You probably understand better than me, I'm just writing some things down to sort out my own thinking.
It is easy to get caught up in the chatter and start thinking that this is an offensive action- part of an end game that fixes something.
I'll submit that it is not- it is purely defensive and in tht regard brings considerable pucker factor with it. Before Jackson Hole the stock market was one step away from falling down the mineshaft. The impact of a severe bear market decline is obvious on top of already punky consumer and investor confidence. This is entirely about lifting the stock market out of danger territory before the next round of problems begin to surface.
The big banks are insolvent and the mortgage mess is going to have to be dealt with sooner than the market would like to think. Today S & P says that it may take $675 B of taxpayer money to resolve the GSEs. How's that going to work? Particularly now with a gridlocked political system?
Alternate theory is that we've thrown in the towel and the crackup boom is off and running. I've always been a deflationist but an alternative way to get to a deflationary collapse is through a brief and intense burst of inflation.
Sir with due respect, the DOW was 6500 in march 09 it is 11k.
Through time if you look the mkt can go all over the place while the economy does something else. Look ay 1987.
Corporate profits are booming, productivity is booming we are making more with less labor. Owners of equities don’t want to sell. People who don’t like stocks don’t have any to sell.
Beans new highs.
Palouser, all valid points, But there is only so much Ben can control. When one is in debt up to their eyeballs, control is not a word I would use. Debt is a cruel master. Having farmed as a young farmer thru the 80's, so many things come up that 'weren't planned' on. One can come thru it, but it is a very painful process. What does Ben do if when he wants to 'tighten the reins' there is global weather problems? Maybe all the stars align, maybe Dems and the GOP live in peace and goodwill, maybe it all works out.
I just don't remember back in the 80's when I was drowning in debt, that my banker listen to me for imput into what interest rate I should be paying.....if my memory is any good....it went more like this from him "we probably shouldn't stick with you, but we are going to at this HIGH rate".
Underdog mentalities always feel someone is controlling, in fact underdogs are just wrong in their mkt predictions and use the controlled for scapegoaing.
The FED attempts to influence lending and has some influence. More so private participants either go long or don’t.
Be careful hanging around endless doom/gloom types, it is bad for your financial health. Net-worths, incomes, economic output rise and rise, yet listening to the gloom/doomers, one would think it all blew up yesterday and 1 yr ago and 3 and 7 and 10.
Knoxhard when was that last time you were positive? GDP 2000 was 9 trillion now 15, what is it ?
Re: Place your best
hardknox - you can buy t-bonds and have them to sell to the FED.
Why be jealous of the banks, join in if you think it is so easy.
'Control' is not a word I would use. Every conversation by those who are versed in the levers the Fed has clearly indicated that there are few if you are facing deflation and interest rates are effectively near zero. But the idea that the Fed should do nothing is simply head in the sand. The same imply that nothing should have been done earlier - which is ludicrous. Kind of like dropping down a mine shaft and saying, "If I do nothing then it will be over more quickly" instead of grabbing the bunge cord you are falling past.
Since our economy is about 2/3 consumer based, and they have taken hard hits because of free market institutional insanity, they are not going to stick their necks out very quickly. Until they do joblessness is a big issue, compunding the problem. I keep hearing what is essentially, "Hurry! Quick!!! Do nothing!!!!!!". One more hit and the consumer is down for a very long count. Only an idiot discounts that fact.
Explain to me how the consumer is not getting hit right square in the mouth right now. Oil prices are climbing. We'll soon see gas prices over 3 bucks maybe heading to 4 bucks. Food prices have already hit 2 year highs and continue climbing. I was always of the belief that when we see nondiscretionary items inflate in price we see discretionary items deflate in price. It would appear to me that if the Fed wants the banks to lend money then maybe they shouldn't be loaning money to them at zero interest only to borrow it right back via treasuries at 2-3 percent. The real interesting thing will be to see who comes out on top. Europe's policy is austerity and trying to prop up their currency while the U.S.'s policy is to increase spending and trying to devalue our currency. I'm sure China will be more than willing to allow their currency to float with ours. We're in a race towards the bottom in terms of money.
Return on the broad market over the last 10 years has been zip.
T-Bills have been better.
proven idiotcy, pickthe highest point of 200 yrs and 10 yrs later unch?
why not pick the lowest?
equities have outdone everything over time,, anyone would know that without looking.
corraqled calpiatl put to work.
1960 to today - 1$ in a seed co is 4k, 1$ in corn futures is 3$
"If our future is up to Paul after the free market types ran everything into the wall for fear of regulating, then it could be dismal. Don't think B cares much about Paul. He isn't running for election. I think the option he is hearing is 'do nothing'. Which is partly how we got here. Given only that option I don't begrudge the man for doing something."
Its not often that I find something here that I agree much with, but that statement above takes the cake for being the least based in reality, and the most unaware of history.
Another big issue weighing on the dollar is the election results. Let's run through the checklist of things folks look for in politicians to see what we've got covered;
1) Loads of endless welfare for all of societies deadbeats... CHECK - (still enough dems to keep the inner-cities from burning)
2) Low taxes.... CHECK - (we now have enough repubs, and Tea Parties are fresh enough reminder to keep the IRS at bay)
3) Lots of military spending and endless foreign adventurism... CHECK - (Note who is in power of the house)
There you have it folks, we've got guns, we've got butter, we've got circuses, and none of us hafta pay for any of it. Everybody gets to party. The ballooning deficit will all be covered the old fashioned way... with the printing press.
You commodity bears were correct for six months out of the last ten years, and nothing and nobody will prevent any of you from hoarding the Greenback, regardless of how much intervention in the free market the gov't makes. Bad economy = inflation in Banana Republic, net-importing, trade deficit ridden jurisdictions. Try telling an Argentinian that a bad economy prevents inflation... How are we any differant?
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