PRESS RELEASE
A Nervous Day of Secret Federal Reserve Meetings
April 11, 2016 (EIRNS)—With the U.S. economy clearly at zero growth or worse, Monday was a nervous day of secret meetings of the Federal Reserve. First the Board of Governors had an "accelerated notice" (i.e., emergency) morning meeting on the subject of interest rates; then Chair Janet Yellen had a closed-door meeting with President Obama in the afternoon. The Fed’s regular April meeting is two weeks away.
Various forecasts of the U.S. GDP growth rate for the first quarter (to be announced April 28) are converging on zero; but all indicators of the real economy, from durable goods and factory orders to wholesale sales and consumer spending, to freight volumes and labor productivity, are indicating that the economy is contracting. The Fed was caught in an interest rate increase while European and Japanese central banks were descending into negative interest rates.
The day was also filled with rumors of the big Italian banks imminently being bailed out by Italy’s government purchasing their bad loans, whose volume is put at €200-400 billion in various estimates—although EU rules are supposed to ban such bailouts. The government was reported to be meeting, again behind closed doors, with representatives of those big banks.
And further destabilizing Europe’s banking system, Austria on Sunday had ordered a major bank bail-in, confiscating some 6 billion euros of senior debt of the Heta Bank, which is the previously bailed-out remains of the bankrupt Hypo Alte Aldria Bank. Heta’s senior debt suffered a whopping 54% expropriation. This debt is guaranteed by the Province of Carinthia, which can’t pay it. So, there is a court fight with creditors asserting that Austria itself is responsible for its province’s guarantees.
