Fed Govenor Wants Its Both Ways

http://online.wsj.com/article/SB119427134784782479.html?mod=sphere_ts
Fed Governor Kroszner Says Rate Cuts Not Likely to Continue & Warns Of Further Subprime Deterioration.

Since 1993 I've been following the Fed in its effect on the mortgage business. No one ever gets the recession until its too late and the same with the rebound. Very few market projectors ever get it right. Economics love to follow each other around. Fed Gov. Kroszner thinks a recession is unlikely, but warns of credit tightening worsening. Bankers always remind me of the Capitol One commercial, where the little guy is running around the fat cat bankers.

Maybe he missed a few reports this week. http://www.bloomberg.com/apps/news?pid=20601087&sid=aKaFoWkJ4Ii8&refer=home
Housing Market Spills Over
"Industrial production in the U.S. unexpectedly dropped in October as slowing sales prompted manufacturers to make fewer automobiles and appliances."

"The figures suggest the biggest housing slump in 16 years is starting to spill over to other industries. The drop also reinforces forecasts for slower growth this quarter." Ya so the biggest housing slump in 16 years can be over come with 75 basis points, when recent ones took us to over 10+ reductions and an almost 0% funds rate. Ya, I'll have what theyre smoking.

The slump holds the potential for a major recession. Whats largely different in my mind is that this housing slump holds global implications since many of the worlds banks hold the notes on these failing mortgages. With that advent of these latest hedge funds there is more global exposure to our housing than ever. Many of the bad notes are still locked up in companies warehouse lines and uncounted yet. This heightens the risk of global markets as all of the worlds banks tighten credit. As other economies are affected and slow it will have a chain effect around the world. Japan's central bank said this week it expected a slowdown.

Industrial output is already slowing as consumers are tightening their wallets and consumer confidence declines. Major recession indicators. Nov. 14th Inventory report showed that inventories are up .4% in September but up 3.3% from last year. Another indicator the economy is slowing. We'll see what housing starts shows next week. The FOMC minutes will just show how denial the Fed is in.

My message to the Fed: Remember Crack is whack! Dont smoke your own!