Jim Rogers Would Abolish The Fed And Resign!

The day after the Fed calvary came and the markets having their best day in five years , Jim Rogers is mighty annoyed!

Speaking to CNBC Europe

• Asked what he would do if he were in Bernanke's shoes, Rogers, who slammed the Fed for pouring liquidity in the system and accepting mortgage-backed securities as guarantees, said: "I would abolish the Federal Reserve and I would resign."
  
  If this happened, "we don't have anybody printing money, we don't have inflation in the land, we don't have a collapsing U.S. dollar"

Jim Rogers blasts the Fed by defining its actions as socialism for the rich!

• "No country in the world has ever succeeded by debasing its currency," he said. "That's what this man is trying to do. He's trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term."
  
  The Fed's move to accept risky collateral is not part of the central bank's business, he added.
  
  "What is Bernanke going to do? Get in his helicopter and fly around the world and collect risk? That's absurd," Rogers said.
  
  A recession may be a good way to clean up the economy, while trying to prevent one may cost more and actually worsen the recession, Rogers said. Also, investment banks should be allowed to fail.
  
  "Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes -- if you bail out every investment bank that gets in trouble, that's not capitalism, that's socialism for the rich," he said.
  
  The weakest financial institution is Fannie Mae, in Rogers' opinion, "but all of them have problems."

Crucialy, he states his vested current interest and makes recommendation on agricultural commodities.

• He said he had a short position on all investment banks and is buying agricultural commodities such as cotton, wheat, coffee and sugar and was also buying the Chinese yuan and the Japanese yen.
  
  "Buy agriculture. Agriculture is one of the few places where you're going to make a fortune in the next years," Rogers said. ( source of article here )

By the way, Slowday asked me, Who Wants To Be A Billionaire!

Here Comes The Calvary!

Fed Leads Coordinated Move to Boost Liquidity ( link here )

• The Federal Reserve announced today an expansion of its securities lending program. Under this new Term Securities Lending Facility (TSLF), the Federal Reserve will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, federal agency residential-mortgage-backed securities (MBS), and non-agency AAA/Aaa-rated private-label residential MBS.
  
  The TSLF is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. As is the case with the current securities lending program, securities will be made available through an auction process. Auctions will be held on a weekly basis, beginning on March 27, 2008. The Federal Reserve will consult with primary dealers on technical design features of the TSLF.
  
  In addition, the Federal Open Market Committee has authorized increases in its existing temporary reciprocal currency arrangements (swap lines) with the European Central Bank (ECB) and the Swiss National Bank (SNB). These arrangements will now provide dollars in amounts of up to $30 billion and $6 billion to the ECB and the SNB, respectively, representing increases of $10 billion and $2 billion. The FOMC extended the term of these swap lines through September 30, 2008.

And the reaction so far? Stock Futures Soar on Fed Liquidity News

Hot Markets

Aren't we all having a time of our lives?

There is one article posted on Safehaven: Warning Shots and Spin. It's written by Steve Saville from www.speculative-investor.com.

Highly interesting piece and the point in which he mentions the sharp correction Saudi Arabia's Tadawul Index is really as a good warning as any. Look at his posted chart. See how it has broken sharply to the downside over the past several weeks?

And I do agree very much with his comments on how the US Fed is trying to put the spin on the collapsing US Housing Market:

• Spinning the housing downturn as a stock market positive
  
  The downturn in the US housing market is being spun as a stock market positive on the basis that it will force the Fed to begin a rate-cutting program and, as everyone knows, Fed rate cuts are bullish for the stock market. Well, it's often the case that what everyone knows is not worth knowing and that certainly applies here because Fed rate cuts are often NOT bullish for the stock market.
  
  When it comes to the setting of the Fed Funds Rate target the Fed will usually just follow the market in that some time after the market begins to lower short-term interest rates the Fed will start doing the same. However, lower short-term interest rates definitely wouldn't be a significant positive for a stock market priced in anticipation of strong earnings growth if the downward move in interest rates was a response to a sharp deterioration in the economic outlook.
  
  In any case, the whole idea that the Fed's next move will be to lower the official interest rate deserves to be seriously questioned because it is based on the assumption that inflation expectations will remain low. There are, however, conditions that have a reasonable chance of arising over the coming months that would invalidate this assumption. Before we mention what these conditions are it's important to understand the Fed's greatest fear.
  
  It is often said that the Fed fears deflation. This is true, but the Fed's fear of deflation can be likened to your editor's fear of swimming with Great White sharks. Your editor would be very fearful of jumping into the water if he suspected that a Great White was lurking below, but sharing a patch of water with a Great White is not something he spends any time worrying about because it is something he can easily avoid. It's the same story with the Fed and deflation. Deflation would be a nightmare for the Fed, but Ben Bernanke will never spend much time worrying about it because he knows he can easily avoid it.
  
  What the Fed regularly does have to worry about is an out-of-control surge in inflation expectations. The Fed can create money in unlimited quantities at practically zero cost, but today's money continues to have value because most people TRUST that it is going to do no worse than lose its purchasing power at the rate of a few percent per year. Or, to put it another way, the money is essentially worthless but as long as most people BELIEVE that the money will decline toward ultimate worthlessness at a slow pace it can continue to be a useful medium of exchange.
  
  The Fed and all other central banks would face a problem, though, if a critical mass of people began to anticipate a rapid acceleration along the road toward eventual worthlessness. If this happened then the Fed would be at risk of losing its ability to keep the world's greatest confidence game going, and it is this risk, not the risk of deflation, that has the potential to keep a central banker awake at night.
  
  We'll now return to our original discussion. There is a significant chance that additional weakness in the housing market WILL prompt the Fed to begin reducing the official short-term interest rate target within the next few months, BUT ONLY IF inflation expectations remain under control. On the other hand, if it looks like the gold price is about to breakout to new multi-year highs then cutting interest rates will probably be the last thing on the collective mind of the Fed, regardless of how weak the housing market happens to be.