Fed chairman
Wade Davis FlexBase Jersey , Ben "Helicopter" Bernanke, is in the hot seat now. The markets are once again focusing on the next meeting of the Federal Open
Market Committee (FOMC) set for Tuesday and Wednesday of this coming week. The
Fed is expected to hold interest rates unchanged at this meeting but is clearly
in an uncomfortable position. Inflation is roaring ahead at serious rates of
increase and the Dollar is in danger of a collapse on forex markets, which would
seem to indicate a need for the Fed to start increasing interest rates. However,
increasing interest rates with a soft economy underway, a badly deteriorating
housing market, and businesses starting to lay off workers at higher rates would
probably throw the economy into a deep recession that the Fed has been fighting
hard to avoid. After all, this is an election year. Ben Bernanke is an avowed
advocate of a more transparent Federal Reserve and reactionary, anxious markets
are the byproduct. Without the mysterious Alan Greenspan at the helm, the
curtain has been pulled back on the Fed to reveal Bernanke as a clear, direct
economist who admits he has no crystal ball. Ben Bernanke is a super active
nanny and he is already supporting the elite financial interests that have
created this speculative bubble in the first place. Over one trillion Dollars
have already been made available to the banks and the brokerages to protect them
from their own excesses and to attempt to forestall a deflationary rigor mortis.
If these bail out operations had not been taken, if the financial system itself
were transparent, the house of cards would surely collapse on us all and the
people would lynch Bernanke and any other rich jerk on Wall Street and in
Washington that they could get their hands on. Bernanke must not rest well at
night knowing just how fragile the financial system still is. Wall Street's
positive reaction to the appointment of Ben Bernanke is yet another example of
how completely clueless most investors are when it comes to the Fed and the
precipice over which America's economy now teeters. Bernanke's time at the
gallows may yet come as one mistake in policy may send the economy over the
precipice whose depth is a big unknown. Probably the fall will be a long hard
one and fairly or not Bernanke will get the lion's share of the blame.
Gold
Salvador Perez FlexBase Jersey , historically a reliable harbinger of inflation, this year set an all-time high of more than $1000 an ounce. The
dollar is languishing at near a record low against the euro and a weighted
basket of international currencies. Housing prices are still falling, actually
tanking is a better description. Gold has gone from $700 to $930 (was $1000),
while the dollar has absolutely tanked with only a few "talk it up" rallies
along the way. The current dangerous level of inflation is not all an oil
problem but oil does seem to be the new punishing force in markets to those
governments, like the US, that let their currencies become devalued. As the
Dollar falls the price of oil heads higher. In a real sense oil prices have
taken on the function that the gold market used to play in keeping governments
from running printing presses at full speed. The more the US debases its
currency as swift punishment the higher oil prices go. Unfortunately, for the US
and for the world, the US government hasn't yet seemed to be fully aware of this
linkage. Or perhaps it is aware, but the financial house of cards in the US is
so shaky that high speed printing presses running at full capacity is the only
course of action that the government feels that it can take in a misguided
effort to avoid a financial meltdown. High fuel costs are now starting to bite.
Four airlines are out of business, Northwest finally had to merge and United and
all airlines, except Southwest that was smart enough to hedge its fuel costs,
are getting killed by fuel costs and are cutting back on flights and cutting
back on employees. Truckers are getting killed too. A major part of the food and
goods distribution system in the US is near a breaking point as truckers go
broke paying nearly five Dollars a gallon for diesel fuel. But back to Bernanke.
Bush appointed him as Chairman of the Federal Reserve on October 24
Paulo Orlando FlexBase Jersey , 2005 and he was sworn in on February 1, 2006. The chairmanship for the Federal Reserve typically lasts 14 years. Bush,
along with Paulson, have done a lot of talking about a strong dollar policy, yet
the dollar continues to lose value. Talk long ago lost it impact on markets,
except for perhaps fueling short term rallies that professional forex traders
sell into. Hard corrective action is what the forex markets now demand if the
Dollar is to move higher over the long term. Wall Street at first thought that
the Greenspan "put" would just morph into the Bernanke put. Like a spoiled
child, Wall Street came to believe it could get away with any amount of bad
behaviour without being punished. The indulgence shown by the Fed became known
as the Greenspan "put" - as in a put option which allows an investor to sell
shares at an advantageous price when they have fallen below the strike price.
Like the Wizard of Oz, Alan Greenspan and other central bankers were hidden
behind a non-transparent curtain to evoke an aura of omniscience. Under Bernanke
the curtain has been pulled away, as Bernanke and Trichet are seen as mere
mortals trying to cope with a complicated and contradictory economic climate.
However, Bernanke is now being criticized by taking actions more designed to
bailout Wall Street friends than to bring on lasting solutions to US financial
problems. At least that is how many investors see it. In the end, Bernanke will
likely be the poor guy who is stretched out to be drawn and quartered as the
economy tanks and Wall Street and the Dollar crash. "Bubbles" Greenspan will be
criticized as
