said at the Discovery Invest Leadership Summit in Johannesburg today. “By staying in cash or hedging against inflation, you won’t regret it in two years.”
More…
Hi Jim,
Given today’s Federal Reserve balance sheet policy, could this be The Playbook?
1. The Federal Reserve feels constrained in their ability to purchase treasuries if they have to wait for mortgage backed securities to mature. They decide to sell this junk paper to free space on their balance sheet.
2. The Federal Reserve offers to sell the junk mortgage paper back to the Big Banks whom they purchased it from in the great bailout of 2008-09.
3. The Big Banks only offer to pay market rates for the worthless paper, quite a discount to what is on the Fed’s books and what they were paid a short while ago (good news, an audit of the Fed on this is not likely).
4. The Federal Reserve clears substantial worthless dollars from their balance sheet which allows for quite substantial purchases of treasuries.
5. The Big Banks, realizing the last "dip at the bonus well" may have passed, devise a revitalized pretend and extend and mark up the recently purchased worthless paper back to a "reasonable mark to model level."
6. The Big banks report record paper profits and more importantly, record bonuses.
7. Main Street remains asleep as this policy is reported as non inflationary.
8. Quantitative Easing accelerates toward infinity.
I doubt this playbook would make much of a stir with Main Street. Who cares, right? "They" are just trying to help us, right?
Perhaps a cheeseburger for $300 is the only thing that will get through to anyone. At that point, it’s too late.
CIGA Glen
Dear CIGA Glen,
You have put it all together. If this was not the playbook, it sure as hell is now.
Regards,
Jim
Fed Looks to Spur Growth by Buying Government Debt By Scott Lanman – Aug 10, 2010 11:14 AM PT
Federal Reserve officials decided to reinvest principal payments on mortgage holdings into long-term Treasury securities, making their first attempt to bolster growth since March 2009 to keep the slowing U.S. economy from relapsing into recession.
“The pace of economic recovery is likely to be more modest in the near term than had been anticipated,” the Federal Open Market Committee said in a statement in Washington. “To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level.” The Fed retained a commitment to keep its benchmark interest rate close to zero for an “extended period.”
With growth weakening in the second quarter and company job gains in July falling short of estimates, today’s step signals that risks of a downturn have increased enough for the Fed to delay its exit from unprecedented stimulus. Chairman Ben S. Bernanke told Congress last month that the Fed was “prepared to take further policy actions as needed.”
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