Quote:
Originally Posted by David - PG
It's necessary in the light of more stress in the banking system. Bear Stearns had to be bailed out Monday. Once big banks go bankrupt that will have devastating repercussions for everyone and the entire economy. Think credit crunch and potentially a decade of deflation a la Japan in the 1990s.
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It will only make things worse in the long run as his policy is causing squeezing of productive economy in order to restore currently unproductive economy
.Actually its necessary in light of stress to clear the whole system.
You dont restore trust, confidency and end credit crunch by further playing gimmy tricks with Level 3 assets, mark to model, rating agency bullshit, TAF window, etc.
from:
http://market-ticker.denninger.net/2...tion-mess.html
"Bernanke needs to decide whether he is going to address the willful regulatory ignorance emanating from The Fed and other banking system regulators or whether he prefers to have the credit markets seize up piece by piece, margin call by margin call, until we finally force into the open the institutions that are insolvent - the hard way.
Down the latter road lies a rerun of the 1930s or a Japan-like situation, with both being brought about by precisely the same sort of regulatory refusal to force market participants to face reality.
The bad news is that I fear that Bernanke has very little time left to get off his kiester as the market is choosing for him. He's wasted the last six months running the old Greenspam playbook but unfortunately this is not LTCM where you literally have one institution that got in trouble - this is much more serious as the we quite literally have all areas of the credit markets seizing up because trust has been destroyed.
What's worse, Bernanke and his Fed have destroyed confidence in our currency by willfully refusing to address the root cause of the problem and that is being reflected in the DX.
The irony of this is that the longer Bernanke fiddles with his bullcrap "rate cut" nonsense trying to shove more heroin at the junkie, the worse the dollar craters and the more inflationary pressure this puts back into the economy through higher import costs, with the most important of those being the energy complex! "
Its from blog, but that guy has been more right then 99% of CNBC.