There’s been an acute shortage of macro clarity in recent days–yes, more so than usual–and so the Federal Reserve this afternoon made a bold effort to enhance the focus, albeit on the one front it can control. “The Committee currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013,” the central bank announced earlier via its FOMC statement. It’s not QE3, which some analysts advocate, but it’s ambitious in the sense that the central bank is telling us what monetary policy will be for the next two years. That’s the equivalent of a politician telling you how he’ll vote in 2013. You want clarity? You’ve got it, at least as Fed machinations go. Whether it’ll help is another question, but there’s no question that’s it’s audacious.

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Ken Rogoff of Harvard tells Bloomberg that the Fed will likely roll out a new round of quantitative easing. “They certainly should do something right away,” says the co-author of This Time Is Different: Eight Centuries of Financial Folly.

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Why This Crisis Differs From the 2008 Version
The Wall Street Journal | Aug 9
There are three fundamental differences between the financial crisis of three years ago and today’s events. Starting from the most obvious: The two crises had completely different origins. The older one spread from the bottom up. It began among over-optimistic home buyers, rose through the Wall Street securitization machine, with more than a little help from credit-rating firms, and ended up infecting the global economy. It was the financial sector’s breakdown that caused the recession. The current predicament, by contrast, is a top-down affair. Governments around the world, unable to stimulate their economies and get their houses in order, have gradually lost the trust of the business and financial communities.

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