The Cycle

Tim Iacono, proprietor of themessthatgreenspanmade, on "The Bernanke Cycle"

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  1. Federal Reserve cuts interest rates
  2. Equity markets surge
  3. Dollar decline accelerates
  4. The price of oil and gold soar
  5. Treasury reiterates "strong dollar policy"
  6. Housing market problems get worse
  7. Credit market problems get worse
  8. Dollar decline accelerates
  9. The price of oil and gold soar
  10. Federal Reserve talks tough on inflation <—– YESTERDAY
  11. Treasury reiterates "strong dollar policy"<—– YESTERDAY
  12. Equity markets plunge <———— YOU ARE HERE
  13. Go to step 1

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Great observation. Thanks, Tim!

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  1. alexd commented on Nov 9

    Lather rinse , repeat.
    I perceive a connection.

    On days like these I am grateful that there are short and ultra short etfs.

    Nice to have choices. I am beginning to have a problem (okay I have had it for awhile that it seems as if all the talk shows only talk about going long. I have no problem with going long, but I think they got a coin that has heads on both sides.

    Remember bull markets tend to last longer than bear ones, except when they don’t.

  2. Byno commented on Nov 9

    step 1: Steal Underpants.

    step 3: Profit

    What’s step 2?

    Seriously, if this doesn’t have all the elements of a liquidity trap…

  3. SINGER commented on Nov 9

    so we should be buyers then????

  4. muckdog commented on Nov 9

    Ah, but Barry… As soon as one recognizes the pattern, it’s all over! LOL.

  5. phil commented on Nov 9

    In the immortal words of Rita Rudner, the comedian now playing at Harrah’s in Las Vegas, ‘now that’s funny’.

    As a side thought, maybe Rita would make a better Fed chairman! At least we would all be laughing while were getting screwed. My apologies for the poor analogy but I can’t think of anyway to sugar-coat it.

    Phil

    Phil

  6. X commented on Nov 9

    Step 12.5

    Stocks plunge into abyss…

  7. FC.classic.line commented on Nov 9

    Without free money they were nothing. They built a house of straw. The thundering machines sputtered and stopped. Their leaders talked and talked and talked. But nothing could stem the avalanche. Their world crumbled. The cities exploded. A whirlwind of looting, a firestorm of fear. Men began to feed on men.

    On the roads it was a white line nightmare. Only those mobile enough to scavenge, brutal enough to pillage would survive. The gangs took over the highways, ready to wage war for a tank of juice. And in this maelstrom of decay, ordinary men were battered and smashed.

    Except for one man armed with an AK-47, and a Honda full of silver.

  8. RW commented on Nov 9

    Sure smells like a liquidity crisis but I’ve seen some good arguments that the problem is also fundamental; e.g., http://tinyurl.com/2na4ku

    IMHO a lot of paper is going to become heavily discounted or completely worthless and a lot of ABS holders, banks included, are going to see real reductions in cash flows on top of their escalating balance sheet write-downs.

    The Fed can intervene, possibly grant more time to the severely distressed, but liquidity, serious as it is, is not the greater long-term problem; i.e., calling the bottom on financials is going be about as successful as calling the bottom on real estate (which is to say not very successful at all). JMO

  9. Stormrunner commented on Nov 9

    Does anyone think that the recent route is incumbent upon the implementation of FASB 157 next Wednesday especially when a good proportion of the hit was to the financials, and the likelyhood of the route to continue though implementation, or is this now priced in and time to jump back in to the market,

    any thoughts

  10. peter from oz commented on Nov 9

    this old bear says the PPT Cavalry haven’t given up yet
    so don’t go ultra short
    mate of mine called all the sub prime fallout right down to the wire in June
    and got creamed shorting the financials early
    make sure you can carry the trade
    as “adam smith” said “wall street is a dangerous place to be if you don’t know who you are!
    am curious about 2 yr bonds and shorter though this rally surely helps the “Chinese” to reallocate without much collateral damage
    their massive incremental cash flow facilitates reallocation without a shift in long held core assets

    I’m only a provencal please advise
    rgdspcm

  11. JL commented on Nov 9

    We need Greenspan to come back and explain that people have to much equity in their houses and they need to refinance. (Full disclosure, I have a house for sale.}

  12. dissent commented on Nov 9

    Well I’m (I admit) weirdly happy about all this.

    I’ve been hosed by this economy. From my seat, it appears the financial industry and Wall Street and globalized corporations have been driving Main Street into the ground.

    Folks, I’m not invested, because you’ve really, really messed with my livelihood. I’m one of those middle aged folks trying to raise a kid with a mortgage and now I need ‘re-training’ (on my own dime, of course).

    So now, ‘masters of the universe’, your dirty linen has really been hauled out to dry. American style financial capitalism is synonymous with toxic waste. YOU did that.

    This economy is now YOUR baby, not mine.

    I’m glad it’s going down the tubes.
    I hope the dollar ends up as toilet paper.

  13. Florida commented on Nov 9

    Right on cue, NBC Nightly News had Cramer on tonight to demand that the Fed step in and save the stock market. Cute, eh?

  14. VJ commented on Nov 9

    You beat me to it. Saw Crazy Cramer telling Brian Williams we are DOOMED if the fed doesn’t come to the rescue. I guess Corporate America can’t operate anymore without interest rates at 1%.

    Free markets my ASS.
    .

  15. scorpio commented on Nov 9

    Bernanke must sit up nights wondering why he wasted time going to college, getting Phd economics, becoming professor at Princeton, when his job boils down to taking Cramer’s calls. hysterics call the shots for this Fed, Ben’s left holding the bag

  16. scorpio commented on Nov 9

    and another thing, while i’m at it. was anyone else just gob-smacked by the C article in WSJ today? CFO crittendon freaking that no one had hedged their mortgage exposure? where was he the last 2 years? ABX collapsing since the beginning of ’07

  17. Pool Shark commented on Nov 9

    Interesting…

    I don’t remember seeing any any posts from Fred or Nova Law this week.

    I guess we won’t hear from them again until we cycle back to Stage 2.

    Year-to-date scorecard:

    S&P500: +2.5%
    DJIA: +4.7%
    Nasdaq: +8.8%
    Silver: +20.0%
    Gold: +31.66%

    “Got milk gold?”

  18. whipsaw commented on Nov 9

    I don’t generally pay too much attention to cycle analysis, but the 9 month cycle bottom is supposed to be about December 11. Guess what happens on that day?

    I am guessing that there will be a 50-100 basis point cut either coupled with or preceded by a massive dollar buying spree on the part of our Asian trading partners to minimize the impact on $USD. Posturing aside, none of them can afford to see the dollar drop much more than it has already. I also expect to see a massive drop in gold prices around the same time.

    My personal issue is whether to continue to hold these Jan QQQQ calls that were so green a few days ago or punt them or buy Dec SPY puts? By any objective technical analysis, the only thing that $NDX (and QQQQ) has going for it is that it has not broken the 200 day MA; then again, financials are mainly responsible for this selloff but were actually up today. So where do the long-only fund managers put money now and how do they get their bonuses?

    It has occurred to me that if a bonus is dependent on outperforming the S&P, then one way of snagging it is to drive prices down while taking the short side, so we might be seeing Plan B in action now via short and ultrashort etfs, but that just doesn’t seem likely.

    ==whipsaw==

  19. David commented on Nov 9

    Barry, great blog.
    You are always right, this economy has us more then scared, it has us petrified.

    “Who would bear these burdens if they weren’t scared of something…” Shakespeare

  20. Steven Soh commented on Nov 9

    Further rate cut means further dip of the Dollar and it appears the U.S. has given up on the Dollar so as to boost exports to fight China imports as well as erosion of confidence of the American Economy and any move by the central banks of the Far East like China to dump US assets, the doomsday of the US Economy is clicking and further loss of confidence of the Dollar would be a catastrophe not only to the U.S. but also the World Economy and I guess the U.S. is bitting on the fact that foreign central banks would not physically dump the Dollar in large scale as it would also be disastrous to the economy of the Asian Countries which rely so much on the export of goods as well as services to the U.S.

  21. whipsaw commented on Nov 9

    Pool Shark said:
    I don’t remember seeing any any posts from Fred or Nova Law this week.

    I guess we won’t hear from them again until we cycle back to Stage 2.

    I really wonder why so many of the posts here suffer from this “us vs. them” mentality? Ultimately, everyone is in the same soup anyway and in a true bear market, everybody suffers, including gold bugs who are just holding even, not winning.

    This has been an extremely bad week for stocks which should suggest that next week will either be much worse or see an amazing turnaround since options are expiring- that’s up to the ringmasters and their time horizons. In any case, there should be some bounces as most markets are oversold and nothing goes up or down in a straight line.

    What I really wonder is what all of you fans of a purifying recession are going to be saying in 6 months once you understand what you wished for? Are you still going to be students of the Austrian School when you are looking for another job and can’t find one? I rather doubt it.

    ==whipsaw==

  22. MarkTX commented on Nov 10

    Whipshaw,

    Shame on YOU.

    A “purifying recession”!!!!!

    That is Chop……

    -You use it as an excuse

    -You are putting blame on someone else.
    (Bears v Bulls)

    -A bad weeek in stocks-does not relate to a recession if you believe the stock market is not about the USA economy????

    SO….

    -What are economics in the USA really about????

    -Look at the big economic picture for the USA and give a full anlaysis…sans bears or bulls…

    NO YUPPIE SYNDROME ALOWED!!!

  23. jan perlwitz commented on Nov 10

    It looks like some people always need someone to blame when capitalist economy goes into a crisis phase, although this phase belongs to capitalism like storms and rain to the weather. They look for sinister forces allegedly causing it by their deliberate doing.

    Bernanke is an easy target to serve as scapegoat, isn’t he?

  24. jan perlwitz commented on Nov 10

    It looks like some people always need someone to blame when capitalist economy goes into a crisis phase, although this phase belongs to capitalism like storms and rain to the weather. They look for sinister forces allegedly causing it by their deliberate doing.

    Bernanke is an easy target to serve as scapegoat, isn’t he?

  25. jan perlwitz commented on Nov 10

    It looks like some people always need someone to blame when capitalist economy goes into a crisis phase, although this phase belongs to capitalism like storms and rain to the weather. They look for sinister forces allegedly causing it by their deliberate doing.

    Bernanke is an easy target to serve as scapegoat, isn’t he?

  26. jan perlwitz commented on Nov 10

    It looks like some people always need someone to blame when capitalist economy goes into a crisis phase, although this phase belongs to capitalism like storms and rain to the weather. They look for sinister forces allegedly causing it by their deliberate doing.

    Bernanke is an easy target to serve as scapegoat, isn’t he?

  27. MarkTX commented on Nov 10

    “Bernanke is an easy target to serve as scapegoat, isn’t he?”

    YES

    But then again, lets not try to minimize who is to blame.

    Do not be an apologist……

  28. That Guy Drinks Beer commented on Nov 10

    Whipsaw, bro, I can’t believe you’re still such a looser after INKP. Retard.

    -WD40

  29. jan perlwitz commented on Nov 10

    “But then again, lets not try to minimize who is to blame.”

    Is Bernanke to blame? If you think so, why do you think so?

  30. mac commented on Nov 10

    Why is Bernanke to blame, Jan?

    Because he cut interest rates in August, because he cut interest rates in September, because he cut interest rates in October and because he will cut interest rates in November.

    “Strong dollar policy,” my a$$.

  31. mac commented on Nov 10

    re above

    meant December (not November)… but with this one, you never know

  32. jan perlwitz commented on Nov 10

    “Because he cut interest rates in August, because he cut interest rates in September, because he cut interest rates in October and because he will cut interest rates in November.”

    And so? I don’t see for what Bernanke is to blame, just because the Fed cut the Fed funds rate and the discount rate. The Fed just reacts to the general economic conditions and the credit squeeze w/o being able to really do much about it (even if they claim otherwise). If Bernanke is to blame for something than for following the false believe that they can control US-economy, GDP-growth and inflation by moving the Fed funds rate and the discount rate up and down. But then again, who isn’t.

    And what does it have to do with the strength of the US-dollar? The dollar weakens because the US economy is in a downtrend and will probably go into a recession and because US economy has been fueled by a global deficit spending which isn’t sustainable. The dollar had already gone down before any rates were cut by the Fed with Bernanke.

  33. jan perlwitz commented on Nov 10

    off-topic: Now I know why some people post the same post several times. They are trying to go back to the blog’s main page by using the back button of the browser.

    Sorry about that.

  34. Anlegen in … commented on Nov 10

    Bernanke-Zyklus

    Der Herr Bernanke hat letzte Woche mit seinen Bemerkungen die weltweiten Aktienmrkte mal eben weiter auf Talfahrt geschickt. Mein Portfolio hat auch gelitten, obschon ich gestern auch noch Gewinne mitgenommen habe (Wacker Chemie).
    Montag werde ic…

  35. Winston Munn commented on Nov 10

    Whipsaw,

    I know you are not a fan of Mises, but his original concept that the attempted management of the economy by the central bank is the cause of business cycle looks to me to have been proven right over time.

    For me, I have to shake my head and sigh when I see the central bank intervening to try to prevent the very business conditions their previous policies have created.

    Cycle may not be the right word – it is more of a silly, viscious circle.

  36. Global Savings Mutt commented on Nov 10

    Hey how about that YEN?!?! Seriously, the yen at 110 has got to have some people unwinding something. And a bunch of Mrs. Watanabe’s are going to be in trouble at home.

  37. ken h commented on Nov 10

    Bernie is picking the lesser of two evils. To think this guy has a choice is short sited. I think that was why he was smirking when Ron Paul unloaded on him with no real political agenda. He has to cut to keep the credit market fluid. Everybody knows that if he didn’t the economy would hit a brick wall at 100 miles an hour. I’m sure that’s what some gold bug bears want but you all know money talks and those wall street pigs will get their way.

    Although……I really think Bernie is starting to buck another rate cut. Hence the sell off this week. While at the same time suggesting raising the GSE limit which is basically a huge taxpayer bail out.

    This is where is is failing and being called inconsistent.

    Like I said,…I doubt Bernie was one of the boys and this is why he has been chosen to be bent over.

  38. Greg0658 commented on Nov 10

    who is to blame – who are causer’s

    Capitalist who wanted a bigger sphere. They build factories and outsource jobs to create a bigger sphere. We are in that growing pain. When Americas scale of wage balances with the new hires, the pain will diminish.

    Its not quite that easy. There are more intakers of commodities in a defined resourse planet.

    So people will be fighting for more to be stronger, until there are less people with power to fight.

    I called a local radio show yesterday on topic of a 26yo Congressman and whether he has the smarts to understand a use of nukes.
    I promote we tell him on each issue how to act – but explained I’m more worried of product safety and clean basic resources.

    To many people making to many problems.
    6 Billion folks and 8 by 2014 is petrify’g.

  39. Greg0658 commented on Nov 10

    ps – petrify’g in the climate of today 111007

  40. Winston Munn commented on Nov 10

    At the end of the year 2000, the U.S. national debt stood at $5.6 trillion – it is now $9.0 trillion – any way you slice or dice it, that is inflation, bordering on hyperinflation.

    Thus far, the only thing that has staved off massive inflation in the U.S. is that the monetization of this debt increase has been outsourced to foreigners – the U.S. has not been forced to print currency paper – instead, it has been allowed to print I.O.U. paper.

    Like it or not, we live in a globalized world. To micromanage the U.S. economy without regard to the dollar’s worth is to tempt fate – recession would look like the “good old days” compared to the U.S. if the dollar lost its status as the world’s reserve currency.

  41. D. commented on Nov 10

    Paulson is basking in his own success and couldn’t care less about what happens to others.

    He says that a low dollar helps US exporters. True.

    Problem is our western economies are based on exploiting the rest of the world’s resources. Past growth has been based on free land, deforestation and slavery. recent growth has been based on dropping rates and privatization of public assets. 50-100 years of middle class sweat distributed to a lucky few.

    When 1B Chinese and other residents of developing countries want the same lifestyle as us, we’re quickly going to realize that the cost of input will kind of erode our margins.

    Never mind the environmental issue. Does anybody really believe that our world can support 2B middle class residents when a mere 1B has already cause so much havoc?

  42. jan perlwitz commented on Nov 10

    “who is to blame – who are causer’s

    Capitalist who wanted a bigger sphere. They build factories and outsource jobs to create a bigger sphere. We are in that growing pain. When Americas scale of wage balances with the new hires, the pain will diminish.”

    Who is to blame when capitalist economy goes into a crisis? No one is to blame, because there are no causers behind it. Capitalists don’t control capitalism. Capitalist are just character masks representing specific economic functions. Their task is to oversee the accumulation of individual capitals. If they don’t fulfill this function competition will eliminate the individual capital from the scene to the advantage of other capitals accumulating. No one controls capitalism. The laws in the economic system have an effect like laws of nature. They force their “will” on every one who is part of the economic system. And who isn’t.

  43. alexd commented on Nov 10

    Malthus. Extrapolate population growth at different rates. Unless the rate is negative it is only a matter of time before the world has a problem that we can only see the begining of. Can the world deal with 10x it’s current population? I know technology blah blah blah. Just keep extrapolating numbers. Obviously there is a need to figure out how to have less people on the planet. Then,20 100,300 years from now at some point we have a situation so dire I cannot think of what it means or what might happen. Of course if we learn to shrink people or some other thing then I am wrong.

    One of the reason that the dollar is going down is that a country has certain resources. People, people with skills, technology natural resources, whatever goods or services that can be sold. Think of it as a pile of currencies. Now think of that country as a company since there are a lot of people who invest here that should make things easier to understand. Now a company or a country can loose capital or gain capital. (It can also use that capital wisely or unwisely). Would you be inclined to invest in a company that was loosing capital or using their money badly (Rd, educating it’s work froce, becoming more efficent)? We even take a gamble on biotech companies because of potential. Can we look at the USA in that light? (Some states cetainly ar better than others)

    As I percieve it, we are spending more than we are taking in, our energy policy has been all bs for 30 years (or so) causing us to be spending an ever increasing amount which we tend to send overseas, we do not encourage savings from the middle class, and we do not look at the health and education of the population as an asset. So as the country becomes less valuable then it’s dollars are worse less.

    Yes interest rates have a direct effect in the short term on a currencies worth minus the change in that currency’s worth, but as long as we do not address fundamental aspects of
    “Where is the money going?” We have a problem.

    Even a supermodel can figure that out.

  44. ken h commented on Nov 10

    I think you guys are thinking too hard. It’s just not that complex. Ben devalued our currency when he cut rates, period. He basically told investers he would pay less for there investment in our country. To top it off , greed in real estate got out of hand to the point we were selling foreign investers garbage. When it got out the paper was worthless, the credit market completely came to a stop. He had to grease the wheels, had to. The only reason the dollar isn’t collapsing is because foreign investers have too much invested and will do whatever it takes to keep the dollar from falling any more. So I think Ben is going to have a real tough time lowering rates anymore. Wallstreet will piss and moan all they want but I just don’t think he can??

    The Supermodel.

  45. stormrunner commented on Nov 10

    Well I guess no one has an opinion on the FASB157 ruling and the route in financials this week.
    As to who caused this I would think the answer is obvious. How could anyone believe after the repeal of Glass-Steagall that it is not the “Debt-Based Fractional Reserve Monetary Banking System” (The FED)that is at fault here whose regulatory powers to control credit creation were circumvented by its own member banks through the hugh profits resulting in power to lobby for Gramm-Leach-Bliley which basically wiped out all the protections from large scale abusive banking practices under the guise of innovation. Off-loading loans to their own investment arms basically repackaging and selling to investors, with no care as to the ability to repay only fees and commissions mattered. This created a circular flow back to bank reserves allowing almost infinite credit creation (outside the FED system – I believe its referred to as disintermediation). This process could continue as long as assets kept appreciating. Does anyone serious believe that the players thought this rate of appreciation was sustainable of course not, they just saw the hole that was created purposefully for them and advantaged it while the getting was good, a psyche-op so to speak. Of course the mania was catalyzed by abnormally low rates by the FED at the behest of the large investment banks just as they’re crying now, the process required some time to bump start but the lag works to differ blame. Accident, hardly.

  46. jan perlwitz commented on Nov 10

    “This process could continue as long as assets kept appreciating. Does anyone serious believe that the players thought this rate of appreciation was sustainable of course not, they just saw the hole that was created purposefully for them and advantaged it while the getting was good, a psyche-op so to speak.”

    Well, that sounds like the players made a free decision to play the game in this way, and they could have done something else deliberately, if they just wanted. I doubt that strongly.

    “Of course the mania was catalyzed by abnormally low rates by the FED”

    That assumes general interest rates are mainly determined by the Fed, but not by general economic and market conditions.

    Did interest rates really go down because the Fed lowered the Fed funds rate and the discount rate or are there other causes mainly responsible for low interest rates?

  47. stormrunner commented on Nov 10

    I would think that most institutions borrow short to lend long necessitating the need to keep rolling over paper the situation where in now with credit crunching. You can not place the blame on the FED in entirety thats the beauty of the con its the whole system and the mechanism of regulation that gets usurped in conjunction with profits generated by the ability to create credit from nothing. It is my belief that had Glass-Steagall held these abuses could not have occured or at least not at this level. The hugh profits facilitate the abolishment of regulation then everyone pleads ignorance, educated people have been screaming for over 5 years as to the only possible outcome of this engineered event. To disregard the evidence just opens the door to further, possably far worse abuses that will eventually destroy the average persons confidence in the system, degrading our way of life. The FED gave up control over credit creation with this implementation of Gramm-Leach-Bliley to their member banks at the behest of their member banks just as surely as Americans are sacrificing Liberty in exchange for security and ultimately will get neither.

    Catherine Fitts x director of HUD does speaking tours to generate awareness of what she describes as the Tape-Worm ecomony a good listen from an insider.

    http://aprn.org/2007/10/16/talk-of-alaska-intimate-investing/

  48. stormrunner commented on Nov 10

    >>That assumes general interest rates are mainly determined by the Fed, but not by general economic and market conditions.

    The system in unity operates as a Cartel, this is the chicken/egg question. Personally I don’t think it matters, but as a matter of observation I do agree with you that the FED follows rather then leads which again supports rather than detracts from my suppositon that the FED cow-tows to their member banks.

    >>Well, that sounds like the players made a free decision to play the game in this way, and they could have done something else deliberately, if they just wanted. I doubt that strongly.

    Once the regulations are removed and the mania commences the wheels are set in motion and the corruption is no longer corruption but just the new business as usual. Stupid is not illegal, it was illegal but the laws changed. The conflicts of interest are obvious.

    Why would anyone trust these frauds in light of the recent banking debaucle

    http://globaleconomicanalysis.blogspot.com/2007/11/any-credibility-left-at-fitch.html

    Nationally Recognized Statistical Rating Organizations (NRSRO)

    Currently there are three (NRSROs)

    S&P
    Moody’s
    Fitch

    Let’s consider a few Flashback Facts

    Enron was rated investment grade by the NRSRO’s four days before bankruptcy;

    The California utilities were rated “A-” two weeks before defaulting;

    WorldCom was rated investment grade three months before filing for bankruptcy;

    Global Crossing was rated investment grade in March 2002 and defaulted on loans in July 2002;

    AT&T Canada was rated investment grade in early February 2002 and defaulted in September 2002;

    Hence all the after the fact bailing and litigation. Right now its the appraisers getting scrutiny. But once one or two crooked appraisers raise the bar in a certain neighberhood, the following appraisals have “legitamate” comps. The journey should not have begun the legislation was in place to prevent it. It took 10 years starting at Bush1 to get it finally axed by Clinton. Hence the term Globalists or Replublicrats, the money siphoned in this engineering process was used to arbitrage the cheap labor of Asia can anyone proof it probably not but the evidence is overwelming, I liken it to the LA OJ Blake trails. We need to get a grip and we need to do it fast we can not rely on our legislators to protect us they’re profitting.

  49. ken h commented on Nov 10

    Agreed Storm runner,

    republicrat,..LOL. exactly right. You could go on and on about where it starts and to point fingers at either of the parties is useless. Their all in on it. Look at the amount of money the campaigns are raising??? Until this corruption allowing special interest to buy votes is stopped we get what we deserve.

    Follow the money. Think Golmand Sachs donates?? think Bears donates?? to who?? how much?? I betcha more than everybody on this blog makes in year combined. I don’t have time to dig out the list but it’s public. Look it up.

    I mean, look at the candidates?? Obama??? what he done? Shoot Hilliary is taking money frm China. The Bushes? If they don’t have ties to the middle east, who does?

    I’ve run businesses and I guarantee it’s about who you know, how many hands you shake, who’s in your corner and why.

    Until WE THE PEOPLE take back our country, we will be at their mercy like in downturn such as this. I mean the fox is in charge of the chicken koop people.

    Don’t get me started because I’m a firm believer this has been in the works for awhile to start a North American Currency much like the Euro.

    What??? I’m a Super Model!

  50. ken h commented on Nov 10

    Sorry to keep running my mouth here. But seriously,….I’m your average joe-six pack super model and I figured this out years ago with housing. It was easy to predict and many out here blogging called it long ago.

    Do you honestly think Citi and B of A and on and on would just get caught like this…..without being promised a bailout???

    If you do, your the one’s that believe Ken Lay is dead.

    Just promise you won’t roll over as a voter and let them!!! That’s what they are expecting!

    You had to see Benny at the end of the hearing like a little kid in a play. Teacher off in the audience mouthing 1 million when he was asked how far the GSE limit should be raised. “Uhhh, A Million??”

    Super Model

  51. alexd commented on Nov 10

    All the neocon Ayn Rand worshipers don’t read history books. (Or in the case of the President, read). Unbridled capitalism, market forces run without restraint and obscurely results in systems exploding. There is a reason that a lot of regulation occurred to limit some aspects of business. Because excessive greed ramps up into a collapse of the communities that it is supposed to work with. It is like the idea of a governor on an engine. IT is there so the engine does not self-destruct or the driver goes beyond his capabilities. Free markets are fine but we need to stop them from blowing up. Perhaps recreating the Glass Steagel and go back to preventing monopolies (which are anti competitive although I hear Billionaires can make really big bribes.) Often what works on a small scale can be overwhelming in a large scale. Sometimes a little bit of poison cures the disease, but a great amount kills the patient.

  52. Estragon commented on Nov 10

    ken h,

    That battle was over before it began. The fed cuts have made it entirely clear how this is going to be handled. Profits are privatized, losses are socialized. Prudent savers are idiots.

    No politician of any party will be able to say “I think imprudent banks and investors should go bust, and people who borrowed money they can’t pay should lose their homes”. That’s a fast way to spend more time with your family.

    The reason we have semi-autonomous entities like the fed is to make some of the hard choices that politicians simply can’t. The die is cast.

  53. whipsaw commented on Nov 12

    Winston Munn said:
    I know you are not a fan of Mises, but his original concept that the attempted management of the economy by the central bank is the cause of business cycle looks to me to have been proven right over time.

    For me, I have to shake my head and sigh when I see the central bank intervening to try to prevent the very business conditions their previous policies have created.

    After two other utterly incoherent replies to my post, one apparently from a 14 year old, I appreciate yours. Where we differ is that I don’t think that you can blame everything on central banks and what they do.

    As I am sure you know, Elizabeth I founded the first central bank in order to facilitate global exploration (read ‘war’) and they are pretty good at that. But our current circumstances aren’t just the result of Greenspan or Bernanke, they are the result of deliberate fiscal, cultural, and political policies as well. This goes back to Reagan’s inauguration and boils down to class warfare at its finest.

    There is a certain silliness in seeing things thru some idealized capitalist prism when all you are doing is getting yourself set up to be run over by crooks, isn’t there? We can argue about whether that was the ultimate destiny of capitalism, but there isn’t much question about what has been going on over the past 7 years or so and there is even less question about how appropriate trying to apply Hoover economic theory will work out.

    Bernanke and Paulson will follow whatever course will protect the status quo in the face of an unhappy public and an unpopular president. Currency restrictions are already going into place overseas, so I think that you can expect more rate cuts, more restrictions, and some surprises that will upright the dollar- these guys may be evil, but they are not dumb.

    ==whipsaw==

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