Explaining Southern California's economy

Reportings: Fed hatred; Groupon IPO; end the 30-year mortgage!

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Scott Olson/Getty Images

A sign marks the location of the Groupon headquarters on November 30, 2010 in Chicago, Illinois.

Bruce Krasting goes after the Federal Reseve. He doesn't hold back: "I want the Fed to fail so miserably that they are marginalized for the next twenty years. I want Bernanke fired. I want the Fed disgraced." (Bruce Krasting)

 

How to do an IPO, the Groupon-Goldman Sachs way: "The hardest step is the first: getting aboard this money train in the first place. You go in with a huge pitchbook that tells the company how awesome they are, how awesomely you’d tell the world how awesome they are, and how awesome you are at IPOs, etc." (Dealbreaker)

 

Abolish the 30-year fixed-rate mortgage! "At heart, it comes down to this: the 30-year fixed-rate product is always going to shift a huge amount of interest-rate risk onto the government in one form or another." (Felix Salmon)

 

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Bullet Points: The Federal Reserve's latest Beige Book

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AP Photo / J. Scott Applewhite

The Federal Reserve Building in Washington, DC.

The Federal Reserve publishes its so-called "Beige Book," a snapshot of the economy taken through the lens of the Fed's district banks, eight times per year. It is booor-ing. You may not even want to read the executive summary of the latest version. Luckily, you don't have to, because I've broken it down into bullet points. And I've assigned my own grades, on how the various parts of the struggling economy are doing. (The Fed, needless to say, doesn't hand out grades.)

•The Big Picture

"...overall economic activity continued to expand in September, although many Districts described the pace of growth as 'modest' or 'slight' and contacts generally noted weaker or less certain outlooks for business conditions."

Translation: Stuckflation, an economy going nowhere, for the rest of the year.

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Federal Reserve plans to monitor blogs and social media. But will it actually read them?

The times, they are a-changin' at the stodgy old Federal Reserve. We used to think of it a financial temple from which a priestly caste of economic policy makers would periodically emerge to make oracular pronouncements of the sort depicted in the video of Fed chairman Alan Greenspan bantering with Ron Paul. Now the Fed plans to keep track of social media and the blogosphere to better understand how it's perceived.

This is from a really great Neal Ungerleider story at Fast Company:

[T]he Fed is now evaluating bids for a social media analysis system that will mine data from Facebook, Twitter, YouTube, blogs, and web forums--beginning in December. In order to "handle crisis situations" and "track reach and spread of […] messages and press releases," the project will also identify a number of what they call "key bloggers and influencers" to target with their outreach, and presumably monitoring, efforts.

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Let's rebrand 'Operation Twist'

So the Federal Reserve, to no one's surprise, is going to adjust its portfolio, selling short-term debt and buying long-term debt in a effort to drive interest rates down below the surface of the sea and involve mermaids in the magical business of monetary policy and the recovery of the U.S. economy. They're calling it "Operation Twist," after a similar maneuver that was last executed in 1961, back when Chubby Checker had the kids a-twistin' like Ben Bernanke after a barbecue lunch with Rick Perry in Lubbock. (MSNBC actually tracked down Chubby for his perspective, and he provided the in-fact quite good advice to just spend money). 

Even the Fed, it turns out, can't get enough of the 'Mad Men' era. What's next? Let's hope it's not "Operation Cuban Missile Crisis."

Operation Twist Again probably isn't going to perform miracles — economists figure it could add slightly to GDP growth and bring unemployment down marginally. But it's disappointing that our economy is in such a downer that our Central Bank has to set the Wayback Machine to the Kennedy Administration to come up with its voodoo — and that American culture has gotten so bad at generating cool new names for dances that the Fed has to reference a year when the Dow started at 610 and finished at 731. Not that we'll headed for those numbers again. But I'm just saying'…

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