Fisher Calls for "Slow Slog" Recovery Yet Says Fed has "Done Enough if Not Too Much" to Stimulate Economy

Bernanke is calling the shots but that has not stopped a few Fed Governors from speaking their minds. Please consider Fisher Says Central Bank Has �Done Enough if Not Too Much� to Help Economy.

Federal Reserve Bank of Dallas President Richard Fisher said the central bank has �done enough if not too much� to stimulate the economy and �one has to question the efficacy� of doing more.

While �it�s going to be a very slow slog� for the economy, the U.S. should grow at more than a 3 percent annual rate in the second half of this year, Fisher, 62, said today in response to audience questions after a speech in New York.

The Fed is set to complete its second round of large-scale bond purchases this month, and Fisher has said he will be among the first policy makers to push for a reversal of policy as needed. The Dallas chief, who votes on the Federal Open Market Committee this year, dissented five times in favor of tighter policy the last time he was a voting member in 2008.

In his speech, Fisher reiterated his view that the nation�s largest banks may eventually need to be broken up to prevent them from posing threats to stability and economic growth. He echoed concerns among Fed district bank presidents, including Thomas Hoenig of Kansas City and James Bullard of St. Louis, that the financial-overhaul law enacted last year may not be strong enough to solve the too-big-to-fail problem and to prevent a meltdown by one or more big banks from damaging the economy.

Too Much

One look at speculation in commodities, the stock market and junk bonds is all you need to see to understand the Fed has done too much already, yet it did not help the real economy one bit.

As for 3% second half growth, I will take the under. Moreover, barring a drop in the participation rate, I expect the unemployment rate to rise.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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