Use access key #2 to skip to page content.

Bernanke: To Heck with Inflation! Must Support Asset Bubble!

Recs

23

January 10, 2008 – Comments (10)

There you have it, more destruction of your savings by a guy who doesn't have the guts to let the economy (or rather, certain, over-inflated segments) take the beatings they so richly deserve.

His solution? Inflate away the problem and pretend everything is fine.

Greenspan II.

10 Comments – Post Your Own

#1) On January 10, 2008 at 4:47 PM, GS751 (27.37) wrote:

Helicopter Ben did it again.

Report this comment
#2) On January 10, 2008 at 5:32 PM, QualityPicks (63.80) wrote:

Well said. But I don't blame him. I don't mind a recession or depression as long as it doesn't affect me :) Funny, but that statement always gets me thinking. If I were financially independent I would feel as strong as you. But I totally depend on my income and when we go into a recession a lot of people that didn't have anything to do with the bubble will be affected one way or another.

So every time I think "let the market do its work" I think of the fact that I don't mind a recession right now, because I haven't been affected. I was actually affected by being priced out of a home (after owning one, I sold and decided to rent too early in '03) The market can be real cruel sometimes. And certainly somebody that showed restraint and discipline can be impacted unfairly (like being laid off).

Anyway, I agree with you, but sometimes I do stop to think of the consecuences of what I'm saying and I get a bit fearful I can be negatively affected. Kinda like "be careful of what you wish for" :-) But I guess at some point we have to take the tough medicine?

Report this comment
#3) On January 10, 2008 at 6:13 PM, abitare (39.45) wrote:

TMFBent,

I hope I am not spamming the same post to much:

But Jim Rogers nails Helicopter Ben.  

"he [Helicopter Ben] is a disaster...he is going to print dollars until we run out of trees" 

 

Report this comment
#4) On January 10, 2008 at 7:42 PM, camistocks (< 20) wrote:

Err... aren't most homebuilders already in the gutter? And the banks? What about the recapitalizations they are forced to do? Most mortgage lenders have gone out of business...

Why should others pay the price for wild west capitalism? Enough free markets, let's have some good regulations! There is a reason, why the excesses happened where there was almost no regulations.

Report this comment
#5) On January 10, 2008 at 8:03 PM, StatsGeek (29.26) wrote:

I couldn't agree with you more, Bent.  In fact, I was about to write my own blogpost about Helicopter Ben.  Short the dollar and short any retailers that import goods from abroad and sell them to the American consumer -- costs will go up and demand will go down = margin compression.

Report this comment
#6) On January 10, 2008 at 8:11 PM, StatsGeek (29.26) wrote:

I couldn't agree with you more, Bent.  In fact, I was about to write my own blogpost about Helicopter Ben.  Short the dollar and short any retailers that import goods from abroad and sell them to the American consumer -- costs will go up and demand will go down = margin compression.

Report this comment
#7) On January 10, 2008 at 9:48 PM, MakeItSeven (32.57) wrote:

Short the dollar and short any retailers that import goods

W stores come to mind.  The yuan has been allowed to appreciate a lot recently and the low-income people who frequent the stores are in deep financial straits.   It happens to be near the high of its trading range even for convenience.   A short at $49 sounds about right.

Report this comment
#8) On January 11, 2008 at 12:07 AM, dude59 (31.13) wrote:

If you look at the dollar (NYBOT:DX), you can see that the foreign  markets thought his comments were bad for the value of the dollar. Remember that he told Ron Paul in the congressional hearing that the dollar going down only affects those people who buy goods made in other countries. Good luck to the W store shoppers.

Report this comment
#9) On January 11, 2008 at 3:18 AM, cbwang888 (25.86) wrote:

The FED is out of bullet. Lower interest rate for what? More borrowing? With the mounting debts, declining assets and rising unemployment rates, who do you dare to lend more money to?

The globalization trend can not be reversed. US labors has no competitive edge to countries like BRICs. Innovations, copyrights and technology IPs need to be protected in order to gain somethings back.

US relied on highly educated immigrants to be competitive in the high-tech area but under Bush Administrations you know what happened.  

There is NO way to avoid the "R" since there is 1 more year to go before change in the white house.

Report this comment
#10) On January 11, 2008 at 8:07 AM, TMFBent (99.82) wrote:

Ben's move might make sense if there was a problem with business investment, but there isn't. Good credit risks can get loans and other financing, and at rates that are, historically, very very cheap. The only thing Ben is doing by printing these bucks is:

1) Giving the babies on Wall Street a bottle. Those DCF valuations look great when you drop the return on the sure bets by which the future cash flows are discounted. (Asset bubble support.)

2) Give the crybaby real estate sector something to jawbone about. See the posts below about the disconnect between fed funds and mortgage rates, and see any number of articles on current lending that shows rates and availability are not a problem for good credit risks. They're only a "problem" insofar as they don't measure up to the stupid loans mortgage lenders were making in order to feed the Wall Street Derivative Ponzi scheme. Fed cuts can't help that, either.

3) This cheap money is simply going to be allocated poorly, chasing commodity prices up, etc. That, of course, is the definition of inflation.

Bernanke is acting like a well-trained chimp.

Report this comment

Featured Broker Partners


Advertisement