Investment

» Inya Ivkovic - FWC: Greenspan's Bubbles: The Age of Ignorance at the Federal R

In response to FWC: Greenspan's Bubbles: The Age of Ignorance at the Federal R posted by Normxxx:

Hi Normxxx,

I agree that lately Jas_Jain has been particularly "colorful" in his wording and not exactly posting much of purely educational value. But I have to admit that before the Bear reared its big, ugly head, Jas did provide valuable insight, too. I believe it is sheer frustration pouring out of him now.

Having said that, Jas, out of respect for our seasoned members here at S101, I would really appreciate if you could tone down your posts and return to supporting your opinions with arguments and original thought.

» Jas_Jain - Crooks at Fed Do Emergency Rate Cut of 0.75%

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What else is new in an economy controlled by Crooks raised in a culture of fraud.

When Fed panics it is time for Scam Lovers to panic.

Jas

-- posted by Jas_Jain

» permabear - Crooks at Fed Do Emergency Rate Cut of 0.75%

In response to Crooks at Fed Do Emergency Rate Cut of 0.75% posted by Jas_Jain:

Helicopter Ben is riding to the rescue. What do the actions of the Fed say about the prospects of the inflation vs. deflation debate going forward? Bernanke was a student of the Great Depression. He is a proponent of the view that the Fed was too slow to act and was largely responsible for the Great Depression. With that view in mind, what is Bernanke going to do about the severe credit crunch we are facing? I was getting a bit nervous about gold this morning, down over $30 in overnight trading at one point. After Bernanke's rate cut, we're up $10. What a swing. What a message it is saying about inflation.

-- posted by permabear

» axolotl - BERNANKE ALREADY LATE

...........That last cut should have been 1/2 instead of a 1/4. The trillion off home prices and trillion off stock prices is not inflation. Looks like more to come on lower prices. He should try to prevent recession here because recessions are expensive. He then should be prepared to do what Milton Friedman suggested - supply just enough money for economic growth and announce it - it would do wonders for inflation expectations (and maybe cost him his job).

-- posted by axolotl

» permabear - BERNANKE ALREADY LATE

In response to BERNANKE ALREADY LATE posted by axolotl:

Bulls who think the stock market can rise forever are all piling on poor Bernanke for being "behind the curve". The reality is the Fed is impotent to fix a problem they helped to create in the first place- that being a housing and credit bubble. Housing prices got way too high. As they correct down, they are taking the economy with them. There is nothing the Fed can do to change this dynamic. Bernanke is just following the herd- dropping rates as the market demands. It hasn't done a darn bit of good yet. And it's not going to do a darn bit of good going forward.

-- posted by permabear

» Inya Ivkovic - The WSJ - "Soros Calls for 'New Sheriff'"

http://online.wsj.com/article/SB12011357...

» Jas_Jain - Fingers pointed at the Federal Reserve

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http://business.timesonline.co.uk/tol/bu...

January 23, 2008

Fingers pointed at the Federal Reserve
The Fed is singled out by critics as largely responsible for failing to eradicate the root causes of possible recession
Gary Duncan, Davos
Recriminations mounted in Davos yesterday among some of the world's most powerful and influential economic figures over where the lion's share of blame should lie for a failure to prevent much earlier the build-up of financial stresses that now threaten a severe world downturn.
The US Federal Reserve, as well as the International Monetary Fund, were singled out by expert critics as likely culprits responsible for failing to eradicate the root causes of the mounting global financial crisis and economic dangers.
The Fed in particular came under withering hostile fire from heavyweight former policy-makers who charged the US central bank with fostering a series of destabilising "bubbles" in markets for assets from shares to US housing by tolerating financial excess and running a lax interest rate policy.
Critics said that the Fed should not have permitted runaway gains in shares, and then US house prices, that by reaching excessive levels had encouraged American consumers to borrow and spend irresponsibly.

The Fed ought to have taken pre-emptive action to quell runaway asset price booms, the critics said. It should also have spotted and stopped unsustainable "sub-prime" lending to US households with scant financial worth, they added.
Sir Howard Davies, director of the London School of Economics and former chairman of the Financial Services Authority, said that the Fed now reminded him of Corporal Jones in Dad's Army, shouting "don't panic".
Professor Larry Summers, the former US Treasury Secretary in the Clinton Administration attacked the recent record of the Fed and other central banks.
"It is hard to give central banks a high grade over the past two years on recognition of incipient bubbles, or on their action to address them in either a regulatory or a policy sphere," he said.
"And it is hard to give them a high grade in the last six months hen the bubbles have been bursting - when they have been consistently behind the curve."
John Studzinski, a senior executive at Blackstone's the leading private equity group, was among leading business figures to call for stronger leadership for governments and financial authorities.
"The thing that markets are desperate for right now is leadership, whether globally or regionally, and it seems this is lacking," he said.
"Until the markets see a lot more leadership on a proactive basis rather than a reactive basis you are going to continue to see this great anxiety and feel this frustration. The Fed is perhaps showing apprehension."
Stephen Roach, a star economist from Morgan Stanley, accused the Fed of again caving in to Wall Street and market pressure with this week's emergency US interest rate cut, and risking sowing the seeds of a future with the potential creation of a new financial bubble.
"We've got prima facie evidence that we have a central bank that is being goaded into action just by what the markets are doing," he said. "It's time to put an end to this, what I think is a very reckless way of running American monetary policy. I'm quite astonished that they did what they did yesterday."
Lord Levene , Chairman of Lloyds, the insurance market said the lessons had still not learned from the fall of Barings Bank, which collapsed in 1995.
He said: "When Barings went bust, you had these new and highly complex financial products ... but the board had inadequate understanding. Financial innovation is only a good thing if the products that come out of it are very transparent and very easily understood."
Lord Levene said that Governments had shown themselves poorly prepared for crises compared to the insurance industry. "If we ran our businesses like that, if I said, 'Wait a minute, there's a hurricane happening, we have got to give it some thought', we would not stay in business very long. "
Other expert delegates also laid into the IMF for failing to identify and more clearly warn of the dangers from US sub-prime lending, securitisation of debt through complex instruments, and widespread financial excess.
Professor Summers said: "We have got a bunch of people with substantial role as a 'sheriff' [for financial markets] but for a whole variety of reasons they have been averting their gaze."
Fred Bergsten, director of the influential Peterson Institute for International Economics, said: "The IMF has been asleep at the switch." He called for a new "steering committee of the major economic powers" of the US, Europe and China - a 'G3' ."
George Soros, the billionaire financier said that the present crisis marked the end of an era of US excess built on the foundation of the dollar's status as a global reserve currency. He also said the IMF had neglected it duty to police global economies and financial markets.

-- posted by Jas_Jain

» Normxxx - Stocks: Classic Bear Signals?

Stocks Show Classic Bear Signals,
And This Time, Impact Is Global

http://normxxx.blogspot.com/2008/01/stoc...

-- posted by Normxxx

» permabear - Fingers pointed at the Federal Reserve

In response to Fingers pointed at the Federal Reserve posted by Jas_Jain:

While all of these bubbles and financial shenanigans were happening everyone was happy with them as long as everything was going well. The stock market was rising. Everyone was getting rich on real estate. The economy was growing year after year. Who is to complain about this? In reality the only folks who were raising these issues as potential problems were the eccentric pessimists. Folks like Morgan Stanley economist, Stephen Roach, whom many consider constantly dark in his outlook. Well in the end it was the eccentric pessimistic outcasts who had the whole thing pegged from day one. We may have been left on the sidelines during the glory days. But we predicted everything that is developing now. We talked about the housing bubble back in 2004 and 2005 before it became a headline. We talked about the credit bubble that was developing as a result of the housing bubble. We talked about the danger of the trillions of dollars of derivatives that were supposedly making the financial system more stable, when in fact they were undermining it. We talked about the amount of debt that individuals were accumulating and lack of savings. I personally harp in the irresponsible budget deficits that republicans since Ronald Reagan have created that to this point haven't yet created massive problems for us. But all of these issues are very serious. We are only now beginning to see the ramifications of these problems in the housing and banking worlds. But over time the U.S. and world will pay for all of this irresponsibility and imbalances.

-- posted by permabear

» Jas_Jain - Fed is planning a Shock & Awe move tomorrow

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Fed is planning a Shock & Awe move tomorrow. Let us see which way it goes. Either 0.25 0r 0.75 will accomplish the mission. Later that day Burn-ass-ke will be flown to a destroyer carrier with Mission Accomplished jumpsuit. Can't wait so see it live.

Jas

-- posted by Jas_Jain