Clueless Bernanke Blows It Again

[drsteph]

Quote from athlonmank8:

Guys...the markets going to sort this out. Bernanke's heading on a path to destruction.

If we dont get the USD situation under control, we're going to be in some serious shit. Bernanke should have said fuck off to the big boys today and risen rates 25 bps to support the dollar's free-fall. The5 only we we're gonna be alright from this is if we tighten up credit.

Used to think that way but I am starting to think differently.

I think the goal is to peg EUR/USD between 1.40-1.50. Seems to be a target, not sure why. Slower easing keeps the USD from appreciating, which might be what is desired to be prevented.

Stable FX rate = dollar peg (or band) which then allows everything else to adjust and things to work themselves out.

Not sure I believe this yet either but trying to understand recent confusing moves.


oh - hey Pabst - you have been reading Russell Napier's book again too? That was my toilet reading this morning.

 

[Avid_Consumer]

Quote from Pa(b)st Prime:

Besides AC, people ignore the obvious. Consumers/mortgage borrowers ect. are NEVER in our life time going to acquire money at 50bp to Funds again. Hence a lower funds rate only facilitates the institutional usury of money center banks being able to borrow at wholesale from Uncle Sam while retailing to the public at wide spreads.

If "liquidity" were a be-all elixir then why did credit contract in the first place? Because assets are over priced and cash flow/debt service ability is diminished.

great question- right, it seems many users of credit are maxed out beyond their perceived solvency

giving banks privileged access to credit seems like another unsustainable attribute of our system.. not to mention fairness across participants in the marketplace

 

[daddyeaux]

cant see the view that this isnt a credit crisis....

not even the banks are trusting each other... spreads blew out today

Fico's above 800 and the local banker wants 9.25% w/ 30% down for vacant land, not a house...

 

[daddyeaux]

Quote from drsteph:

Used to think that way but I am starting to think differently.

I think the goal is to peg EUR/USD between 1.40-1.50. Seems to be a target, not sure why. Slower easing keeps the USD from appreciating, which might be what is desired to be prevented.

Stable FX rate = dollar peg (or band) which then allows everything else to adjust and things to work themselves out.

not sure if this helps but black markets for dollar conversion are springing up all over the middle east w/ dollar offers on the street 7-10% below the official Saudi peg of 3.75 per......

and other pegs around the Persian Gulf are far below the bank rates...

F the Euro... Oil is the new reserve in town...

 

[MKTrader]

I thought Friedman believed a basic algorithm could/should run Fed policy? I don't remember what it was, but I remember reading that.

For the record, both Bernanke and Greenspan have said (or at least implied) that they could've prevented the Great Depression. I guess they'd try to inflate their way out...

Quote from JamesVU2000:

You know how you avoid a Great Depression by not letting a credit system run completely wild. Too late for that.

Bernanke is the mop up king. Even Greenspan used to criticize the fed for putting to many coins in the fuse box. We never here about that anymore because Milton Friedman some how concluded that the fed was the master of the universe and could have prevented the great depression.

 

[Alex_in_Oz]

Anybody read or is anybody going to read 'The New Monetarism' by David Roche?


It may answer all of your questions at once


?

 

[Kaempferrand]

Depending on how you see it, Bernanke is really a short seller's wet dream coming true.

 

[polpolik]

Quote from Daal:

Its funny how all the sudden bernake turns out to be a 'moron' just because people are in the red on their investments

You nailed it. A couple years ago, when Bernanke was raising rates, he was a moron. Now he's dropping rates, he's still a moron. You just can't make everyone happy.

 

[Hombre]

Quote from Pa(b)st Prime:

You're making my case. I looked up my zip down here. 1200 properties! And this is a zip that hasn't seen new construction (per 'se by SoFla standards) and hence flippers in years.

Sub-prime is to 2007 what Credit-Anstalt was to 1931. It was just the first domino to fall causing every spread in the world to readjust. At the end of the day LEH's loss is perversely attributed to some black delinquent homeowner in Detroit.

To properly evaluate this situation, you must also know the total number of properties in your zip. My guess is that 1200 is less then 2 % .
According to Fisher Investments total subprime loans default potential is less then 1% nationally.

 

[Daal]

Quote from Hombre:

To properly evaluate this situation, you must also know the total number of properties in your zip. My guess is that 1200 is less then 2 % .
According to Fisher Investments total subprime loans default potential is less then 1% nationally.

according to fisher investments homebuilders were a excelent buy in late 06