Bernake an idiot…

[Allan from Fallbrook]

Wiley: Thanks for making the point that the Fed is not a government agency, nor are they following any governmental policies as regards monetary or credit policy. Neither Freddie nor Fannie are governmental agencies either, rather they are GSEs, but most people feel that the “full faith and credit” of the US Government are behind them.

Greenspan had a long run at his post, punctuated by some truly bad monetary policy decisions. It may be an arguable point to some, but looking at the events of 1997, 2000 and now, you can make the point that the air in those respective bubbles was pumped in by the Fed.

Bernanke now has the unenviable task of trying to simultaneously hold the line and avert disaster. He is not an idiot; to the contrary, he is a very bright individual. But, as was opined on this thread several times, he is doing his level best to keep parroting the script he has been given and, in so doing, comes across as something of an automaton.

If anyone were to sit down and really give the American people a primer on what this bubble is made of and the disastrous and reckless choices we have made from a monetary and credit vantage to prop up the illusion of a dynamic and growing economy, you would probably have a riot. On second thought, no, you wouldn’t. People really don’t care so long as they can keep the plastic hot and buy the newest Hummer, or RV, or boat or go to Paris for summer vacation.

Yep. P.T. Barnum was right.

[LA_Renter]

Speaking of the dollar I found this on Forbes

“CMC Markets’ chief analyst Ashraf Laidi said the US dollar’s latest decline should now be raising alarm for the US Treasury and the Federal Reserve as the greenback’s trade-weighted index (as measured against six currencies) has now fallen to below the 80.40 level, its lowest level since 1992.

He said previously, the yen’s continued weakening had acted as a major stabilizer of the US dollar when the US currency hit all-time lows against the euro and multi-decade lows against the Australian dollar, Canadian dollar, sterling and New Zealand dollar.

‘But as the periodic revelations of sub-prime troubles boost the yen on falling risk appetite, the US dollar’s decline becomes increasingly pervasive,’ Laidi said.”

I could be wrong but to me this looks dangerous. I would give anything to be a fly on the wall sitting in those meetings at the US Treasury and the Federal Reserve. This subprme thing is really turning out to be something don’t you think!

[LA_Renter]

Speaking of the dollar I found this on Forbes

“CMC Markets’ chief analyst Ashraf Laidi said the US dollar’s latest decline should now be raising alarm for the US Treasury and the Federal Reserve as the greenback’s trade-weighted index (as measured against six currencies) has now fallen to below the 80.40 level, its lowest level since 1992.

He said previously, the yen’s continued weakening had acted as a major stabilizer of the US dollar when the US currency hit all-time lows against the euro and multi-decade lows against the Australian dollar, Canadian dollar, sterling and New Zealand dollar.

‘But as the periodic revelations of sub-prime troubles boost the yen on falling risk appetite, the US dollar’s decline becomes increasingly pervasive,’ Laidi said.”

I could be wrong but to me this looks dangerous. I would give anything to be a fly on the wall sitting in those meetings at the US Treasury and the Federal Reserve. This subprme thing is really turning out to be something don’t you think!

[Allan from Fallbrook]

I think the sub-prime debacle is indicative of larger problems as far as excess liquidity goes. And I think the largest risk out there right now is a credit crunch brought on by suddenly risk averse investors.

There is supposedly a lawsuit ready to be filed tomorrow against BSAM (Bear Stearns Asset Management) for the losses sustained in the two sub-prime funds they managed. It certainly won’t end there, and more bad news is sure to come in this market, as well as MBS products supporting loans in the Alt-A market.

While there is definitely a focus on the housing market bubble here at Piggington’s, it is really a by-product of excess liquidity: cheap money that was easily available and pumped into an available asset class that was removed from the dot.com bust.

The wild thing is this: No one out there really has any idea how truly deep the risk runs. The derivatives market is nearly opaque from an oversight and valuation standpoint and, until the real bleeding begins, it’s anybody’s guess as to how bad this all can really get.

[Allan from Fallbrook]

I think the sub-prime debacle is indicative of larger problems as far as excess liquidity goes. And I think the largest risk out there right now is a credit crunch brought on by suddenly risk averse investors.

There is supposedly a lawsuit ready to be filed tomorrow against BSAM (Bear Stearns Asset Management) for the losses sustained in the two sub-prime funds they managed. It certainly won’t end there, and more bad news is sure to come in this market, as well as MBS products supporting loans in the Alt-A market.

While there is definitely a focus on the housing market bubble here at Piggington’s, it is really a by-product of excess liquidity: cheap money that was easily available and pumped into an available asset class that was removed from the dot.com bust.

The wild thing is this: No one out there really has any idea how truly deep the risk runs. The derivatives market is nearly opaque from an oversight and valuation standpoint and, until the real bleeding begins, it’s anybody’s guess as to how bad this all can really get.

[Bugs]

I think BBs job description includes managing – or at least attempting to manage – the market psychology, both in terms of foreign consumption as well as domestic. In some respects his job is similar to the spokesmouth for the NAR. “Now is a great time to invest in America.”

[Bugs]

I think BBs job description includes managing – or at least attempting to manage – the market psychology, both in terms of foreign consumption as well as domestic. In some respects his job is similar to the spokesmouth for the NAR. “Now is a great time to invest in America.”

[Author]

Posts