Federal Reserve Worried About Recovery, Takes Small Steps

WASHINGTON — As recently as two months ago, the Federal Reserve sounded optimistic about the economic recovery. Now the central bank is clearly more worried, and economists say there’s not much more it can do to help.

The Fed said Tuesday that it would spend a relatively small amount of money – about $10 billion a month, economists estimate – buying government debt. The move is designed to drive interest rates on mortgages and corporate borrowing at least a little lower and help the economy grow faster.

Read more: Interest Rates, Fed, Fed Statement, Federal Reserve, Quantitative Easing, Treasuries, Fomc, Business News

El-Erian: Federal Reserve Can’t Do Much More To Improve Economy

Despite all the anticipation over today’s Federal Reserve meeting, there’s little else the central bank can do now to help the economy recover, Pimco’s co-CEO Mohamed El-Erian told CNBC.

Read more: Interest Rates, Mohamed El-Erian, Fed Open Market Committee, Pimco, Federal Reserve, Monetary Policy, Ben Bernanke, Business News

Mike Signer: It’s a Change Election, Stupid

At events around the country, Democratic candidates are unveiling, buffing, and polishing the shiny new message that will drive this fall’s campaigns. The message generally employs a car as its major metaphor, with direction as its logic, invoking remarks President Obama made several weeks back. Republicans, President Obama said, have driven the national car into the ditch, and “now they want the keys back.” The president’s message to Republicans? “You can’t drive!”

If the meme rings familiar to political junkies, it should. Since the Clinton years, Democrats have frequently told voters, “D is for Drive, R is for Reverse.” The message rolls both backward and forward, condemning conservative retrenchment and lauding progressive results. Recently on Meet the Press, Press Secretary Robert Gibbs put it this way, “Understand, the last six months of 2008, right, we saw an economy that shed three million jobs. The first six months of 2010, this economy has created 600,000 private sector jobs.”

We should be concerned about the “D is for drive” message. Not because the facts aren’t right–they are. Democratic policies are doing more to turn the economy around than Republicans’ policies–if they have them–ever would have done. While not perfect, the leadership of President Obama and Democrats in Congress helped save the auto industry and has generated hundreds of thousands of jobs.

But there are facts, and there’s emotion. What’s worrying is less the facts than the touch, feel, and underlying character of the new message. The message too easily risks the impression of complacency, an “insider” character, and even, perversely, cockiness–at a time when Democrats need instead to identify with and channel the emotional frustrations of the electorate (and the majority of independents).

In other words, in their attempt to rebut the Republicans’ specious attacks on policy, Democrats are overcompensating and becoming that which they should abhor: the establishment.

All the evidence shows that this November we’re facing a change election, just as we did in 2008. A recent Washington Post poll found a stunning result: 26 percent of registered voters are inclined to support their current Congressional representative, whereas 62 percent are inclined to “look for someone new.” The large majority of the electorate will probably be uninterested in someone who is operating from a premise they don’t buy–in this case, touting a status quo economy because it “has started to create private sector jobs.”

Across the nation, economic distress, coupled with a deep frustration with politics as usual, has generated a fascination with outsiders, reformers, and “courage politicians” in general. In the recent Washington Post poll, two figures jump out, respectively the highest and lowest figures in the over 20 years that the Post has been running this poll: the percentage of voters who trust neither party on the economy (17%) and the percentage of voters inclined to reelect their Representative (25%).

This isn’t only important for what it signals about the electoral abattoir that likely awaits Democrats this fall; it also signals a problem among leading progressive strategists. Time and again, you hear it from well-placed Democratic insiders: a faith that superior reason and facts will, on their own, win the argument. We have elected a supremely rational president who has surrounded himself with very bright people; excellent.

But there’s precious little evidence so far that intelligence, reason, and facts are winning the day. Drew Westen’s terrific book The Political Brain, proved that progressives too often rely on facts, while conservatives successfully go for the gut. But it was a best-seller years ago; you’d think Democrats would learn. But on the contrary, health care reform took twice as long as it should have and the public option was jettisoned, as the president was Swift-Boated with Sarah Palin’s nihilistic, absurd, but emotionally resonant “Death to Granny” attacks–and didn’t fight back quickly or forcefully enough.

The lesson is that we need more passion, more heroes and villains, and a message that presents Democrats as impatient with (even angry about) the status quo, rather than satisfied protectors of the realm. Congressional candidates need to present a vision of the nation that impatiently challenges the establishment, on economic development, on national security, on consumer and small business issues.

Even a track record–even facts–won’t necessarily win the day, if what the people want is someone who makes them feel like change is a’coming. As James Carville might say, “It’s a change election, stupid.” Even if you’re driving in “D,” you can still end up in the ditch.

Read more: U.S. Economy, Change, Clinton, Mike Signer, Economy, President Obama, Message, Drew Westen, Jobs, Obama, Robert Gibbs, Barack Obama, Politics News

Anti-mosque ads depicting 9/11 to run on NYC buses

NEW YORK (Reuters) – Anti-mosque advertisements depicting a plane about to crash into a flaming World Trade Center will soon be displayed on New York City buses after the transit authority relented and agreed to the ads.

Productivity weakens in second quarter

WASHINGTON (Reuters) – Business productivity fell for the first time in 1-1/2 years in the second quarter and labor costs hardly rose, according to government data that underlined the halting pace of economic recovery.

Senators seek Lockerbie bomber medical records

WASHINGTON (Reuters) – Four U.S. senators asked Scotland’s government on Tuesday to release the Lockerbie bomber’s medical records, saying that would help answer questions about his release on compassionate grounds.

Netflix, Epix strike programming deal

LOS ANGELES/NEW YORK (Reuters) – Streaming and mail-in rental company Netflix Inc has reached an exclusive deal for online rights that allows its members to watch new films from the three studios that own the Epix pay TV channel.

Blackstone in talks to buy Polymer-source

NEW YORK, Aug 10 (Reuters) – Private equity firm Blackstone
Group is in exclusive, early-stage talks to buy
MatlinPatterson’s Polymer Group , a non-woven
materials maker, a source familiar with the matter said on
Tuesday.