McClatchy News has the article Fed’s language shift signals Washington, sequester harming growth.

“Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth,” the Federal Open Market Committee’s statement said.

That was almost identical to the March wording, except that back then the Fed said that “fiscal policy has become somewhat more constrictive.”

It means that by the Fed’s read of the latest economic indicators, actions taken by Congress and White House – or not taken in the case of failing to reach a budget compromise and allowing automatic cuts to begin on March 1 – are harming the economy and the Fed’s efforts to jumpstart it.
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“Like a patient who has been administered too many antibiotics, the economy is less and less responsive to the Fed’s continued monetary stimulus,” Rep. Jeb Hensarling, R-Texas, head of the House Financial Services Committee, said in a statement. “America is nearly five years into the Fed’s historically unprecedented interventionist policies and there is very little gain to show for it.” He added: “12 million Americans remain unemployed – a number roughly equal to the entire population of Ohio.”

Here is another great example of how a Republican tries to shift the blame from deliberate Republican policies to an agency that is doing its best to repair the damage the Republicans are doing.

As I have posted extensively on this blog, trying to resolve a recession bordering on depression with only the monetary policy tools at the disposal of the Fed is like trying to push on a string.  Pulling on a string is much more effective, and that would be robust, stimulative fiscal policy.

The Republicans put every roadblock possible in the path of stimulative fiscal policy, leaving the Fed to come to the rescue with the only tools that it has.  These tools are not nearly as effective as the tools at the disposal of Congress, but if Congress will only behave in a negative way, what is the Fed supposed to do?

If the Fed did not try to counteract what Congress is doing, then this economy would be in much deeper trouble than it is now.  For political purposes, the Republicans are harping on the “problem” of an increasing deficit, when in fact, an increasing deficit is the most effective tool to counter a recession, short of  correcting the mal-distribution of income and wealth in this country.  The Republicans are even firmer in not allowing a fix to the mal-distribution problem.

McClatchy News has the article Obama pick of Rep. Mel Watt to regulate mortgage finance sparks controversy.  The article has a slew of examples of how the Republican party lives in a place far from reality.  I picked a few of them to quote below.  You’ll have to read the article itself to get the rest of them.

The Obama administration’s selection Wednesday of a North Carolina congressman to head the government’s mortgage-finance regulator appears certain to spark a confirmation battle and renewed debate over the government’s role in backstopping home loans.

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The selection of Watt, a career politician who hasn’t worked in banking or finance, touched off immediate controversy. He’ll head a highly technical agency, and his nomination did not sit well with Republicans who want changes in housing policy.

“I could not be more disappointed in this nomination. This gives new meaning to the adage that the fox is guarding the hen house,” Sen. Bob Corker, R-Tenn., said in a statement fired off minutes after news broke of Watt’s selection and well before the official White House photo op. “The debate around his nomination will illuminate for all Americans why Fannie and Freddie failed so miserably.”

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Watt has served 20 years in Congress, many of them on the influential House Financial Services Committee. Sen. Elizabeth Warren, D-Mass., called him “a thoughtful policymaker with a deep background in finance and a long record as a champion for working families.” Rep. Elijah E. Cummings of Maryland, the top Democrat on the House Committee on Oversight and Government Reform, said Watt “has deep expertise in housing policy and a record of distinguished service” in Congress.

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How to “unwind” Fannie and Freddie is a complicated question. For now, they’re the only game in town. Before the financial crisis, sparked by a housing bubble and a collapse in lending standards, Wall Street banks had aggressively gone after Fannie’s and Freddie’s business, capturing a large share of the market long enjoyed by the two quasi-government entities.
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Doing away with Fannie and Freddie has been a Republican rallying point, placing calls for their dissolution in the Republican Party platform during the 2012 elections.

“Fannie Mae and Freddie Mac were a primary cause of the housing crisis because their implicit government guarantee allowed them to avoid market discipline and make risky investments. Their favored political status enriched their politically-connected executives and their shareholders at the expense of the nation,” the platform read.

That looks past the lead role that Wall Street played in the housing crisis. But five years later, lawmakers continue to debate just what to do with both Fannie and Freddie.

I finished the selection of quotes with the major understatement from the article.  After saying that “Wall Street banks had aggressively gone after Fannie’s and Freddie’s business, capturing a large share of the market long enjoyed by the two quasi-government entities”, the article could have mentioned how Fannie and Freddie finally started to lower their own mortgage standards to try to recapture some of this market from the private sector that had pioneered low standard mortgages.

The article did not cover at all how the Republicans had insisted on privatizing Fannie and Freddie in such a way that they now had stock holders who insisted that Fannie and Freddie had to pursue this risky strategy in order to maintain market share.  If Fannie and Freddy had remained solely government entities there would not have been the pressure to maintain market share, and thus no need to pursue reckless policies like the private sector was pursuing.

The Republicans are the cause of this whole mess in so many ways that it is amazing that they are the ones to claim to have the policies to fix it.  They just want to go back to the very same policies they put in place that caused this mess.  That the public and the press have such short memories that they allow the Republicans to spout off this way is even more amazing.  Am I the only one around here with any memory of this history at all?