AT SUCH A DIFFICULT TIME.
THINK THE FED SHOULD CAUSE, WHY? >> ONE IS, I THINK WE ARE IN
EARLY STAGES, NOT THE LATE STAGES OF THIS BANKING
SITUATION THERE HAS BEEN A SIGNIFICANT CHANGE THE
PROSPECTS OF SMALL AND MS. SPINKS.
THEY PROVIDE OF THE LENDING TO SMALL AND MIDSIZE ASSISTANCE.
WE HAVE SEEN THE FIRST USE OF THIS WHICH IS ASSET LIABILITY
MISMATCH. THE CREDIT ISSUES ARE ABOUT
START. THAT IS WHAT YOU ARE SEEING
REACTION IN THE MARKETS. THE OTHER ISSUE, FROM A RISK
MANAGEMENT POINT OF VIEW, IT IS MORE IMPORTANT TO SUSTAIN THE
CURRENT RATE FOR AN EXTENDED. PERIOD OF TIME.
AND RISK HAVING TO CUT AGAIN, THAT WOULD BE TROUBLING.
ONE MORE COMMENT, IF I WERE AT
THE FED, I WOULD CALL OUT THAT WE A WHOLE OF GOVERNMENT
APPROACH. YOU NEED PHYSICAL RESTRAINT,
LOOK AT OTHER POLICIES THAT ARE OUTSIDE THE FED.
I WOULD PAUSE HERE. KATHLEEN:
RIGHT NOW YOU HAVE A RATE HIKE ON WEDNESDAY, 25 BASIS POINTS.
IF INFLATION IS STILL HIGH, WHY NOT DO ONE MORE WHAT I CAP ALL
THE DONE AND SIGNAL THAT YOU ARE STILL HAWKISH WHEN IT COMES
TO INFLATION, BUT YOU HAVE AN EYE ON THE BANKING WHATEVER YOU
WANT TO CALL IT. ROBERT:
I PREFER THE HAWKISH PAUSE, NOT RAISE, SIGNALING WE ARE IN A
TIGHTENING STANCE.
THE BANKING SITUATION MAY BE MORE SERIOUS THAN WE UNDERSTAND.
I WOULD LIKE TO NOT REGRET NOT DOING THAT MONTHS FROM NOW.
KATHLEEN: PUT ON YOUR FISA CHAIR CAP, IF
YOU WERE ADVISING DESK, WHAT IS THE RISK NOW?
WE KNOW THERE ARE SHORTS OUT THERE, PEOPLE ARE NERVOUS, IS
THE FUNDAMENTAL THAT COULD KEEP SMALL AND MEDIUM SIZED BANKING
TURMOIL PROBLEM GOING? ROBERT:
NORMALLY IT'S AFTER WE HAVE BEEN THROUGH A CREDIT CYCLE, WE
HAVEN'T EVEN STARTED THE CREDIT CYCLE.
HAD A ASSET LIABILITY MISMATCH ISSUE, AND BANK EQUITY HAS BEEN
MARKED DOWN BASED ON THAT. WE HAVE CREDIT ISSUES YET TO
COME. WE ARE AT A DIFFERENT STAGE IN
THE CYCLE AND THERE ARE POTENTIAL DEPOSIT INSTABILITY
DOWN THE ROAD WHEN CREDIT ISSUES START TO UNFOLD.
WE ARE IN THE SECOND OR THIRD INNING OF THIS SITUATION, THE
SEVENTH INNING. WE JUST FINISHED THE FIRST
PHASE, THERE IS A LOT MORE TO GO. THE CREDIT PHASE IS FORM
SERIOUS. SHERY:
YOU DON'T EXPECT THERE MIGHT BE THE RISK THAT IF YOU PAUSE AT
THIS LEVEL, YOU MIGHT BE FORCED TO HIKE AGAIN, CLICK WE SAW
WITH AUSTRALIA. ROBERT: THERE IS A WAY TO POSITION THIS.
LET'S SAY THEY RAISE AND PAUSE, OR CAUSE AND SIGNAL.
EITHER WAY, THE RHETORIC NEEDS TO BE THE THE FED STANDS READY
TO RAISE RATES. ALL YOU ARE DOING IS RAISING A
LOT VERY QUICKLY, WE WANT TO ABSORB SOME OF IT I THINK
PEOPLE UNDERSTAND THAT SIGNAL WE ARE PREPARED MORE.
HAIDI: YOUR CONCERNS ABOUT CREDIT
TIGHTENING, COMING FROM A TIME WHEN WE SAW NUMBERS ALL,
LAYOFFS AT A HIGH. HOW CONCERNING IS THIS FOR THE
MOST VULNERABLE PART OF THE AMERICAN RELATION, ESPECIALLY
WHEN FEWER THINGS THAT A LOT OF PEOPLE WILL BE LEFT OUT ONE
INFLATION IS THIS FAST? ROBERT:
NORMALLY, AT THIS STAGE, FEW WORRY ABOUT THE UNEMPLOYED.
RIGHT NOW WE ARE IN A CRISIS OF THE EMPLOYEE.
THE PROBLEM OUT THERE, 50 MILLION WORKERS, WHO MAKE
$50 MILLION A YEAR -- WHICH HASN'T STOPPED.
A SUBSTANTIAL MONETARY EASING, THE LOW TO MODERATE INCOME
FAMILIES ARE PAYING THE PRICE. YOU NEED ADJUSTMENT IN THE
LABOR MARKET.
WE HAVE A SHORTAGE OF WORKERS FOR AS FAR AS THE EYE CAN SEE
FOR $50,000 OR LESS. YOU CAN TOLERATE LOOSENING IN
THE MARKET. I AND MORE WORRIED ABOUT THE
FAMILY WHO IS WORKING BUT TELLS ME THEY CANNOT MAKE ENDS MEET.
THAT IS WIDESPREAD HAIDI: SHERRY MENTIONED THE
CREDIBILITY, IT'S AN INTEREST IN ONE WHEN IT COMES TO THE RBA
SIGNALING. YOU THINK THE GLOBAL INDO IS
TIGHTENING AND THAT IS WHERE WE SAW THE SURPRISE MOVE THE RBA?
WILL THE FED CONSIDER THAT AS WELL? ROBERT:
I DON'T THINK THERE IS A WINDOW ON TIGHTENING.
WE HAVE DONE SO MUCH, SO FAST, I THINK A PAUSE, ABSORB AND
UNDERSTAND WHAT IS GOING ON WITH THE BANKING SITUATION
WOULD BE UNDERSTOOD BY THE MARKET IF THE LANGUAGE IS SET
UP PROPERLY, YOU WILL CONTINUE TO'S -- EXTEND THE WINDOW.
I DON'T THINK THE WINDOW IS CLOSING.
I THINK THAT COULD PUSH YOU INTO MAKING AN MISTAKE.
KATHLEEN: DOES THE FEDERAL RESERVE BEAR
RESPONSIBILITY TO WHAT IS HAPPENING TO THESE BANKS?
DO THEY HELP LAY THE ROUND WORK AND 10 BANKS TO GET POSITION
THEY ARE IN. ROBERT:
I WOULD HAVE EASED OFF MONETARY POLICY A COUPLE OF YEARS AGO.
I DO THINK THERE IS A PROBLEM WITH A LACK OF PROVISION, ONCE
THEY KNEW THEY WERE IN A HIKING MODE MY WAS OF THE FED REVISE
AND MAKE SURE, THERE WERE OUTLIERS, THAT THEY CAUGHT IT
EARLY SO WE WOULDN'T BE GOING THROUGH THIS. KATHLEEN:
LET'S STEP BACK A STEP FURTHER. YOU LEFT THE FED IN 2021 THE
NEW FRAMEWORK WAS BEING IN WAYS, WHICH SAID WE ARE NOT
GOING TO RAISE RATES UNTIL WE ARE WELL ABOVE 2%, AND MAXIMUM
EMPLOYMENT READ IS THAT A FACTOR THAT SET THE STAGE FOR
WHERE WE ARE NOW? ROBERT:
I DISSENTED ON THAT GUIDANCE, I THOUGHT WALKING IN TO THAT
GUIDANCE DID NOT MAKE SENSE.
I WISH THAT HADN'T BEEN DONE, THAT MAY HAVE LED THE FED THE
MORE INCLINED BUYING BONDS, LATER TO RAISE RATES.
I HAVE SAID MANY TIMES, TAKING IN THE ACCELERATOR EARLIER
WOULD HAVE MADE IT SO THEY DIDN'T HAVE TO
SLAM ON THE BRAKES RIGHT NOW. KATHLEEN:
WHAT IS THE CHALLENGE RIGHT NOW? IS THERE SOMETHING THAT THE
GOVERNMENT AND THE FED NEED TO DO? ROBERT:
THERE IS THE MONETARY POLICY, BUT WE HAVE A FEW OTHER ISSUES.
MORE FISCAL DISCIPLINE, HAVE A LOT OF SPENDING IN THE LINE.
THE FEDERAL GOVERNMENT IS WORKING AT CROSS PURPOSES WITH
THE FED. ENERGY POLICY, AND THE INTEGRATION TO THE TRANSITION
BEING ON THE BACKS OF LOW INCOME FAMILIES.
THERE ARE ACTIONS OUTSIDE THE FED THAT ARE MAKING FOR PEOPLE
WHO ARE MAKING $50,000 A YEAR OR LESS.
WE FEED A WHOLE OF GOVERNMENT APPROACH, NOT JUST THE FED
DOING IT ALONE. SHERY:
WE ALWAYS COME BACK TO DEBT CEILING ISSUES.
WHO KNOWS WHERE THIS IS GOING. IF WE CONTINUE THE STANDOFF,
WHAT WOULD BE LOCATIONS -- WHAT WOULD BE THE IMPLICATIONS?
ROBERT: THERE IS A REAL ISSUE IN HERE,
AS WE SIT HERE, HAVEN'T GONE INTO A DOWNTURN THE DEFICIT IS
ALREADY 10% OF GDP. WE HAVE A LEGITIMATE ISSUE
ABOUT THE NEED FOR FISCAL RESTRAINT.
I DON'T THINK IT'S HELPING TO MAKE PEOPLE WORRY ABOUT DEFAULT.
THE DISCUSSION ABOUT CONTROLLING SPENDING IS VERY.
50 MILLION FAMILIES THAT CAN'T MAKE RENT, MIGHT WELCOME THAT
DEBATE. KATHLEEN:
IN JUNE, JULY, AUGUST, ARE WE OWING TO WHERE WE ARE?
ARE THEY DONE HIKING RATES? HOW WILL THIS PLAY OUT?
ROBERT:
GETTING TO 4% HEADLINE INFLATION IS DOABLE.
IT WILL BE STICKING TO DO BELOW THAT.
THAT'S GOING TO AFFECT SERVICES INFLATION.
THIS IS GOING TO BE A TWO OR THREE YEAR BATTLE.
SOME PEOPLE TALK ABOUT THIS IS LIKE A FEVER, AND IF YOU RAISE
RATES HIGH ENOUGH, YOU BREAK THEM EITHER, I THINK THIS IS A
RUNNING SITUATION, YOU NEED A FULL OF GOVERNMENT APPROACH.
IT WILL TAKE A FEW YEARS OF A CONSISTENT FINES.
I WOULD BE WORRIED ABOUT RATES STABLE, UNDERSTANDING THE FIGHT
WILL BE LONGER.