Tuesday, January 22, 2008

Alan Bernanke.......

It took the Fed only one quarter to reverse almost 50 percent of the past 2 years of rate increases. But this is what happens when all your models are so out of touch with reality & you are ignoring your duty for oversight. I think if there will be any rate increases in the distant future they will start with well telegraphed measured 0,125 % steps...... I assume that it is more likely that Elvis is still alive than that the Fed will ever orchestrate an emergency rate hike..... Unfortunately i havn´t found a broker that is willing to accept that bet :-) The next question will be if the Greenbag is on its way to become the new currency for the next wave of carry trades.....

Die Fed hat binnen eines Quartals bis Ende Januar vermutlich die Hälfte ihrer Zinserhöhungen zurückgenommen für die sie in ihrem mühseligen Normalisierungsprozess ( 0,25% Schritte ) zwei Jahre gebraucht hat. Eine echt reife Leistung. Das ist aber wohl der Preis dafür das man vollkommen an der Realität vorbeilebt und sich nach Modellen richtet die aus der Steinzeit stammen. Zudem hätte ein Großteil des Wahnsinns vermieden werden können wenn die Fed Ihrer Aufsichtspflicht nachgekommen wäre und die meisten der durchgeknallten Darlehensfinanzierungen nicht durchgewunken hätte. Ich befürchte schon jetzt das sich die Fed im nächsten Zinserhöhungszyklus (irgendwann in 10 Jahren) zu gewaltigen Zinsschritten von 0,125% entschließen wird.... Zudem ist wohl wahrscheinlicher das Elvis lebt als das die Fed jemals eine ausserplanmäige Zinserhöhung initiieren wird.. Leider haben ich noch kein Wettbüro gefunden das diese Wette entgegennimmt..... :-) Die nächste Etappe wird wohl sein das der Greenback die neue Carry Trade Währung werden könnte....

From panic to penicillin - Bernanke, blogged Ft Alphaville

Less Than Respectful Commentary on the Fed Put and Fiscal Rescue Efforts Naked Capitalism

Five Things You Need to Know: Emergency Rate Cut, What It Means and What to Do Minyanville

Greenspan Put Is Dead. Long Live Greenspan Put: Caroline Baum Bloomberg

The Fed Blinked: Now, What? Herb Greenberg

Bernanke Blinks
Mish

Desperate measures Economist

Es riecht nach Verzweiflung FT Deutschland

Time to remember this great chart from Minyanville showing how stupid the case "Don´t fight the Fed" is...

Höchste Zeit sich den wunderbaren Chart von Minyanville anzusehen der einmal mehr eine angebliche Börsenweisheit "Don´t fight the Fed" entzaubert.....

Lots of the mess can be blamed on Greenspan but as shown in this excellent piece The Education of Ben Bernanke from the NYT ( Hat tip to Hellasious from Sudden Debt ) i doubt that Bernanke would have done much differently.... Especially after the latest actions......

Sicher kann ein Großteil des aktuellen Unheils Greenspan angelastet werden aber dieser großartige Bericht The Education of Ben Bernanke der NYT ( Dank an Hellasious von Sudden Debt zeigt eindeutig das Bernanke wohl ganz ähnlich gehandelt hätte ( siehe Aktion gestern ) .......

Bernanke is also firmly opposed to the notion that central banks should raise rates to prick bubbles in the stock market or elsewhere. In a paper written at the height of the dot-com mania, in late 1999, Bernanke and his friend Gertler argued that it is virtually impossible to identify a bubble before it pops.....

Bernanke made a small contribution to a problem that would blossom in a big way on his watch. In the aftermath of the 2001 recession, inflation was at its lowest level in decades. Though consumer prices were rising, Bernanke feared a possible bout of deflation — the potentially devastating phenomenon in which prices drop, leading to lessened business activity and then still lower prices and so forth. This occurred during the Depression and also in Japan in the 1990s. Bernanke’s argument provided a major element of support to Greenspan for keeping interest rates low

But as a goldbug/bull you gotta love these guys......

Aber als Goldbulle muß man solche Typen einfach lieben.....

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10 Comments:

Anonymous eh said...

Alles wird gut. Keine Sorgen machen.

It's time to buy.

"The U.S. economy is not that important anymore," Hans Timmer, a World Bank economist, said in Singapore earlier this month.

Plus, the Fed cut rates and we will soon have a stimulus package.

12:57 AM  
Blogger jmf said...

Moin Eh,

"Shah has increased his holding of banks over the past three months to about 20 percent of the portfolio"

He is trying to desperately talking his book. Sounding more like like he is averaging down....

The losses should be enormous :-)

I have to thank Ben aka Al for the spike in gold.

I have watched CNBC yesterday. It is amazing how the guys turned around and advised the audience to buy financials and retailers.....

I would love to go to the archives. I´ll bet that everybody has adised this after the first rate cut from the Fed a few month ago. Almost nobody listening to these morons would have had any money left to invest a nickel...

Pure comedy!

1:08 AM  
Anonymous Barley said...

Perhaps this is all moot as the USD evolves to a currency unregarded. Soros believes this is the eventuallity. Until then and until a new world currency is accepted, I'm happy with gold coins.

7:31 AM  
Blogger jmf said...

"I'm happy with gold coins"

I´m with you.

How about this call.... :-)

Goldman Sachs no longer recommends shorting gold

Goldman Sachs said it no longer recommends shorting gold, as it has since Dec. 11, which on paper resulted in a loss of $54 an ounce. After the Fed rate cut, "we believe that there is now greater pressure for continued U.S. dollar weakness.

We have long held that the gold price trades inversely with the U.S. dollar; thus, with the increased uncertainty in global financial markets and a higher probability of continued U.S. dollar weakness, we believe that the risk/reward of our short gold trade has diminished," it said.

You gotta give them credit for admitting that they were wrong.

7:46 AM  
Anonymous Barley said...

Just an off topic comment:

pro forma earnings reports present an "as if" picture of a firm's financial status. Frequently, that means pro forma financial statements leave out such things as restructuring charges and merger-related expenses, which, if reported, would lower earnings. However, in the financial world, pro forma earnings reporting has no standard definition and no consistent format that I know of.

AND THIS:

C's Press Release:

Citi to Exceed Targeted Capital Ratios Pro Forma for Fourth Quarter 2007; Nearly $30 Billion of Capital Raised or Priced Over Last 2 Months

NEW YORK – Citi said today that it will exceed its announced targeted capital ratios on a pro forma basis for the fourth quarter 2007. [close quote]

How many times in a Press Release can you say "pro forma"?

3 times in the first six lines of the release. Any why identify Q4/07? What does this mean for the consolidated 2007 results? I personally never seen this phrased this way - and I've drafted and read more press releases than I care to remember.

I love to know your thoughts and your readers thoughts.

I took some short positions in MER and C in Feb 07. I think it is time to get behind C once again.

8:01 AM  
Anonymous Barley said...

Check out the new Citi Ultimate Moneymarket Saving Acct proudly featured on Citi's home page. FDIC ins. No min. APY is 4.5% [must be new customer and make 2 elect. bill pays]

Countrywide Bank Money Market is 4.0% APY (based on min dep of $1k), FDIC ins.

8:34 AM  
Blogger jmf said...

It´s all fiction & spin. What i want to hear is what it is going to look like during 08..... I assume a real time calculation will show that they are already missing their own goal (even on a proforma basis) .... :-)

They soon will need another capital injection to achieve their "pro forma" capital ratio.

Congrats to your well times shorts in the beginning of 2007.

I´m lightening up my short positions during the last few months and especially the last few days. Trying not to be too greedy.

I am surprised that the Fed & Bernanke didn´t manage to orchestrate some kind of simultaneous action with other central banks.

So his move looks even more frightening and you really can get the impression that there is an imminent "accident" in the making.

Can´t remember i have drunken so much coffee as i´ve did during this month.....

8:52 AM  
Anonymous j said...

as Trichet whistles past the graveyard , the explosions he hears are further losses in Swiss and German banks .... wait until they come out with their real problems ..... Union Bank of Singapore (UBS's new name on the street ) already is shopping a preferred

1:28 PM  
Blogger Ben Bittrolff said...

Let it all bounce, then re-short.
Charts for the Big Bounce bounce that's developing: (http://benbittrolff.blogspot.com/2008/01/charts-for-big-bounce.html)

TheFinancialNinja

7:24 PM  
Anonymous eh said...

Financial Ninja:

I think equity indices the world over have put in a tradeable bottom.

Maybe so. But there is still a bit of a hangover in Hong Kong and India today. Surprisingly enough. We'll see how things close in Europe and the US later.

I do not see how a 'bailout' of bond insurers makes sense.

12:29 AM  

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