(CNBC)
That was the take of the MSM of Ben Bernanke’s words over the past few
days. To some extent Ben’s soft talk has had a beneficial impact. “Soothing”
was how Paul Mccully from PIMCO described it. But the market overall
does not seem to be listening. The NY close stank. Currencies, bonds and
stocks moved to risk off mode again.
I heard different words from Bernanke. I heard him say:
or raise taxes.”
We have been in an environment of crisis/emergency monetary
and fiscal policy for two years. We have ZIRP, QE, stimulus, 10%
deficits and total debt exploding.
Bernanke said again today that these emergency responses must be
continued far into the future. This high-octane life support is
essential to keep the patient alive. Never before in history has so much
gas been thrown on a financial fire. And if you believe Ben, we have to
continue doing that or we die.
The reason the markets are punky in spite of the all pro MSM cheer
leading and those "soothing" words from the Chairman is that the markets
are not buying Ben’s words. They shouldn’t. Ben should take note of the
reaction. At least he would better understand what he is up against.
My read and apparently the market’s is:
definition not well.
When Ben can stand before the cameras and put his policies where his
mouth is by ending the emergency monetary steps and work with other
leaders toward a more balanced fiscal approach the markets will listen
and respond. In the meantime he is not going to fool the audience that
really matters. That audience is the capital markets, they are not
buying what Bernanke’s selling.
I do believe you are correct. We have the worst possible situation, a president who is really floundering and lacks the necessary skills and experience to see us thru this crisis(es) and a college professor central banker intent on “proving” his thesis that we can inflate our way our of a bubble and resultant financial meltdown.
So I do believe we will see QE II, and it will be big, on the order of trillions. And the Fed will enable it supported by the federal Government. We are going where no man has gone before!! Bernanke is all in, and holding deuces.
sschu
wow, that's a good point about the professor trying to prove his thesis. I can just see him practicing snubbing his nose at people in the mirror.
And there it is. Stay in the market at your own peril and immorality.
Correct! A 10% of GDP budgetary deficit IS life support WW. I'm heartened to see Bruce including it in his article... it should be prominently displayed with an (*) asterick whenever positve numbers are released. It is impossible to underestimate the effect of this methamphetamine shot to the near-corpse that is this economic recovery.
Spot on kitty cat. Love the meth reference...But I like to think of it in even shorter lasting methods than meth--say a hit on the crack pipe.
We already have a cracked pipe Mr. Beale sir... and if you smoke meth they call it 'Crank' as in "Cranking it up!" which is very appropriate here.
And I've finally decided that my final vote will be for the 'Gulf of Doom'.
Going to visit GoD will have a whole new meaning now!
Double post...argh.
Ok kit cat. GoD it is!
You tell'em, homeboy!
The problem is, the best solution will wipe out the equity and bondholders of his owners. So we get extend and pretend.
Serious question - do you think there is any barrier to growing the Fed's balance sheet to $10T?
If he does it before Nov, I think he can get away with it.
Once Ben's owners are finished deleveraging then the music will stop and all the businesses and people who have not completely deleveraged will be stuck in a game of musical chairs with no music and no chairs.
The FED represents and works in the interest of banks period. Everything else is irrelevant to them.
There is no physical limit. They are after all just numbers in a digital ledger. The only real constraint is Gentle Ben's integrity, which is to say, there is no meaningful limit.
Your "best" solution is correct, as is your conclusion why it will not be tried...that is, until no other alternatives remain. Reality is a tough nut.
To paraphrase a Churchill line - "You can count on the Americans to do the right thing, after they have exhausted all other avenues".
Obama knows better my friend...
After all, he removed the bust of Churchill from the white house.
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/barackobama/4623148/Barack-Obama-sends-bust-of-Winston-Churchill-on-its-way-back-to-Britain.html
I sure hope not. & i stress hope