Art Cashin: Fed is walking a tightrope

http://www.zerohedge.com/article/art-cashin-fed-walking-tightrope-hurricane-and-other-observations

While we are seeing the headline numbers are pretty bad, behind the headlines there are some equally disturbing numbers. The government, we are hearing, because of tight budgets, people are being asked to take 1, 2 or even 3 furloughs a week without pay. That's wage deflation, and that's gonna put a strain on things: consumers are going to hold back.

The layoff seem to be slowing because business was taking the other approach. If you want to stay working I am going to have to cut your salary and/or your benefits.

Small businesses account for 50% of our GDP, they account for 60% of new hiring. We are not seeing new hiring because small businesses are not buying into this. So the recovery has not hit main street yet. If you ask small businesses why aren't you borrowing, their answer is "send me a customer, don't send me credit."

We've had more and more signs of potential deflation and the Fed is terrified of that...They've got to come up with something inventive, something as they call it, 'new quantitative easing.' And yet that brings the concern if they do something that is dramatically different, will people say 'What do they know that we don't know? What is the big cause of this?' So the Fed is walking a tightrope in a hurricane and it's going to be tough."