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Bernanke: Ignorant AND Jumpy

Recs

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January 25, 2008 – Comments (10)

Just visit housingpanic to be kept up to date on how the SG unwinding prompted and/or fanned the flames the big selloff. Of course, that had nothing to do with Helicopter Ben's surprise rate cut. That decision came on the heels of new economic data that showed "downside risk" -- so those clowns at the Fed claimed in their press release.

Bernanke and Co. are starting to look not only ignorant and confused, but very, very dishonest.

10 Comments – Post Your Own

#1) On January 25, 2008 at 9:08 AM, floridabuilder2 (99.31) wrote:

so this is true... i read it somewhere else too....  bent you are pretty sharp what are the implications of a 75pt cut that wasn't needed?  So far I see oil rebounding and gold going through the roof.... the market is glowing again with MSFT earnings... so I had to buy the QLD to offset my SKF ultrashort...

Everyone said this was a mistake, but right now I am a little unclear on what the ramifications are, especially for the stock market short term

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#2) On January 25, 2008 at 9:28 AM, loriyacht (31.52) wrote:

Hmm...  the immediate implication that comes to mind is that the Fed won't cut again next week.  And with everyone expecting at least 25 or maybe even 50, that can't be good.

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#3) On January 25, 2008 at 9:36 AM, CycleFreak7 (< 20) wrote:

floridabuilder, the short term effect is mostly good.  The cut helps ease fears of continued downtrend and recession.  But the rate cut is extremely short-sighted.

The long term effect is that the USD will continue to weaken against other currencies - thus the flight to gold and other commodities.

The rest of the world owns more and more of the U.S. - we are mortgaging our future and payment will come due at some time. Soon, the many middle-eastern and asian countries that peg their currency to the USD will end that policy. When they do, oil, electronics, textiles and ... well anything that is imported in vast quantities to the U.S. will skyrocket in price.

The Dark Side Of Interest Rate Cuts

- CF

 

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#4) On January 25, 2008 at 9:45 AM, CycleFreak7 (< 20) wrote:

floridabuilder, the short term effect is mostly good.  The cut helps ease fears of continued downtrend and recession.  But the rate cut is extremely short-sighted.

The long term effect is that the USD will continue to weaken against other currencies - thus the flight to gold and other commodities.

The rest of the world owns more and more of the U.S. - we are mortgaging our future and payment will come due at some time. Soon, the many middle-eastern and asian countries that peg their currency to the USD will end that policy. When they do, oil, electronics, textiles and ... well anything that is imported in vast quantities to the U.S. will skyrocket in price.

The Dark Side Of Interest Rate Cuts

- CF

 

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#5) On January 25, 2008 at 9:58 AM, GS751 (27.32) wrote:

further devaluation of the dollar.  like you all said, expect gold to soar, notice how I have a ton gold picks green thumbed.  I like to look in terms of a year because I am not good at short term stuff, I am keeping all my outperform ultrashorts intact for another couple of months, this thing is going to undwind and get worse, I see the Dow at 10,000

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#6) On January 25, 2008 at 11:06 AM, TMFBent (99.81) wrote:

What those guys said. This is terrible long-term policy and a terrible precedent. Just let the markets have their fits and let capital move to where the good future returns are. These clowns at our central bank are too busy trying to manage public relations, and they risk selling out all our futures by doing so. This free money is going to fuel more inflation, IMO, especially in fuel and other commodities, and Bernanke and the rest of those clowns will pretend that inflation there doesn't matter, as usual...

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#7) On January 25, 2008 at 12:46 PM, TDRH (99.66) wrote:

Not qualified to make this statement, but I believe this was done to try and prevent the collapse of the financial institutions around the world.    With the insurance companies struggling for survival, and foreclosure rate continuing to rise, with the large supply of homes already on the market, you have the makings of a dominoe collapse.  The financial companies need the broader spread to offset a little of  their losses and hopefully buy some time.   The lower rates allow for those homeowners  on the fringe to refinance and slow the rate of  increase in foreclosures. 

He is bailing out big banks/buddies on Wall Street, but I don't think he really has a choice.

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#8) On January 25, 2008 at 3:27 PM, nycguy (< 20) wrote:

Gold going through the roof is an impact of the South Africans cutting off electricity to the mining companies.  Considering that South Africa is one of the major producers of gold, that is going to reduce the supply of gold.

The rally in gold will probably continue to the next Fed meeting where another 50bps price cut is expected.  At that point, gold will probably consoldiate around the 900/oz per price level while the markets evaluate inflationary prospects.

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#9) On January 25, 2008 at 5:40 PM, abitare (33.78) wrote:

Yesterday, I posted on your blog:

Am I crazy to think the SEC, IRS, and FBI should be investigating the FED, Fannie and Freddie? Is it unreasonble to think some of their activity is criminial?

No one said anything...but now that Housingpanic posts it and everyone gets on board. Well, maybe I need new friends?

But maybe you will listen to billionaire Jim Rogers:

 

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#10) On January 25, 2008 at 8:09 PM, joeykid13 wrote:

After the ECB's decision, the FED has to hold the line to zero, or 25 basis points at the most.  I think the emergency cut this week was a huge mistake, in light of the world market selloff and the government stimulant package.  Why do they keep "shooting the works", all at once, it is inconceiveable.  They should have let the market tank on tuesday, and announced the stimulus package on Wednesday.  Then, they could have cut 100 basis points next week, for a fantastic rally.  Now, whatever they do is going to be a loser.  I think if the fed hadn't acted the ECB would have, in light of their pre-knowledge of the disaster at Societe Generale.  Next week stinks on ice!

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