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July 31, 2007

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bailey

Clearly, the markets STRONGLY believe BB can & will come to the rescue. Let's assume he'll try, are his efforts likely to work?

Dave Iverson

As I see it, Bernanke faces a double bind and likely public damnaton no matter what course he chooses, no matter what action (or inaction) he takes. From a post earlier this spring:

"If the Fed tries to keep the economy 'pumped' by lowering interest rates in the wake of the subprime meltdown, speculative fever may continue to escalate, albeit not necessarily in the housing market. If the Fed raises rates, or maybe even if they don't lower them, Bernanke will be blamed for inducing recession— the recession Paul Kasriel recently warned as 'imminent'." http://forestpolicy.typepad.com/economics/2007/03/bernankes_doubl.html

Paul Kasriel once said "Alan Greenspan is the luckiest Fed Chairman in the post-WWII period." http://forestpolicy.typepad.com/economics/2005/08/in_greenspans_w.html

Bernanke may end up being the unluckiest. Or maybe not. Maybe we will be singing praises to him within a few years. What do I know? What do any of us know?

What we do know: It is going to be interesting indeed going forward!
But the ancient Chinese knew that too, in the form of this curse/blessing: "May you live in interesting times!"

LoraPreet

Great site very informative two thumbs up!

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http://www.earwod.com

Hedge Fund Consultant - Richard Wilson

So much for BB coming to the rescue.

- Richard

Dave Iverson

I dunno, Richard.

BB, along with other central bankers, may indeed be coming to the rescue in some slightly nontraditional ways. See, e.g. Paul Krugman's Dec 14 video -- at this post: http://forestpolicy.typepad.com/economics/2007/12/catching-up-on.html

Or maybe BB will become AG's "goat", catching all (or most) of the flak from the mess that Greenspan started, after reigniting the flames of wanton speculative excess. I'm betting more on the former than the latter. We will know better in 2-5 years. At that point in time we can review points and prognosications. 'Till then we wait, and worry.

PS.. I edited your comment slightly, deleting the URL for your blog. When I went to your site, I couldn't just go back to mine. Readers can still find your site hyperlinked under your name in your message--that opens in a new window. Someday soon, maybe, I'll open up my comments section to allow html tags. Then I can allow folks to advertise their sites directly and can make sure that when they do their sites open in a separate window. Happy Holidays..

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  • Chronicles of international finance and geopolitics, with hints from thither and yon to help us find a way from "growth and development" to "sustainability."

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