Ben Bernanke went in front of the Joint Economic Committee of Congress today and painted a pretty bleak picture for them, or rather for the country, Republicans were hearted by the impending collapse of civilization. The Fed Chairman told them flat out that the economy is close to faltering, and that the Fed is considering taking more direct action besides its current bond swap scheme. He told Congress that without more consumer spending things will start getting worse and consumer spending will only happen if they have jobs, he also said flatly that Congress must not make any sharp cuts to spending.
To listen to the corporate media you would think he encouraged the Congress to balance the budget by making big cuts to spending, though the clips they run don’t show that. Bernanke has been laying the blame for the lack of jobs at the feet of Congress in recent speeches (when he says Congress, he means Republicans). The Republicans in turn renewed their demand that the Fed stop doing anything to stimulate the economy.
There aren’t a lot of things the Fed can do except do another round of bond buying or QE3. They could pressure the banks to start loaning money by cutting the interest rate that they are paying the banks for depositing money with the Fed. Ever since the banks collapsed in 08 the Fed has been loaning money to the banks at nearly zero interest and at the same time paying them to deposit money with the Fed. A really great investment if you can get in on it.
Speaking of sweet deals, Bank of America says it will plow ahead with a $5/month charge for using your debit card, but they will probably not charge people who have a large balance or a mortgage with them, other big banks have been experimenting with a $3/month charge. BoA says they have no choice but to start charging the excessive fees since the government is restricting them to charging no more than 22 cents to the merchant for swiping your debit card.
The Federal Reserve estimates the cost of a swipe to be no more than 4 cents and banks had been charging 44 cents per swipe. Consumer groups estimate the cost maybe as little as a penny or 98% profit in the old days, now to be reduced to only 95% profit, but that isn‘t enough. Those profit numbers might seem to be too close together to be correct, but we are talking about something that is nearly 100% profit no matter what they charge. BoA claims they will lose 2 billion a year in revenue from being restricted to a 22 cent swipe fee. If only half of their customers pay the $5/month debit card fee they will “earn” 3 billion.
The Senate voted 79-19 to bring the Currency Manipulator bill aimed at China to the floor for a vote. It’s likely that Republicans voted for the bill on the understanding that it will die in House. So called “anti-tax” Congressmen are determined to not let it pass.
China and the usual free trade idiots are screaming about a trade war, as if China buys anything from us now. The usual argument again is being trotted out that everything at Walmart will be too expensive if made in the US. If you don’t have a job or your wages are a third of what they used to be, then everything is already too expensive. The fact is that worker wages on average are half what they used to be, that is before outsourcing started 30 years ago. Increased efficiency should translate into higher wages, much higher wages. The fact that they don’t is not an accident or a natural occurrence. The 99% are being robbed by the 1%, get used to it or fight back. www.prairiew2.com