Rate Hikes? Not bloody likely, Ben

The economy is in tatters. Consumer confidence has plummeted, food and energy prices are soaring, and the housing market is experiencing its biggest crash since the Great Depression. Manufacturing is down, unemployment is up, gasoline is topping $4 per gallon, and tent cities are sprouting up throughout the Southwest. If there’s a silver lining to this mess; it’s not visible from planet earth.

… Last week, Fed chief Ben Bernanke made light of the nation’s economic woes saying:

“Despite the unwelcome rise in the unemployment rate that was reported last week, the recent incoming data, taken as a whole, have affected the outlook for economic activity and employment only modestly. Indeed, although activity during the current quarter is likely to be weak, the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so…The Federal Open Market Committee will strongly resist an erosion of longer-term inflation expectations.”

“The risks to the economy have diminished over the past month”?

… In real terms, inflation is off the charts; anyone whose been to a gas station or the grocery store lately knows that. The Fed responsible for keeping interest rates too low to try to keep the investment banks afloat and the stock market awash in cheap capital. Last week, Sun Zhenyu, China’s ambassador to the World Trade Organization said what most people have already figured out for themselves: “The dollar’s depreciation has further added fuel to the rapid increases of crude oil and food prices and hurt the exports of developing countries.”

Smirking Chimp