The Ultimate Humiliation for Ben Bernanke
Here's the full story...IMF officials have informed Bernanke about a plan that would have been unheard-of in the past. They want to conduct a general examination of the U.S. financial system. The IMF's board of directors has ruled that a so-called Financial Sector Assessment Program (FSAP) will be carried out in the United States.
This is nothing less than an X-ray of the entire U.S. financial system. No Fed chief in U.S. history has been forced to submit to this kind of humiliation — until now.
I wonder what the IMF will say about those "wonderfully performing bonds" that the Fed took in the Bear Stearns bailout. The writer of the story, Gabor Steingart, had this great line that I couldn't have written better myself.
He said: "Inflation is going up and up, and this year's average will likely top 4%. But this time Mr. Dollar is also Mr. Powerless. He can raise interest rates in the fall, or he can pray, which would probably be the better choice. At least prayer would not prevent the U.S. economy from growing, a highly likely outcome if interest rates go up."
So, the Fed has to deal with that embarrassing "audit" from the IMF, while the economy is melting down. I truly believe consumers are being smacked on the head with high gasoline and food prices, their house values falling, credit as tight as a drum, the stock market going to hell in a hand basket, and now job losses for six consecutive months. This all sounds like the late 70's early 80's to me. The only thing missing are interest rates as high as the sky!
But, the "boys" have successfully diverted the markets attention away from all of this rotten stuff for now. And they got their brother-in-arms, Trichet to play along with them for now too...
We'll have to wait a see what Bernanke's next move will be...
Here's the full story...IMF officials have informed Bernanke about a plan that would have been unheard-of in the past. They want to conduct a general examination of the U.S. financial system. The IMF's board of directors has ruled that a so-called Financial Sector Assessment Program (FSAP) will be carried out in the United States.
This is nothing less than an X-ray of the entire U.S. financial system. No Fed chief in U.S. history has been forced to submit to this kind of humiliation — until now.
I wonder what the IMF will say about those "wonderfully performing bonds" that the Fed took in the Bear Stearns bailout. The writer of the story, Gabor Steingart, had this great line that I couldn't have written better myself.
He said: "Inflation is going up and up, and this year's average will likely top 4%. But this time Mr. Dollar is also Mr. Powerless. He can raise interest rates in the fall, or he can pray, which would probably be the better choice. At least prayer would not prevent the U.S. economy from growing, a highly likely outcome if interest rates go up."
So, the Fed has to deal with that embarrassing "audit" from the IMF, while the economy is melting down. I truly believe consumers are being smacked on the head with high gasoline and food prices, their house values falling, credit as tight as a drum, the stock market going to hell in a hand basket, and now job losses for six consecutive months. This all sounds like the late 70's early 80's to me. The only thing missing are interest rates as high as the sky!
But, the "boys" have successfully diverted the markets attention away from all of this rotten stuff for now. And they got their brother-in-arms, Trichet to play along with them for now too...
We'll have to wait a see what Bernanke's next move will be...
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