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.....

Fed & Moral Hazard

For the three people out there that still think the Fed and the majority of other central banks are still fighting inflation i recommend to read Moral Hazards And Fed Actions fom Mish. I coudn´t have said it better. AMEN!

Für die zwei bis drei Leute die immer noch denken das die Fed und fast alle anderen Zentralbanken sich die Inflationsbekämpfung auf die Fahnen geschrieben haben sollten zwingend Moral Hazards And Fed Actions von Mish lesen. Besser kann man es kaum beschreiben. Sehr treffend!

Thanks to John Trevor

Bernanke Vs The CEO Of Nestle On Food Inflation

Who do you believe? I´ll go with the expert from the world largest food company and not with the spin masters from the FED who eats at the CPI cafe.

Wem würdet Ihr glauben? Ich halte mich da doch eher an den Experten des größten Nahrungsmittelkonzernes der Welt und nicht and den in einer parallelwelt lebenden FED Chef der im CPI Cafe essen geht....

Thanks to Wall Street Follies

This is taken from Herb Greenberg.

The head of Nestle doesn't see food inflation as a short-term issue, but part of "structural" changes in his world. So much for this "core inflation is in check" mumbo jumbo. Check, please.

At the same time Bernanke is living in his own "core world" and wonders why the inflation expectation are imperfectly anchored.....

Zur gleichen Zeit fabuliert Bernanke weiter über seine eigene "core" Welt und wundert sich das die Inflationserwartungen nur suboptimal verankert sind....

"Delivering a speech to the National Bureau of Economic Research, the Fed chief said "changes in energy [and food] prices should have relatively little influence on 'core' inflation, that is, inflation excluding the prices of food and energy."

Make sure you read Barry Ritholtz nice rant Un-frickin-believable

Clear Statements and Rose Colored Glasses / hussman

hussman is "mr. anti spin". make sure you read this piece in full length and compare this to the reaction and the opinions made by the media and off course wall street.....

and by the way the 10 year is higher than befor the fed meeting.... havn´t heard much of this in the msm.....and of course stocks have given nothing back from their gains..... here is a good take from mike larson http://tinyurl.com/yshwbb


besten dank mr. hussman. unbedingt das ganze in voller länger lesen und es dann mal mit den äusserungen in den medien und von wall street vergleichen.

und ganz nebenbei ist die renidte der 10jährigen höher als vor der fed sitzung... habe das noch nirgends gelesen.....selbstverständlich haben aktien nichts ihrer gewinne eingebüßt.... bitte dazu auch den link oben lesen.

for now. it has has worked...... :-)

bis jetzt ist es aufgegangen.... :-)

Given continuing inflation pressures and an otherwise unambiguous tightening bias, whatever room the Fed left open for policy change was clearly to allow flexibility in the event that the housing market deteriorates profoundly. A Fed cut is likely to be put into practice only under conditions that nobody would wish on this economy.

Let's revisit the changes in the statement from January's wording to March. First, its comments relating to the housing market:

• January: “Recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing markets.”
  
• March: “Recent indicators have been mixed and the adjustment in the housing sector is ongoing.”

Some observers were relieved that the FOMC didn't utter words like “sub-prime,” “delinquencies” or “foreclosures.” Far be it from the Fed to fuel that fire. An “ongoing adjustment” sounds better – sort of healthy, like massage therapy.

If the clarity of the Fed's continuing tightening bias is muddled by the rose-coloring of Wall Street's glasses, consider the following:

• January: “Readings on core inflation have improved modestly in recent months”
  
• March: “Recent readings on core inflation have been somewhat elevated.”
  

Both statements then attempt to maintain the Fed's credibility by asserting that those pressures “seem likely to moderate over time,” but also indicate that “the high level of resource utilization has the potential to sustain those pressures.”

Next, the Fed actually takes pains to re-affirm its tightening bias:

• January: “The Committee judges that some inflation risks remain.”


• March: “In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected.”

“Predominant policy concern” - that's not a bias? From January to March, the Fed's language indicated more concern about inflation, not less.

The difficulty is that the Fed can't act on these concerns because the economic situation has started to decay as well. As I noted last week, the economy has its head in the freezer and its feet in the oven, and Wall Street wants to call the temperature “just right.”

Essentially, the Fed now has to allow for bad things to happen in both directions – continuing risks on the inflation side, and an “ongoing adjustment” in housing and the mortgage market. Remember, the most recent problems have focused on adjustable-rate mortgages (though all classes of mortgages are showing increased delinquencies and foreclosures). Despite its inflation concerns, the last thing the Fed wants to do is talk about “additional firming” in the interest rates to which those ARMs are tied.

größer/bigger http://www.smugmug.com/photos/136440158-O.png

It also has to allow some flexibility to become a “lender of the last resort” in case the foreclosures start to accelerate.

• January: “The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook…”
  
• March: “Future policy adjustments will depend on the evolution of the outlook…”

This is not a Fed that's “signaling prospects for a rate cut later this year” as Wall Street evidently concluded, but rather a Fed that's caught between a rock and a hard place, and knows it.

In short, despite persistent inflation pressures, the Fed can't easily raise rates further because that might add to the instability in the housing sector. So it has to manage inflation expectations verbally, while also backing away from its preferred inflation targets and accepting higher ones instead.

And that's exactly what Fed Governor Frederic Mishkin did on Friday night at a speech in San Francisco. He noted that getting inflation into the “comfort zone” of 1-2% could involve higher interest rates and “considerable output and employment losses.” So instead, the Fed is relying on the public's expectation that inflation will remain “anchored” around 2%. Mishkin noted “I am less optimistic about the prospects for core PCE inflation to move much below 2% in the absence of a determined effort by monetary policy,” adding that “a substantial further decline in inflation would require a shift in expectations, and such a shift could be difficult and time-consuming to bring about.”

Do those sound like remarks from a Fed that's eager to ease monetary policy?

Though my view remains that Fed actions are largely irrelevant to the volume of lending activity, there's no question that they have a psychological effect. Currently, my impression is that Wall Street has largely misinterpreted the Fed's language, and that its interpretation will be subject to an “ongoing adjustment” in the weeks ahead.

In any event, our investment position is driven not by expectations of future Fed actions, but by the prevailing condition of valuations and market action.