Should we do this? 
9/16/2008 FOMC meeting federalreserve.gov/monetarypolicy…
Day after Lehman filed for bankruptcy. And day before Reserve Primary fund broke the buck. FOMC held at 2%.
Day after Lehman filed for bankruptcy. And day before Reserve Primary fund broke the buck. FOMC held at 2%.
Big worry is AIG. Geithner skips this meeting to deal with that situation. Bill Dudley not sure if AIG is illiquid or insolvent.
FOMC unanimously approves Bernanke-Geithner-Kohn (foreign currency subcommittee) to do unlimited swap lines - supplying $ - to G-10 central banks (ECB, Swiss, Japan,etc) who would turn around and provide $ liquidity to their banks... but no swaps for emerging market central banks
Rosengren anticipates run on the money market funds that was already in motion
And there's a lot of "letting Lehman fail" was the right thing... but Rosengren: "too soon to know whether what we did with Lehman is right...we took a calculated bet. If we have a run on the money market funds ...that bet may not look nearly so good." 😬
Amazingly Rosengren is the only participant who favors a rate cut.
because I seemed to piss off so many (@dandolfa @1954swilliamson etc) with my August 08 FOMC thread - - I will spare you the inflation projections from the usual suspects. On the whole, the FOMC seemed to remain concerned about inflation ... though less so
interestingly the FOMC seemed to consider a rate cut of 50 basis points or nothing... Bill Dudley set the context market expecting either 50 or nothing
OK son has woken from nap so gotta run ... but Fed staff still pretty optimistic about economy - "we’re still expecting a very gradual pickup in GDP growth over the next year and a little more rapid pickup in 2010" - but labor market weakened significantly. Stockton:
so the staff to mark up their estimates of unemployment to 6.2% in 2009 and 5.9% in 2010.
staff estimate of long run full employment = 4.75%
"The NAIRU remains flat at 4¾ percent, and potential GDP continues to expand about 2½ percent per year from 2011 to 2013."
"The NAIRU remains flat at 4¾ percent, and potential GDP continues to expand about 2½ percent per year from 2011 to 2013."
in worst case scenario staff estimates unemployment getting to 7% by the end of 2009 [it was 9.9% in December 2009]
