Bernanke Is Clueless

Avid_Consumer · Sep 7, 2007

lol what are you looking for, a pat on the back? i was referring to aaa

trefoil · Sep 7, 2007

No.
Read my post.
Find in there some spot where I begged for a cut for the sake of the stock market.
Take your time.

QQQBALL · Sep 7, 2007

Quote from trefoil:

The flat to inverted curve was an incentive for banks to look for ways to make money other than buying money short and selling it long term, their normal way of making money, because that normal way wasn't making what it used to,...The result was this subprime mess we're now in, which is really caused by all the structured products created to try to squeeze more vig out of that flat curve.
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thats bullshit. the subprime mess was caused by bad lending practices, people wanting homes they couldnt really afford and AAA ratings on toxic paper. greed from rating agencencies, greed from borrowers, greed from lenders

GREED:eek:

trefoil · Sep 7, 2007

Greed is always around. The form it takes in finance, though, depends on the environment.
Bernanke set up an environment where there was an incentive to lend to riskier people, because risk=higher rates (every bp over a Treasury rate is a measure of the risk you're taking, as Rick Santelli once remarked somewhere along the way) which of course meant that they were then able to make money lending, which after all is what they're in business to do.
Was it predictable that this would blow up? Yep. But with incentives aligned the way they were, and all those financial engineers looking for juice any way they could, with hindsight this whole thing looks pretty much inevitable.
Had the yield curve been normal, we might still have had some problems, but not nearly to the extent as now, because the incentive would not have been there.

Trader5287 · Sep 7, 2007

Quote from trefoil:

No, the idiocy on his part was being too tight for too long. The rate should never have been above 4.5 at most in the first place. The flat to inverted curve was an incentive for banks to look for ways to make money other than buying money short and selling it long term, their normal way of making money, because that normal way wasn't making what it used to, and that situation persisted for a couple of years, whereas in the past, under Fed chairmen who actually had a clue, it never lasted this long. The result was this subprime mess we're now in, which is really caused by all the structured products created to try to squeeze more vig out of that flat curve.
I'm content right now; made a killing yesterday on gold stocks, looks like today will be another big winner that way. But the general economy is getting hit hard, and the stupid part of that is that it was unnecessary, and brought about only by Ben's macho rate raising contest with that other fool, Trichet.
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Exactly.

trefoil · Sep 7, 2007

BTW, since I know all you "zealots", as AAA calls you guys, are reading this, are we now going to get any posts on how the gold folks were clued in to today's number, being as how gold shot up yesterday? Or are these conspiracy posts you guys love to make confined only to times when financial stocks go up ahead of something happening?
Just wondering.

sprstpd · Sep 7, 2007

Fed needs to raise rates to match my healthcare inflation.

dhpar · Sep 7, 2007

Quote from trefoil:

No, the idiocy on his part was being too tight for too long. The rate should never have been above 4.5 at most in the first place. The flat to inverted curve was an incentive for banks to look for ways to make money other than buying money short and selling it long term, their normal way of making money, because that normal way wasn't making what it used to, and that situation persisted for a couple of years, whereas in the past, under Fed chairmen who actually had a clue, it never lasted this long. The result was this subprime mess we're now in, which is really caused by all the structured products created to try to squeeze more vig out of that flat curve.
I'm content right now; made a killing yesterday on gold stocks, looks like today will be another big winner that way. But the general economy is getting hit hard, and the stupid part of that is that it was unnecessary, and brought about only by Ben's macho rate raising contest with that other fool, Trichet.
More...

omg. what a nonsense that is.
fed is NOT controlling shape of the curve and intl money flows. if they did not hike above 4.5 the curve would get inverted anyway. it all resides with money - not with rates (but higher short term rates can take some money away).
it is irony that as soon as the adjustment started to take place fed started to pump more short term liquidity into the system. what they need to do in the long term is to take all excess money away - that's not going to be made easier if they are persuaded to cut.

by the way i am content right now too. and i am with sprstpd on this one.

trefoil · Sep 7, 2007

So you're saying the Fed has no influence (influence, not direct control, note) on the rates going from 13 weeks to 2 years? Because that would be the first time I'd ever seen anyone say that.

dhpar · Sep 7, 2007

i did not say that - i was talking about the whole curve - and largely about ff10y, 2y5y and 2y10y - because that's where the inversion hurted for the lending banks...