F. A. Hayek’s : Indeed, it was stimulus that caused the coordination failure

Hayek after 35 Years
April 26, 2010
by Jerry O’Driscoll

http://thinkmarkets.wordpress.com/2010/04/26/hayek-after-35-years/

Today I reread F. A. Hayek’s Nobel Lecture, “The Pretence of Knowledge.” Hayek was awarded the Nobel Memorial Prize in 1974 and delivered his lecture on December 11, 1974. I was amazed at how modern it was, and appropriate once again for the times.

The 1970s were terrible times: stop-go demand management policies had produced stagflation that would continue for the rest of the decade. Hayek said that “we have indeed at the moment little cause for pride: as a profession we have made a mess of things.” He charged that the mess had been produced by policies the majority of economists “recommended and even urged governments to pursue.”
The focus of his lecture was on scientism and how its errors had led economists and the Western economies to where they found themselves at that moment. What was the chief theoretical error? It was “the belief that we can permanently assure full employment by maintaining total money expenditure at an appropriate level.” The “Pretence of Knowledge” was that economists had or could ever have the knowledge required to do that.

What was the correct theory of the cause of widespread unemployment? It is “the existence of discrepancies between the distribution of demand among the different goods and services and the allocation of labour and other resources among the production of those outputs.” We call such discrepancies a coordination failure.

The coordination failure cannot be resolved by stimulating demand because spending is always on particular goods and services. There is no aggregate out put on which to spend money. Aggregate demand and supply are categories of a model with no empirical counterparts.

Unless economists can solve the knowledge problem, they have no way of aligning spending with actual preferences. Stimulus policies are more likely to aggravate as alleviate the problem.

Indeed, it was stimulus that caused the coordination failure. Hayek outlined his theory succinctly in one paragraph.

Monetary injections into particular markets stimulate demand only temporarily.

Labor and other resources are drawn into the stimulated activities (think housing, 2002-07).

Once the monetary stimulus ceases or merely slows, the production and employment cannot be maintained.

Only if monetary stimulus or accelerated (once expectations come into play) can the new pattern of production and employment be maintained.
The consequence of monetary stimulus is “a distribution of employment which can be maintained only by a rate of inflation which would rapidly lead to a disorganization of all economic activity.”

The lecture is worth reading by those who have not done so, and rereading by those who have.

http://thinkmarkets.wordpress.com/2010/04/26/hayek-after-35-years/

Failure Generation: Obama faces growing credibility crisis

Obama faces growing credibility crisis
By Edward Luce in Washington

http://www.ft.com/cms/s/0/434315b2-8ea6-11df-8a67-00144feab49a.html

Published: July 13 2010 18:51 | Last updated: July 13 2010 18:51

Robert Gibbs, Barack Obama’s chief spokesman, got into hot water this week for daring to speak the truth – that the Democrats could lose control of the House of Representatives in November. But it could be even worse than that.

Contrary to pretty much every projection until now, Democratic control of the Senate is also starting to coming into question. While Mr Obama’s approval ratings have continued to fall, and now hover at dangerously close to 40 per cent according an ABC-Washington Post poll published on Tuesday, the fate of his former colleagues in the Senate looks even worse.

EDITOR’S CHOICE
Opinion: ‘Hell no’ is not a platform for power - Jul-13In depth: The Obama presidency - May-23Obama attacked over business regulation - Jul-12Video: Donohue on business regulation - Jul-12Global Insight: US financial reform - Jul-12White House taps Lew for budget office - Jul-13In the past few days polls have shown Republican challengers taking the lead over previously safe Democratic incumbents, such as Barbara Boxer in California and Russ Feingold in Wisconsin. Indeed, given the uniformly negative direction in the numbers, it is now quite possible the Republicans could win the Senate seats formerly held by both President Obama in Illinois, and Joe Biden, vice-president, in Delaware.

Add to that the continuing woes of Harry Reid, the Senate Democratic majority leader, in Nevada, where the Republican party’s recent nomination of Sharron Angle, a far-right and highly eccentric Tea Party supporter, appear to have had no positive effect on Mr Reid’s prospects, and the Grand Old party has a good shot at taking control of both houses of Congress. Worse for Mr Obama, political scientists say that at this stage in the calendar, there is almost nothing he can do about it.

“If you ask me where the silver lining is for President Obama, I have to say I cannot see one,” says Bill Galston, a former Clinton official, who has been predicting for months the Democrats could lose the House. “Just as BP’s failure to cap the well has been so damaging, Obama’s failure to cap unemployment will be his undoing. There is nothing he can do to affect the jobless rate before November.”

see more :
http://www.ft.com/cms/s/0/434315b2-8ea6-11df-8a67-00144feab49a.html

California is a greater risk than Greece, warns JP Morgan chief

California is a greater risk than Greece, warns JP Morgan chief
Jamie Dimon, chairman of JP Morgan Chase has warned American investors should be more worried about the risk of default of the state of California than of Greece's current debt woes.

By James Quinn, US Business Editor in New York

Mr Dimon told investors at the Wall Street bank's annual meeting that "there could be contagion" if a state the size of California, the biggest of the United States, had problems making debt repayments. "Greece itself would not be an issue for this company, nor would any other country," said Mr Dimon. "We don't really foresee the European Union coming apart." The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.

California however poses more of a risk, given the state's $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7326772/California-is-a-greater-risk-than-Greece-warns-JP-Morgan-chief.html

"Net neutrality" : I am from the Government and I am here to help.

Once again big brother is here to protect us from ourselves and we are told that Regulation is needed “to preserve Internet openness, helping ensure a future of opportunity, innovation and a vibrant marketplace of ideas,” says Julius Genachowski head of the FCC.Leading the push for new regulations for "Net neutrality" . This all sounds very nice ,but an administration that openly attacks Private Citizens for expressing views contrary to there own such as Joe the Plumber ,FOX News and Rush Limbaugh is going to be put in charge of openness on the Internet?

One look at the history of innovation suggests that innovation has happening despite Government intervention and in reaction to Government intervention (getting around it) not because of it . Once again the gang in Washington seems to be living in the 1970's with so many unresolved issues from that decade. The insecurities of the generation that never made it continue to manifest them self's in more regulatory over reach ,Government controls and a virulent anti private enterprise mentality..

Opponents say net neutrality rules could interfere with management of their networks, risking slowdowns when applications such as peer-to-peer file-sharing hog limited bandwidth. They also say they may pull back from investing billions of dollars in more network capacity. Network providers feel the FCC is threatening restrictions on the ability and flexibility to manage traffic. Managing traffic is clearly and underhanded way to gain Government control of the Internet access.Turning networks into one big Government monopoly . We are already seeing in the EU blocking peoples Internet access as a punishment. How much longer will it be before content is controlled under the ruse of "not limiting access" or certain IP profiles come under surveillance ?

Hair Care Bomber and Breaking the Buck !

Nothing could be more symbolic for the systematic failure of the policies of Barrack Obama than the continued talk by global leaders of removing the Dollar as the worlds reserve currency . An explosion of US Debt ,a declining economy ,no US job growth ,falling real estate values and an enormous growth in the size and scope of the US Government has lead to a continued decline in the value of the dollar and a suspicion the the US Government's backing is no longer worth very much.

The G20 lead by Beijing has begun to call for a new global currency as an alternative to the US dollar as the US deficit rocketed. The White House it self is estimates US Debt could reach nine trillion dollars over a decade.

The inability of the 70's Generation to offer any intelligent leadership has created a climate of catastrophic leadership failure on all levels. Not since the Carter Administration has the US global position been so weakened . It appears to be only a matter of time before events take a turn for the worse . This weeks terror threat and multiple arrests triggered by the 'hair care" bomber seem to be a sign of things to come. The empty talk may go well with the pro big government US media and rambling talk show hosts but does little to solve to days pressing problems.

On this blog I have long warned that the philosophy of the 70's Generation is the philosophy of failure. I have attempted several times to online what I see as the coming crisis. The dollar is now key . A collapse will signal the beginning of the long term demise of the US economy and perhaps the demise of freedom it self.

"no good deed goes unpunished"

In the words of an old wall street sage, "no good deed goes unpunished" and seems bankers and auto companies have found out the hard way. The big banks Faustian deal with the government has not gone the way they had planned and now perhaps way too late there is an attempt to undue the damage.Auto companies tried but failed to stop their demise, for everyone except the UAW fell short and their attempts to save them selves.

With the 1970's ideology of failure taking hold ,the government appropriately reaches for someone with no auto experience to run an auto company but if you look at the level of gross incompetence of guys in Washington with one failure after the next stacking up it may not make any difference anyway. These are the same guys who want to tell you how much money you can make . I do have to laugh when even the administrations full blow attempt to destroy the US economy has in it self met failure, failing to fail sorta speak.

And this is where we sit only four months in ,huge deficits .increased taxation ,heavy regulation, zooming oil prices and absolutely no job creation what so ever! No administration not even Jimmy Carter failed so massively so quickly !

dare I say GO OBAMA ,keep on keeping on

Swine Flu and the Bronx is burning......

Geez is this the 1970's or what ,swine flu ? here we go again maybe the Son of Sam will also make a comeback or maybe the Yankees?Next you are going to tell me the Bronx is burning . I am not sure if its a for real alarm but this rehashing stuff from 35 years ago continues to remind me of the Carter Era. So is it real or another excuse or desperate attempt for a massive intervention by the government in the economy ? My bet is the latter so hold on to your piggy bank it just may get raided again.

Actions have Consequences

Nothing more ridiculous than the idea of a politician who has never had a job thinking they know better and can run a company . History has proven over and over again that this is pure folly This weeks nationalisation of the auto industry looks like its going to lead to massive layoffs in the auto sector . Already workers complain they are being treated worse than wall street by the Obama administration .I think over the next couple of months many of Obama's biggest supporters are going to feel the same . Good to remember there are consequences to the way you think and act .

Market Up on Obama's Failure to make lasting changes ?

So Obama turns to private enterprise to save the sinking financial ship.The Geitner plan depends on private investors buying up the segregated toxic assets after the treasury goes for the no money down strategy and picks up the dead wood off the banks books .But Wait aren't these the same investors that are saddled with the toxic junk now? So the real story is tax payer gives private investors a better price.There is more private investors better get a pre-nup from the administration which seems to have a new policy inactive every minute and depending which way the wind blows can turn you from hero to target in one media cycle.

On thing is clear about the presidents recent campaign stop on jay Leno ,the white house dog is getting a more serious vetting than the Secretary of the treasury . Obama seems more in campaign mode than presidential mode but I am not sure even with all the hero worship from the mainstream media or stone age media is working.

Congress on the other hand looks to reward the mainstream media for there support with a nationalization of news papers plan,ah to work once again for the fuhrer !

This week Obama got some breaks with housing and durable goods orders posting upside surprises and the market continued its upside rally. Investors continue to wonder was this the bottom ? The sure fire wall street answer is when people stop asking if its the bottom it is the bottom . However given the significant down turn in the market since the election of Obama and his socialist leaning became more apparent the market has taken a perspicuous drop ,so we be infor a very vigorous Bear Market rally in the offering .The other big plus is the Citibank signal giving investors an "its over" cheer .

Some traders feel the markets strenght signals the inability of Obama to create lasting change toward socialism and that as in the past the 80's generation will reject and change everything the 70's generation tries to put in place . This last explanation seems to square better with Obama's sinking popularity and the lefts continued isolation from middle class Americans with their tax every thing that moves and any body that works policy .

answer to failure is do even more of the same.....

So with one swoop of the pen in a huge leap back wards the single greatest achievement of the Clinton Administration ie...welfare reform ,is done away with in the "stimulus package".
Poor Bill looks like the stain on the blue dress will be his only lasting legacy .

A 700 plus billion dollar bacon, eggs and cheese massive government intervention in an already crippled economy looks like a sure fire failure from the get go. As the cover of Newsweek pointed out so eloquently "we are all socialists now" and as I have remarked often on this blog yes with the 70's generation firmly in charge and reshaping the world in its own likeness., and yes they are really a bunch of communist's now as they were then . It is a generation that neither realized the fruits of the free market nor experienced free market prosperity in action.

Past government interventions of any sizable magnitude have all ended in utter failure and this one starting with the initial TARP funds from the Bush administration has failed at every single step of the way ,but in the infinite wisdom of all bureaucrats the answer to failure is do even more of the same .

Obama reaches for the bacon.....

So in grand fashion, with the economic pressure on our new president did what politicians over the ages have long resorted to, he reached for the bacon, promising a chicken in every pot and a pool in every back yard, a thousand bucks to every illegal alien and loads of money for every left wing program proposed over the last 40 years .It reads like a laundry list or a wish list resulting in no good deed going unpunished. So much for all that “change”. The only change so far is the price tag, which seems to be growing by leaps and bounds.

The rush to the extreme left is not as extreme as many talk radio commentators such as Rush Limbaugh surmise. Again I repeat it’s just a generational thing the folks who came of age in the 1970’s were never really invested in the free market to begin with. After all they never reaped the benefits or even saw it in action. They were the generation of bad disco, Watergate, hyper inflation, failure in Vietnam, stagflation, drug addiction, the hostage crisis and gas lines. Even the Olympics in Munich were tarnished by violence. These folks have spent there whole lives emotional scared from the trauma of growing up in the 70’s and now is there turn for revenge. Their goal is to punish everyone who has or has done anything and they view the Obama administration as the vehicle to make this happen.

the 70's Generation the Generation that never made it....

like most generations coming to age in a particular time period that era has a way of effecting ones out look throughout that rest of there life. In the 1920's it was the devil make care attitude ,in the 1930's the great depression ,in the 1940's it was world war twoand the greatest generation ,in the 50's it was moving to suburbia ,in the 1960's it was the anti war counter culture ad wanting to change the world . These generational experiences have a way of effecting the majority of that generation shaping there experience and the way we think about the world . In the 1970 's oil shocks ,stagflation,international terrorism ,military failure ,stagflation ,the misery index, high divorce rate ,high drug and alcohol use ,the hang over from the sixties all lead to one over riding principle for the 70's generation FAILURE and the 70's generation becare the generation that never really made it .

With this failure came the litany of kook conspiracy theories ,and inability to see a benevolence in the universe ,a feeling that things larger then onself were working against us . That malevolent forces beyond our control were conspiring against us. That we were helpless in the face of doom .Not trusting the markets nor the government but looking to punish and spread the misery equally far and wide, the 70's generation embrace totalitarian socialism or communism to a greater degree than anyone since the 1930's.

As the 70's generation grew up it brought incompetence and disaster and mostly failure in its wake , from ENRON,the mutual fund debacle ,to the current banking and finance disaster to the destruction of wall street ,the 70's folks have unleashed a cataclysm of disaster and failure on to the rest of us. Remember these people still think good old stagflation Jimmy Carter was a good president?

So why do I keep harping on this day in and day out ,well any economist worth his salt would admit that one of the strongest cyclical driving forces in an economy are demographics and given the most economic activity is driven by business creation and house hold formation it can be noted that from time to time an economy is blessed with demographics that favor these to factors ,but what we find in the 70's generation is a proclivity for neither. My last reunion told the whole story ,as i am told nearly half the graduating class of 1980 had never been married . I found this simply astonishing given we came from a very upper middle class place with a "first rate education".

No dont get me wrong every generation has its successes and failures but some generations seem to produce more of the latter .

there is more to come....

Greenspan Sells Out and we go limit down....

No wonder the market continues its sell off even the former FED Chair Allen Greenspan has raised the white or should i say red flag and joined the communist socialist big government party. Oh how the mighty have fallen once a clear voice now humbled by this huge financial crisis. Sometimes I wonder why these guys hold on when it’s clearly time to retire and manage in moment of weakness to decimate an entire lifetime of work.

Given the preponderance of 70’s generation types who operate under the philosophy that governments know better than markets and people its no wonder the market continues to fall and chaos reigns. The Elliot wave suggest this is the final leg of the 5th wave down

The current misconception being propagated is that hands off lazy fair left us with this mess, and big government is here to save us. Unfortunately in the world of Sarbanes Oxley it very hard to argue that there is not enough financial regulation, if the truth be told regulation it seems was applied unevenly with generous dispensations given to political friends and patrons.

Contrary to the current view that the government didn’t do enough in the 1930’s the reality is that it did plenty just not the right thing .In the 1930’s Government activism virtually created and prolonged the great depression, then like now the market was wrung by scandal creating a movement for greater regulation. This led to a very activist government ever searching for more revenue too feed their schemes. Interest rates and Taxes were raised, and world trade was halted with the passage of Smoot Hartley. There were efforts to over regulate everything and with price fixing of commodities were used guarantying shortages.

The positives yes they do exist are more than you think, inflation remains benign, the FED has stated buying commercial paper from qualified companies reinvigorating that market and perhaps saving consumer money markets,banks are beginning to merge clearing out the dead wood, the FED is buying up bad debt, interest rates are declining ,the dollar is strengthening and municipals bonds are firming up and once again looking to be the haven of widows and orphans.

blame it on the 1970's

Seems to be a crisis of leadership …my theory is simple; almost no one who came of age in the 1970’s has good leadership quality’s ,everyone of that decade was brought up as an anti American socialist and cry baby thus the current crisis and the move toward government running everyone’s life. Good thing the 1980’s can do generation is right around the corner!

Lehman didn’t come clean got caught lying while Merrill fussed up and made the best out of a bad situation. It’s a long story staring bad government, stupid politics, weak management and an inability of any of the players to grasp the magnitude of the situation.

McCain Victory will lead to lower Commodity and Energy prices

As a McCain victory in November looks more and more likely and with it a significant overdue change in US energy policy and strategy, energy prices and commodities will continue to decline on the hope of new found opportunities in exploration.
The McCain policy of increasing capacity flies in the face of the last 40years of US energy policy of conservation and waiting for a miracle magic resource the takes away nothing and adds something. Like so many of these fantasy no cost to you ,no money down ideas it has lead to a dangerous dependence on importing foreign oil as a political tool in lieu of foreign aid . Yes there are many alternatives such as nuclear, natural gas and coal but expansion of use of these resources has also been stifled by 40 years of the “fossil fuels are evil lobby”.

Senator McCain’s recent performance and political mastery of appointment of Alaska’s Governor Sarah Palin puts him in the driver seat for this November’s election. Go ahead let the opposition attack “motherhood” and focus on family matters all they want, it is simply a non starter with the American public and will do even more damage to the wood be McGovern –ites.

This blogger for one would like to say good riddance to the policy of energy constriction and the whole 1970’s mentality and thinks the time may be right for change .Recent weakness in commodity prices maybe confirming a McCain Victory will lead to lower Commodity and Energy prices

let the kids Dance !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

So Mayor Mike says its OK to dance in NYC again and as the word spread that the repressive dance ban in the city was about to end the market responded with a bit of a dance of its own ! Putting together back to back wins for investors. While some licked their wounds from the recent market turmoil other expressed optimism that toilet paper will continue to have strong sales in the current market environment.

Crowds filled the down town underground club scene and an excitement in the air that seemed to spill out and into the streets and perhaps into the hearts and heads of investors . Perhaps this is a sign of things to come and perhaps that the next generation that is waiting in the wings with new ideas and a solve the problem get it done attitude unlike the down trodden 70’s generation is starting to feel its own.

Perhaps we have reached the depths of financial and sub prime despair and banks have finally told us what is really on their minds and on their balance sheets . Better yet perhaps the solutions will be reached despite the best intentions of the political class and the worlds largest economy will once again create jobs by getting back into the energy business.

So look for more volatility till the end of the summer in to the middle of October . October 21 or so should see some kind of direction set and the playing of both sides of the fence the short and long should come to the end .

The issue of energy is not a supply problem it’s a delivery problem.

The issue of energy is not a supply problem it’s a delivery problem. We are not running out of resources, its our ability to deliver energy to the right place at the right time to the right people at the right price that is the problem. The US has so under invested in energy infrastructure since the 1970’s the ability to deliver energy has been so constrained as to push up prices and until the restraints on the energy delivery system are relieved we will continue to feel the pinch of higher energy prices . That means we need, power plants, transmission lines, refineries, shipping terminals, drilling rigs, better regulatory environments and so on and so on…

Looks like we have gotten a strong counter rally the last two weeks. What has worked the last year or so, what I have been calling the 1970’s inflation trade or “Disco trade” of energy, Ag and precious metals has backed off while the counter sectors such as airlines and financials have rebounded. The process has been exacerbated by heavy short covering and the climatic event of Fannie Mae and Freddie Mac almost testing the implied guarantee of the federal government. So what’s next, I would expect the counter rally in airlines to continue until oil prices stabilize again and the financials bounce should get you back up to the 50 day moving average and then the fundamentals of each issue and the industry should begin to guide us.



I am available for public speaking and beers after work please contact me for bookings

The big issue once again is leadership and the 70’s generation’s inability to exhibit any.

As I put fourth in the last post the market has just about sold off everyday since the FED meeting and to readers of this blog that should be no surprise. The FED has once again talked the talk, waffled, but failed to walk the walk.

On the positive I don’t really think the economy is half as bad as we have been led to believe, after all productivity continues to grow which is virtually unheard of during a slow down and unemployment remains relatively low. Inflation for all the talk is still low compared to the 70’s, but still a long term treat and high compared to recent years .

The big issue once again is leadership and the 70’s generation’s inability to exhibit any. The lame 1970’s style political solutions are pushing the market down and will continue to do so given the vast failure of all these government first, tax and regulate everything that moves policies .The thing any keen market observer should take away from the 1970’s was the utter failure of the policies of that time period and the grave consequences that followed. So don’t forget to take profits from time to time but stick with the Ag ,Energy and Precious Metals trades that have performed so stellar year to date and given the possibility of an emergence of a “second jimmy carter “ presidency this trade should stay in tact for some time .

FED plots the easing end game

As FED plots the easing end game, a tug of war is developing in the short run between the weak dollar make money off inflation and the ending the FED cuts will strengthen the dollar crowds. The theory being that on one hand FED rate cuts weaken the dollar and raise prices of basic commodities like oil, natural gas, wheat, soy beans and so on while ending the rate cuts would have the opposite effect of pushing the dollar higher and in turn lowering the cost of basic commodities. Depending on which camp you are in defines what stocks you are buying or looking to buy. In the short run I would be looking at a dollar rebound but in the long run I favor the higher commodity price argument.

Meanwhile tomato pickers in Florida look to go on strike and congress continues its assault on free markets with talk of wind fall profits taxes, large gas tax increases, increased banking and finance regulation and a final assault on free trade. It’s funny that the same people that want open borders for illegal immigrants look to limit the amount of goods and services that can be exchanged from country to country. The continued rushing head long into the foolish policies of punishing the producers that led to the energy crisis in the 1970’s and now also being applied to the agricultural market will have the same disastrous results. The net effect being the same results as 1970’s; which were a government created energy shortage, higher inflation and slower economic growth.

Oliver Twist

Like Oliver Twist once said,”I want more”, first there were maze riots in Mexico now there is rice hording at Sams Club,I haven’t had this much fun since Johnny Carson started the toilet paper shortage rumors in the 1970’s …yikes and just like the seventies “the Saturday Night Fever’ portfolio is staying alive set up to take advantage of raising inflation a weak currency ,more onerous and stupid regulation and higher taxes. The sector focus is and should remain Energy, Precious Metals, Commodities and Agriculture .There is nothing as much fun as making money of other people’s foolishness especially when there is so much foolishness to go around, it looks like easy pickings. Again stick with the “Saturday Night Fever”, portfolio which is made up of sectors that thrive in a higher inflationary environment and the self inflicted shortage that over regulation, higher taxes and price controls always brings about.

Short term in an odd twist the US dollar has staged a rally today, my guess is that the FED is about to curtail its interest rate cuts which as I have stated time and time again were the wrong medicine applied to the current banking crisis. Since the Bear Stearns debacle the FED seems to have sharpened its focus on the secondary market for mortgage backed securities which is the real center of the problem.

In the short term you may want to lock in some gains on Ag ,Energy and Precious metals as the dollar rallies, or use the weakness as a buying opportunity depending on your portfolio and cash situation. Banks and financials have also started a counter rally though it still seems like a bounce and again the road to recovery is littered with “almosts” so its best to do a lot of home work.Remember commodity cycles are punctuated with enormous corrections along the way.

The strong Euro is also killing European manufactures and curtailing EURO exports as wells as the tourist trade which Europe is so over dependent on. The ECB may soon be facing a slowdown of similar magnitude to the US so it’s not much of a stretch to expect significant rate cuts. I think the ECB is a bit behind the curve and should have been cutting rates already.