Ben Bernanke seems to think that a few more mistakes ...

Hermes · #1 (**permalink**) 01-17-2008, 05:19 PM

… by him won’t really matter anymore but it is sad that he has convinced Washington to assist him on his path of destruction.

The U.S. economy screams for a recession and the financial markets are down on their knees and beg for a bear market and the more policy makers and anyone else will deny the markets what they want the worse things will get.

The more Bernanke and friends decide to push against the market forces the harder they will push back. Many of the problems have been created by market participants and actions the Federal Reserve has taken over the past 12 – 18 months or since Ben Bernanke took over. The problems have started before that and have been elevated ever since then.

The stubborn bullishness has added to the problems and the ignorance by the majority has not helped at all.

The sooner those individuals who attempt to fix the problems they have created stop the interference with the markets and give them what they want and need the sooner the problems will be solved. The markets work best with no interference.

There may be a plan announced tomorrow an ‘economic stimulus package’ but that is very likely to have very little or no effect at all.

The Philadelphia Fed Survey today showed that conditions have accelerated to the downside. Even worse for the Federal Reserve is the fact that Prices Paid have surged to a multi-month high Prices Received have also surged to multi-month highs which point to the potential of an increase in consumer inflation. The outlook six months from now shows similar readings and suggests that the problems may stay here longer then the majority expects.

The Empire State Index supports the Philadelphia Fed Survey and paints a similar picture. The PPI and the CPI released earlier this week show that inflation should not be ignored and has picked up over recent months. Ben Bernanke, hopefully in a final desperate attempt that will back-fire like all other measures he has attempted, will lower interest rates once again and now the government, who is known to mishandle situations like this and is clearly not the entity that anyone desires to take measures when it comes to fiscal management and monetary decisions, will announce a plan that will add to problems that the U.S. economy does not need, not now and not in the future.

Ben Bernanke seems to have lost interest in the destruction of the U.S. Dollar, but his soon-to-be rate cut or even rate-cuts will try to give it the final knock-out he desperately seeks, and puts his focus now on the total destruction of the U.S. economy. Why not, if you mess up mess up in such a big way that it will not be forgotten for generations, right?

The economy screams for a recession, markets beg for a bear market, the U.S. Dollar is basically worthless, inflation is accelerating, Ben Bernanke and friends try their best to make things worse so is there anything else?

Equities are still ridiculously over-valued. True, P/E ratios are low but P/E ratios are as worthless as the U.S. Dollar with the difference that they always were and the U.S. Dollar needed help to get there.

Do you want proof that P/E ratios are worthless?

All you need to do is look at all mutual funds that use P/E ratios as one of their major arguments to buy into markets. Oh, right. They have a time horizon that will outlive their investors (that is a slight overstatement but the point made is clear).

Today’s market action delivers a clear message:

We do not trust any plans that may be announced over the next 24 hours.

There is a healthy pull-back which may continue for a while, along the road we will get small rallies to get out of extremely oversold conditions but each time a lower high will be reached and a lower low will be the result of the next leg down.

There are tremendous profits to be made, regardless of the market conditions but it is up to management and their teams to realize those profits for their clients.

Dru · #2 (**permalink**) 01-18-2008, 02:00 AM

You nailed this one Hermes.

GarySpicuzza · #3 (**permalink**) 01-18-2008, 08:45 AM

Hermes wrote:

Quote:

The sooner those individuals who attempt to fix the problems they have created stop the interference with the markets and give them what they want and need the sooner the problems will be solved. The markets work best with no interference.

Amen Hermes!

The United States Gubment and state and local gubments interfere with EVERYTHING and over regulate EVERYTHING to the point of strangling off EVERYTHING.

Their answer to EVERYTHING is another "program" on top of the multitude of failed "programs" already on the books.

Most all of our fearless leaders have Peter Principled* out about 3 levels below where they are resulting in dumber than a box of rocks solutions to fabricated problems that only exist in their own minds.

*The Peter Principle is a colloquial principle of hierarchiology, stated as "In a hierarchy every employee tends to rise to his level of incompetence."

Mynion · #4 (**permalink**) 01-18-2008, 11:19 AM

Amen to that!

We need people in power who can think more long-term, and fix the real problems we have. This stimilus is a short-term band-aid designed to try to ride out the next year or two.

Let's address the real problems, at their source, with long-term solutions carefully designed and implemented to allow our market the freedom to work itself out.

On a more personal level, we need to be honest with ourselves and understand that some of the blame is ours as well. Together, we can build a better tomorrow. Get your arse out and vote, too! It sickens me when I know plenty of people that didn't care for Bush as President, and certainly didn't want him re-elected, but didn't get off their butts and vote for Gore/Kerry. Unbelievable! You have no right to complain if your actions don't support your views.

Dru · #5 (**permalink**) 01-19-2008, 05:55 PM

So, without turning this into a political debate, look at the promises and prior performance of the candidates and see if they are preaching fiscal responsibility, as well as acting the part. Vote accordingly.

TripleS · #6 (**permalink**) 01-21-2008, 12:32 AM

but i think is not different, between him and Greenspan, the thing they giving out all in the junk issue...not able to get a truth meaning for them. Just make few announcement that hiding the truth matter for market. making the market become worse by deceasing the rate.

__________________________________________________
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Mynion · #7 (**permalink**) 01-21-2008, 11:56 AM

Quote:

Originally Posted by Dru

So, without turning this into a political debate, look at the promises and prior performance of the candidates and see if they are preaching fiscal responsibility, as well as acting the part. Vote accordingly.

Exactly.

It also helps to have a financial strategy that works in many market conditions, including recessionary and times of high inflation. There's a lot of emotion flowing throught he markets of today, more so than ever before. Which means there is significantly less control when emotions run rampant.

Ben can keep cutting rates, and Bush can rebate whatever he wishes to American taxpayers, but the fact remains that Mr. Market is an emotional wreck right now and what we really need is some consistent good news. Give me $1600 and it goes to pay down my credit cards, which does not free up much disposable income at all.

A solution? How about trying not to spend our way out of this. How about getting inflation under control so I won't be spending $5 for a gallon of milk next summer, just to make the government's debt payments less. How about not spending billions of dollars to bail out organizations/corporations that fail simply out of greed. How about focusing on the middle class and not tax cuts for the wealthiest of Americans. Maybe there are other things than need fixing that would ultimately have a positive effect on both the economy and the stock market.

The lights are dim, but there is still hope. (Where's Obi-wan when we need him?)

brian · #8 (**permalink**) 01-21-2008, 02:38 PM

Vive recession!

The sad part is that the economic cycle is exactly that, and the wheel demands to turn from positive economic conditions to negative. Yet Bush is trying to do what he can to stop the wheel turning - which is right there with King Canute being asked to turn the tide.

The really big problem is that the previous period of economic boom was unnaturally sustained with unnaturally low interest rates - the treasuries drove everyone to cash in on every penny they had.

And now it's all spent.

The economic conditions we're facing now can be addressed as like a sticking plaster - you can either pull it off fast with brief pain, or else you can slowly pull at it, causing less immediate pain, but protracting it unnecessarily.

I think the situation is that having realised they cannot milk any more money from consumers, they will end up pulling the sticking plaster off as slowly as possible - and in doing so, create a sustained recession that lasts longer than necessary.

Just my 2c.

Hermes · #9 (**permalink**) 01-22-2008, 04:55 AM

I do not want to turn this into a political debate but I think that any democratic victory will make things wores then they are. They have a socialistic approach and that never works, look at France and Germany...terrible.

The current administration made plenty of mistakes, we can all agree on that but the tax cuts did help.

I do hear calls to help out the middle-class and here is one problem I have with that idea:

The middle-class is where it is because it chose to be there. They will not admit that fact but their actions speak louder then their words. Every day the hard working-middle class makes choices that wil keep them there and yes, investments in mutual funds are just one of many choices that they make to assure their status won't change. I don't see nothing wrong with that as long as the individual is satisfied but to make such choices and then call for help is ridiculous.

Don't get me wrong. I favor a flat-tax. 10% capital gains and 20% income tax. Period. There are other taxes that should be cut that would benefit every consumer. The approach to help out is quite simple but for some reason governemnts make it so hard on everybody.

Mynion · #10 (**permalink**) 01-22-2008, 10:55 AM

Hermes,

The middle-class, regardless of the choices made, are taxed beyond belief. The Bush tax-cuts only helped those in the upper class. The reason why it was designed this way is that a tax break to the rich will lead to extra money for investment in our economy, whereas a tax break to the middle class would not have as much of an immediate impact on our economy. This was short-term thinking.

Also, the AMT is affecting more and more middle-class Americans when it was originally designed specifically for those that make $1 million or more annually. This is causing middle-class Americans to lose tax breaks and their standard tax deductions.

Truth is, the middle-class has been financing this country, bearing the brunt, and any system from any political party that moves us in a new direction would be welcome.

I'm a Republican, always have been, but I do not like any of the Republican candidates. Mitt Romney is the only one that would probably capture my vote. Otherwise, I'm all for government reduced spending and fiscal responsibility, improved foreign relations, better government-run programs, etc. and unfortunately, the Democratic platforms are beginning to align themselves with my beliefs.

While I didn't vote for Bill Clinton, I have to admit that America was far better off during his administration. Who knows, the race is still early, but I'd probably vote for Obama or Clinton if I voted today.

Hermes · #11 (**permalink**) 01-22-2008, 11:29 AM

Mynion,

I agree with you, the middle-class is being taxed way too much and that's why I favor a flat tax of 20%, maybe even less then that. You are right on as of why the Bush tax cuts have been put in place and the reason behind it.

I also agree with you about the AMT and I think that problem needs to be fixed as soon as possible. Every year more and more middle-class familes will fall victim to it.

I also agree with you that the middle-class has finaced this country. Democrats will raise taxes if they will get to take over and the will raise them for everybody in order to fund their social plans.

I believe that if any party really wants to help the middle-class they should start with financial education so that the middle-class will have a solid financial foundation to built on. Many mistakes that the middle-class makes and which leads to heavy debt loads may be avoided that way and the benefits of that would be far greater then a cut in taxes.

I would like to see more tax-cuts across the board, for wealthy individuals, investors and the middle-class. There are so many problems that need to be fixed more like yesterday rather than tomorrow.

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