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Bernanke: Chumps!
I got a laugh out of the $600b number. The dealers were polled on their
expectations last week. The response was an even half trillion. So with
that as a bogie the Fed does 600 large. They wanted to do just a bit
more than was actually expected. So they added on an extra 100b. They
gave the market what it wanted and a little bit of extra cream on the
top.
It’s like we are in Disney Land. Everything is orchestrated. For six
weeks the Fed has been dishing out its intentions. Public speeches have
all been planned and edited to make it appear there was a robust debate
at the Fed on the merits and risks of QE. At least a half-dozen news
articles were planted in major newspapers.
There was no debate. This was scripted from the beginning. The only
issue was how much should be announced at this meeting. The choice of
$600b proves that they are managing expectations down to hourly market
reactions.
Cramer at the CNBC summed it up for me:
“Only a chump or an idiot would hold money in a bank CD or money market fund”
He went on to add:
“Bernanke will get the job done by any means necessary.”
When Cramer referred to, “getting the job done” he was referring to the Fed’s exclusive objective; raising the price of stocks.
That is Bernanke’s solution to our problem. Bernanke believes that the
wealth effect will drive consumption higher and spur the economy to
create jobs.
Bernanke is going to rig the stock market in order to sucker folks with
401k’s to put up every dime they have in high beta stocks. As the
markets rise they will borrow some money and spend it as they will feel
richer. But really they are just borrowing against unrealized gains.
When the music stops on Bernanke’s madness those same folks will get
trampled on their holdings. And they will be deeper in debt. That’s
Bernanke’s plan.
Any financial planner that was truly looking out for a client who was
saving for retirement and managing an unpredictable world would give the
following two pieces of advice:
A) Always have some cash available in case of emergency. Two
months of expenses at a minimum. If you have six months of your nut
covered outside of your equities you can sleep at night.
B) Take the number 100. Subtract your age from that. The result
is the percentage that you should have in growth oriented equities.
Bernanke just blew those guideline away. Anyone who followed that advice would be an idiot. Or even worse, a chump.
IMHO there is not much consequence from QE-1 Lite. This is just a top
off of the MBS book. As that goes down the Treasury book goes up. In the
massive Agency/Treasury swap market the changes in supply and demand
are netted out.
However, QE-2 does have significant impact on total liquidity. When I
say total liquidity I mean global liquidity. Not all of the beneficial
impacts of monetization in the US will be retained in the US. For
example, if one was cashed out of an investment in Agency bonds one
might very well reinvest the proceeds in a very nice bond of a very nice
steel company in Brazil. That would be an unintended consequence of QE,
but what the heck. What’s good for CVRD, is good for America, right?
I could go on for a bit about where the QE money could go. And on that
list would be equities. For myself, I would favor foreign equities.
After all, why not take advantage of the weak dollar that comes with QE?
Another of those unintended consequences. My point is that not all of
the QE money is going into the US equity market. I will leave it up to
the reader to estimate how much of QE-2 actually does go into US stocks.
My guess is that it is tops 200b. The Wilshire is at 12.6T so QE-2
might add about 1.5%. How much of that is in the print over the past six
weeks is anyone’s guess.
I think the Fed stuck its foot in the mouth with their plan. They
gave us a very clear deadline. QE-2 will be done in 241 days from
today. And you can bet the Fed will complete the mission on schedule.
Halfway (or so) through QE-2 the remaining residual impacts on pricing
will be on the wane. The markets are pretty efficient about these
things. "Halfway" happens to be the first week in March. “Sell in May” could take on some special meaning next year.
Bernanke’s plan is a short-term bet on the stock market. The bet can be
measured in months. The aggregate benefits (if any) will be felt more
outside our borders than within. In the final months of QE-2 the great
debate will be, “Will Bernanke do a QE-3?” The new Congress is going to say “No” to an expansion and we are in for a showdown.
Cramer is wrong on the outlook. While Bernanke will attempt to, "get the job done by any means necessary",
his hands will be tied. Bernanke blew his wad on this roll of the dice.
A four-six month bet on the S&P is all we are going to get.
Just who are the idiots and chumps?
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he has stated apparently in an op ed tomorrow that he does see rising equity prices as a benefit of his policies. of course "the stated and actual goal is to monetize the debt" and has nothing at all to do with equities so you tell me what he's trying to say. The fact that "equities are rising therefore inflation is under control"? Okay...In any case "where the rubber hits the road is in the fixed space." That's what the Fed controls and that's the space where they are acting. According to the WSJ "they're making a fortune for the treasury" in so doing. Humans naturally being attracting to "fortune making as opposed to fortune telling" want in on the game. Frankly I have no idea what I would do if I were in his shoes...but I know this. Whatever I would do I would not SAY what I was doing. EVER. I've always thought "that was the purpose of a central bank in the first place." They give you "language cover." But what do I know. I'm just a truck driver with an attitude problem. And "I ain't tellin' you shit about that thing in that place either."
i can't believe ur so critical of mister b. the man is a genius. this proves it;
http://www.youtube.com/watch?v=INmqvibv4UU
Ha!, Even the MoneyHoney surmised a possible housing bust in 2005, questioning this bald BankEunuch.
Bernanke and the U.S. Congress have not even started monetizing yet.
Goldman has already told us what to expect: at least $4 trillion.
Right now it's monetization for the sake of rates. Soon it will be monetization for the sake of monetization.
It's Bernanke's "Austrian Solution".
Right, they can "anounce" whatever number they want and it will always be just a fraction of the actual, they will be pumping all day everyday until they are taken out.
Benny "Bubbles" Bernanke the bankster's best buddy:
http://www.youtube.com/watch?v=vdED3rVgIu4
"I will try again to blow a bubble that will last all day!"
...and, that's just enough time to leave the new Congress "holding the bag". ;-))
The Paul/Fed hearings will be fun to watch, though.
Hearings dont do diddly squat.
Alan Grayson was booted out and Barney was re-elected. Speaks volumes about this country's "educated voter class"
Have to agree. Grayson asked some very intelligent questions re finance/TARP whereas BF is about the dumbest last-century MoFo that could be found. I liked Grayson, although we wasn't of the 'party' of my choosing. SEE, party is irrelevant and is just a play against the people.
They will all be out of the country at the same time. The Bankster Elite are fleeing America . Buy your fuel
The 4th-14th Nov Obama, Hilary Clinton, Geithner, Bernanke, and all minions will be leaving for a tour of India and Asia… At the same time planning will be occurring for the G20 meeting…In other words they meet to have a meeting…This meeting will be about the currency crisis and trade; mostly between China and America…Either the Chinese Yuan or the American Dollar will be in trouble…
wallstreetpro2 stopped making videos, so now we will have to get our entertainment for the paul/bernanke hearings. =)
I'll bet wallstreetpro2 had a visit from Homeland Security or one of those black masked ATF boot lickers.