The fed is so scared of having a banking crisis that it can no longer conduct monetary policy. We have an inflation problem that no one wants to take appropriate policy action in order to end. Instead we bow to GS and other companies who make tons of money in a high inflation enviroment while everyone else suffers. Its no longer acceptable to have a tough independent fed who is owned by no one. If Bernake had something and the markets tanked he would be crucified. People want gurantees in this country. Those gurantees mean rising asset prices. Last time I checked, capitalism was supposed to be self cleansing. It cleans out excess. This is no longer the truth. The fed and government has "winked" and said go ahead and do whatever you want because we stand ready to bail everyone out. In the long run this is a disaster because it forces people to make assumptions and it makes them lazy. People and institutions expect the government to come and bail them out when they make stupid investments and decisions. I really believe the banking system and financial institutions are nationalized. They are being guranteed by the government. Why bother trying to compete in the real world when you can be a bank or insurance company that the government stand ready to bail out because it is to big to fail?
its a pickle but personally i feel bernacke has nothing to do with it. this pile of poo was inherited and he is holding the poo-bag in his poo hand. the average consumer is tapped. negative savings rate: credit card debt is more expensive. housing is more expensive. food is more expensive. oil/gas/home heating is more expensive. housing prices going down. stocks, bonds, commodities going down. all ouit of the consumers/investors pockets. somethings gotta give. housing is on a bubble which imho hasnt officially popped, but its close... if rates pause - the dollars gonna get taken to the woodshed and china and japan are gonna be pissed. us will stop being able to raise $$ and will have to inflate there way out of this mess... if rates continue to go up, which they have to in my opinion even to walk the dollar down (dollar losing ground severely relative to other currencies despite past 17 rate hikes) - consumer gets crushed. smells ugly to me but what do i know reeks of the 80's....
The guy is hamstrung. He inherited the position at a really tough time. Inflation vs a tanking housing mkt vs keeping the damn econ humming at 3%, not to mention the dollar. I actually feel sorry for the guy. Its pretty much a no win situation. Jay
Great thread - Bernanke seems like a nice guy, but is destined to become the poster boy for all bag holders. Anybody see that line of questioning from Sen. Sarbanes and Jim Bunning on Thursday. Hey Bernanke, go down like a mench. Next time tell those guys to go f*** themselves.