When does Ben say no?
As a parent, the easiest thing to do is say yes to the kids and give them what they want. What’s harder is to say no and instill some discipline. The Fed faces a similar issue today in deciding when to say no to extraordinarily easy money. Ben’s in a no win situation for now in that the risk trade dynamics change for the worse if he signals that rates won’t stay “exceptionally low” for an “extended period” and he risks further inflaming asset inflation if he stays put. The economic outlook though won’t change much if the fed funds rate is at .25, .50 or even .75%. The Fed put themselves in this box by cutting rates to almost zero and fingers crossed on where we go from here. ABC confidence rose 2 pts to -49 and is the first gain in a month. The MBA said purchases fell 1.8% to the lowest since Feb as people await clarity on the tax credit. Refi’s rose 14.5% as mortgage rates fell below 5%.
November 4th, 2009 at 11:14 am
Kneeling whore comes to mind.
November 4th, 2009 at 11:18 am
“Refi’s rose 14.5%…”
Stock markets are up by 60%. The USD’s collapse is helping exports. The USG’s debt is getting cheaper to finance. The reflation trade is working as designed and the FED will do nothing about reversing their accomdating position until…it is far too late to prevent double-digit inflation.
November 4th, 2009 at 11:51 am
Pat G writes:
” FED will do nothing about reversing their accomdating position until…it is far too late to prevent double-digit inflation.”
Totally agree! I heard on FSN this weekend that for every 1 trillion they create vis-a-vis Quantitative Easing that it is reflected in a $4,000.00 move up in gold.
“Zimbabwe” Ben will go down in history as a flaming moron.
Oh, and I read on that Yves “I’m superior to everyone else” blog that a bunch of bloggers got invited to Treasury for a meeting…Barry? Did you get a call? I sure as heck didn’t. I would have shown Yves the definition of bad manners. That institution under Paulson took a crap in everyones living room to help their GS buddies – that Yves is bad manners, telling them their plan sucks is a fact of life NOT bad manners.
November 4th, 2009 at 1:41 pm
The analogy is good but the conclusion is clearly bad. Good parents know that their children need a structured disciplined environment and are prepared to put the tine and effort into providing that. The parents can be sure that putting that time and effort in will pay enormous dividends down the road when they are able to enjoy the company and successes of their stable happy children. They will have avoided the heart ache of dealing with the outcomes and trying to correct imbalances and faults in their older children or young adults. Otherwise the analogy is highly accurate
November 4th, 2009 at 1:43 pm
[...] appropriate time to say no to “extraordinarily easy money” and boost interest rates, says Miller Tabak equity strategist Peter [...]