Wednesday, September 19, 2007

The Double Double Cut!!


The Circus finally ended. Here is the full
FOMC statement.

Financial Sense Market Commentato, Frank Barbera certainly did not have any kind words to offer in his market wrap
Fed's Reckless Bubble Blowing - Part II: Ben Bernanke and the Missing Bond Vigilantes?

  • With these spreads already slipping into negative territory, the action today by the Fed sends a very negative message to global investors, that the US will not support its money. That is potentially the most dangerous concept any central bank can breed, and in that light, it seems that the level of outrage directed at the Fed should be that of a "scathing rebuke." We have moved from one serial bubble blower in “I didn’t get it! ” Alan, (see 60 Minutes interview last weekend) to now a man, who for the second time in a decade, seems to be steering the country toward yet another wrong choice.

    Before this one is over, if the Fed does not change course, we may all pay the penultimate penalty of having walked down the path toward hyper-inflation. The sheer arrogance of the Fed may not be in question today, especially by a gleeful US Stock Market smelling "bail out" for the insider cronies; but in a different reality, that of a burgeoning currency crisis six months down the road, with Fed credibility shot, the situation may have a much darker complexion. At that point, there may be little in which to rejoice.

    Personally, I had hoped that the new Fed Chair would be a man of greater character, and that much of the negative press associated with his prior academic writings was perhaps exaggerated. The action today resonates as being even more poorly thought out than Mr. Greenspan’s bathtub ruminations on Adjustable Rate Mortgages and more likely than not, serves as notice to one and all that we may be embarking on yet another new and grand Fed experiment; one in which we will all get to find out how many times an hour the price of coffee and T-Shirts can change value.

And the market, how they celebrated! ( See US Market Wrap 18th Sep 07 )