I saw some of his speech this morning on CNBC. He looked pretty nervous and completely waffled on the follow up questions.

He also completely refused to speculate the likelihood of a recession, which to me is an answer in itself.

He’ll be able to blame sub-prime on the demise of financials for a while but he’s screwed no matter what now:

If he cuts rates:
– It won’t be enough to save the mortgage banks
– It will further weaken the dollar
– It will piss off the Chinese which BB isn’t “overly conerned about”

If he leaves rates:
– The dollar will at best stabilize at it’s lowest point ever
– Wall Street will have another sell-off

If he raises rates:
– The dollar will be respectable eventually again
– The sub-prime mortgage crisis will play out much quicker
– Stocks will fall

Somewhere Alan Greenspan is laughing…

…but hiding.

I saw some of his speech this morning on CNBC. He looked pretty nervous and completely waffled on the follow up questions.

He also completely refused to speculate the likelihood of a recession, which to me is an answer in itself.

He’ll be able to blame sub-prime on the demise of financials for a while but he’s screwed no matter what now:

If he cuts rates:
– It won’t be enough to save the mortgage banks
– It will further weaken the dollar
– It will piss off the Chinese which BB isn’t “overly conerned about”

If he leaves rates:
– The dollar will at best stabilize at it’s lowest point ever
– Wall Street will have another sell-off

If he raises rates:
– The dollar will be respectable eventually again
– The sub-prime mortgage crisis will play out much quicker
– Stocks will fall

Somewhere Alan Greenspan is laughing…

…but hiding.

Does anyone remember the Fed prediction a recession? They simply won’t tell us what they know, or they are lousy at what they do. Either way, it’s not good for the transparency that Bernanke promised.

Does anyone remember the Fed prediction a recession? They simply won’t tell us what they know, or they are lousy at what they do. Either way, it’s not good for the transparency that Bernanke promised.

If he leaves rates:
– The dollar will at best stabilize at it’s lowest point ever
– Wall Street will have another sell-off

I disagree.

If he leaves rates:
– the dollar will weaken even more.
– Wall Street will crater because, he’s doing nothing and the dollar is weaker.

If he leaves rates:
– The dollar will at best stabilize at it’s lowest point ever
– Wall Street will have another sell-off

I disagree.

If he leaves rates:
– the dollar will weaken even more.
– Wall Street will crater because, he’s doing nothing and the dollar is weaker.

hipmatt – Macroeconomics is messy due to large number of variables. Actually, Bernanke is being correct on his statements.

1. Inflation is moderating – The fact that house prices are falling at the rate of at least 10% per year nationally and even upto 50% in some isolated markets means overall inflation has to come down. If a person spends, say 30% of income on housing, and house prices fall 10% per year, that alone contributes 3% per year of annual deflation.

2. Weak $ is a plus in some respects – it reduces trade deficits, increases exports, that in turn causes rise in employment etc., Weak $ only hurts importers and people with large accounts of cash (or cash equivalents). Since most Americans have net negative cash (or cash equivalent) – being in net debt generally, inflation is actually not bad for them.

Rest of the statements, I won’t attempt to side with BB since I don’t agree with him. But surely that man is not an idiot. He is just interpreting the data differently.