December 11, 2007

The Ben Bernanke Panic-o-Meter


Raise 1/4: Bernanke seeks to correct his past mistake as bankers and Wall Street take to the windows

No change: Bernanke shocks the world by supporting the US dollar and proving that he's at least heard of the term "moral hazard"

Cut 1/4: Bernanke proves that he is controlled by Wall Street and banks ahead of what's good for the American people, and will do whatever he can to make sure his banker buddies get their Christmas bonuses, even if that means letting inflation roar, the dollar destruct and savers get screwed

Cut 1/2: Bernanke in pure desperation mode, knowing the banks will fail and there's nothing he can do about it even as he slashes rates all the way to zero in a scorched earth panic

Federal Reserve Chairman Ben S. Bernanke may have to risk becoming the proverbial ``fool in the shower'' to keep the U.S. economy out of recession.

Renewed turbulence in financial markets puts Bernanke, 53, under pressure to open the monetary spigots wider to pump up the economy. Traders in federal funds futures are betting it's a certainty the Fed will cut its benchmark interest rate from 4.5 percent tomorrow, and they see a better-than-even chance the rate will be 3.75 percent or below by April.

``The Fed has to assure the markets that it's ready to ride to the rescue and cut rates by as much as necessary,'' says Lyle Gramley, a former Fed governor who's now a senior economic adviser in Washington for the Stanford Group Co., a wealth- management firm.

The danger of such a strategy is that Bernanke may become like the bather, in an analogy attributed to the late Nobel- Prize-winning economist Milton Friedman, who gets scalded after turning the hot water all the way up in a chilly shower. The monetary-policy equivalent would be faster inflation or another asset bubble in the wake of aggressive Fed action to tackle the slowdown in the economy.

70 comments:

Roccman said...

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All failed empires monetize their dept...this will be no different.

Cut 100 bp.

Anonymous said...

zero: hero
1/4: dick
1/2: revolution

John Polomny said...

He should raise rates but will cut 1/4 point to appease his banking masters. I have to laugh as this is so superficil it is unbeleivable. If you watch CNBC they have been going on for days about whether or not the Fed will cut like it is some big mystery.

Ed said...

OF COURSE he is going to cut 1/2. If you believe otherwise I have some oceanfront propery in Iowa to discuss with you.

The dow isn't up 1000 over the past week for nothing. The insiders know what's happening.

'puter guy said...

It's just for Christmas. Benny will CUT this week to save xMas. It's all about year end. It's all about bonuses and shopping and consumer debt. 2008 ... he jacks rates up. You could tell me my house is worth $600k or $50k. Doesn't matter - I own it outright. Would you like butter on your popcorn??

Anonymous said...

1/2 for sure.......he's just that kind of guy.......

Anonymous said...

The shadow banking system Gross is referring to is "essentially the breakdown of our modern day banking system, a complex of levered lending so hard to understand that Fed
Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August."

http://www.cnbc.com/id/22112839

Roccman said...

Bwhahahahahahahahahahhaha!!!

Ya think?

By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 1:24am GMT 11/12/2007

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/....

Morgan Stanley has issued a full recession alert for the US economy, warning of a sharp slowdown in business investment and a "perfect storm" for consumers as the housing slump spreads.

In a report "Recession Coming" released today, the bank's US team said the credit crunch had started to inflict serious damage on US companies.

"Slipping sales and tightening credit are pushing companies into liquidation mode, especially in motor vehicles," it said.

Anonymous said...

Does anyone remember the poster from last week (I forgot which thread) who wrote that he was cashing out his chips and moving to Switzerland? True to form, news out of Switzerland is no better. The guys comment just shows you how dumb the typical American is.
QUOTE:
UBS forced to seek bail-out after extra $10bn write-down
By Sean Farrell, Financial Editor

Anonymous said...

>> 1/2: revolution

NOT!

Just last week I asked my 21 yr old niece what she thought about rate cuts, the economy, and the housing/credit crunch.

Blank stare. Speechless. Clueless.

Just like your typical, average American citizen.

keith said...

good point on the niece, but 90%? of americans don't know who the fed is or what it does

but 99% of americans know what the price of gas is

get it?

sam said...

Any Dr. who prescribes 6 bloody mary's as a cure to a hangover is the sort of dude I want to party with.

This picture only emphasizes that point.

The six bloody mary cure works everytime, at least until liver failure or rehab is required.

john holmes said...

He will cut 50 bps so all is good in america.The whole game is a scam.I wonder if him and paulson have tea together? I hear these politicians like to tea bag each other.

Anonymous said...

1/2 point cut to keep HPers renting!

Roccman said...

http://tinyurl.com/3xl2wj

LauraVella said...

I've given up on Ben doing whats right for the people...

Another 1/4 point reduction today.

Anonymous said...

Price of oil right before you geniuses elected oil men Bush/Cheney = $8 (this is NOT a typo).

Price of oil now with the two oil men warmongers Bush/Cheney running their fascist regime = $88

Any questions?

LauraVella said...

"It's just for Christmas. Benny will CUT this week to save xMas. It's all about year end. It's all about bonuses and shopping and consumer debt. 2008 ... he jacks rates up."


puter, I agree with you 100%.

LauraVella said...

"Slipping sales and tightening credit are pushing companies into liquidation mode, especially in motor vehicles," it said."


I'm constantly seeing TV ads by Honda, Toyota, Lexus, and Infinity suggesting a purchase of a "car for a Chrismas gift"... funny, I always purchased a car when I needed it, not as a gift!

This is what happens when car dealers get accustomed to "HELC high"...the withdraws will be awful!

Anonymous said...

Keith,

My niece isn't stupid - just scary ignorant, like most Americans. She went car shopping recently, and all she cared about was the monthly *lease* payment. Monthly payments, and leasing - Ok, that IS stupid...

Damn American school system - the dumbing-down is on purpose, not by accident. It's how sheeple are created.

keith said...

just add a zero or two or three to this projection. Or change the B to a T:

http://tinyurl.com/3x2oe2

Freddie Sees $5.5B-$12B More Losses

Freddie Mac Chief Says Business Will 'Get Tougher Before It Gets Better' As Defaults Rise

WASHINGTON (AP) -- The chief executive of Freddie Mac estimated Tuesday the mortgage finance company will lose an additional $5.5 billion to $7.5 billion over the next few years as the housing crisis worsens and home-loan defaults rise.

cobra2411 said...

My vote: He's going to cut 25.

The problem isn't a lack of money in the system, it's a lack of trust and lack of pledgable assets.

You can go to ZERO and it's not going to help because there are no more assets to pledge for a loan and the banks don't trust anyone will pay them back.

Sorry, the time to fix this by playing with the FED rate has come and gone and we've missed the boat.

Anonymous said...

Fear of systemic failure = 50bps

Doesn't want to cause panic = 25bps

I go with 25bps

cobra2411 said...

"keith said...

good point on the niece, but 90%? of americans don't know who the fed is or what it does

but 99% of americans know what the price of gas is

get it?

December 11, 2007 3:00 PM"

And 99% of americans think the FED has the power to fix the problem.

They have NO power to fix this.

The bank of england cut 25 last week and LIBOR went UP. So even though BOE cut and the average person thinks that will help make things cheaper, the market says otherwise. Same thing will happen here. Look at the 10yr note over the last couple days. All signs point to the fact that if the FED cuts, real interest rates and the cost of living will increase.

Bottom line is that the market controls the FED.

Ed said...

"keith said...
good point on the niece, but 90%? of americans don't know who the fed is or what it does

but 99% of americans know what the price of gas is

get it?"


**********************

Ahh but don't you know the price of gas is all Bush's fault. As soon as Hillary begins her 8 year reign of terror gas will be down to $1.20 again.

I know this because DailyKos and CNN tells me so. No revolution needed, just a Democrat in the white house and all our troubles will be history. I know this since the NY Times tells me so.

Anonymous said...

How delicious would a .25 RISE be?

I'd take tomorrow off work

borkafatty said...

Well seeing that they eased up on the jail time for Crack cocaine users, oh wait wrong topic!...

Um!...

what was the question?

Anonymous said...

Half point cut, its triage - save what you can, i.e. the banking investment complex, and throw everyone else to the wolves. If they were worth saving in the first place they would be rich already.

It would be a excellent defensive move, it would be a sucker punch to China as well. Turn that cash surplus into worthless paper.

Merry Christmas.

-Snowden

Vandal said...

Wells Fargo Chairman says he expects a 3/4 cut today?!

http://www.bloomberg.com/apps/news?pid=20601087&sid=aOupRn349CpI

Totally insane.

smokester said...

50 point cut for a christmas gift to wallstreet.

Anonymous said...

Ahhhh...the American way of life. And people still listen to these so-called, "financial analysts". Faux News loves "experts" like that vomiting lies on airwaves.

SFBJ -- Six charged in securities fraud scheme

Six people, four from Florida, have been charged in connection with an ongoing securities fraud scheme involving promoters and officers of publicly traded companies, the U.S. Attorney's Office for the Southern District of Florida and the FBI said.

Charged in the scheme were: Ron Williams, 57, of Miami; Mark Foglia, 52, of Hypoluxo; Virgil Williams, 62, of Escondido, Calif.; Rex Morden, 57, of Henderson, Nev.; Efrim Gjonbalaj, 35, of Boynton Beach; and William Haynes, 42, of Palm City.

According to the indictments, an FBI agent acting as a corrupt manager of an unregulated hedge fund, called Fillmore Capital. During the course of the undercover investigation, officials said the men agreed to pay an undisclosed kickback to the purported manager of the hedge fund if the manager caused Fillmore Capital to purchase certain specified securities. The defendants also agreed to hide the kickbacks to the purported manager through a fake consulting contract.

The defendants face 20 years in jail and fines if convicted.

RayW said...

25 bps...any more than that and the dollar will be worthless...but that would mean our trade deficit would go down....100 bps....save American jobs! Buy Canadian built cars assembled with Mexican made parts.

Does any of this matter anymore? The Feds are not going to let the housing market completely collapse. They should but they won't.

Anonymous said...

Expect a 3/4%, or 75 basis points. Toyota and whoever still manufactures products in the States will gain from this. But Canada will suffer horribly with extreme layoffs and high unemployment, as the dollar loses half its value against the Canadian currency. General Motors, Chrysler, and Ford are now faced with a huge white elephant in Canadian manufacturing costs, and may face bankruptcy.

Meanwhile, consumers in the States will be spending a significantly higher portion of their income on food and energy. Expect $5.00 per pound hamburger and $5.00 per gallon milk soon.

Andrew Hac said...

#####
Anonymous said...

zero: hero
1/4: dick
1/2: revolution

December 11, 2007 12:52 PM
#####

1 whole damn point cut: DEEPLY FOOKED America and her pathetic AMERICANO !!!

Anonymous said...

1/4 point drop..theres goes the value of the dollar..hey I guess now really is a good time to buy real estate!

Vandal said...

Keith, your description for 1/4 cut was right on the money for the prediction. Help bail the banks while appearing "in control".

There goes the DOW...market is crying "Not enough!" like a drug addict who could only get half of the "hit" they need.

Anonymous said...

50bps cut - it should be obvious that this guy doesn't give a damn about this country when he tells us that inflation won't affect Americans as long as they're buying American goods.

Anonymous said...

1/4 point???

pussy...

Anonymous said...

.25 PCT RATE CUT AND THE MARKETS TANK 200 PTS INITIALLY.

I GUESS THE BANKS WANTED MORE FREE MONEY TO OFFSET THE MASSIVE LOAN LOSES FOR THE NEXT 18 MONTHS.

Anonymous said...

Pump 'N Dump... that's what the stock market is showing now... down 203 pts in 15 minutes.

We're really showing the foreign investors that America's economy is really strong with all these rate cuts.

Anonymous said...

Oh Man! I had the strap on tight hoping for 50cc! Only a 25cc! I can't live like this!

eric in vegas said...

Dow down 165 as of this post. Wall street was expecting a 1/2 point cut. Imagine if he held rates or raised 1/4 point.

Anonymous said...

"She went car shopping recently, and all she cared about was the monthly *lease* payment. Monthly payments, and leasing - Ok, that IS stupid..."

In her defense, I leased a car for several years shortly after finishing grad school simply because the jalopy I was driving was beginning to cost me more than the lease payments would have and I did not have the cash to buy. I did all the homework, brought the laptop in with me, and checked all their figures- so I ended up getting a pretty good deal for what it was.

In the end, I got a dependable car that I did not have to worry about for a couple of years (oil changes included), which probably cost me the same it would have to fix the jalopy every time it broke down.

In any event, at the time it was good for me, but now I drive a new to me used car.

lowly working man said...

its not helping ben.the lowly working man is suffering with high gas, food and housing because you are irresponsible and greedy.

Anonymous said...

bring back volkner. cut the money supply. save america

Anonymous said...

Ben,
Free Money caued the recession you retard. Grow some f@cking balls.

Anonymous said...

Market down, comodities up. Nice Job shithead.

Anonymous said...


OF COURSE he is going to cut 1/2. If you believe otherwise I have some oceanfront propery in Iowa to discuss with you.

The dow isn't up 1000 over the past week for nothing. The insiders know what's happening.



Good call, dope. It was a classic Wall St pump & dump

An American Patriot said...

Our Central Bank is the greatest bank in the world. No one even comes close. People from around the world will continue to pour money into the U.S. because we are the most reliable nation on the face of this earth. We also have a financial system that is transparent, unlike other countries. So go ahead and continue to talk all of this "economic collapse" nonsense. America will march on.

Anonymous said...


Wells Fargo Chairman says he expects a 3/4 cut today?!

http://www.bloomberg.com/apps/news?pid=20601087&sid=aOupRn349CpI

Totally insane.



WFC is run by morons. I applied for an analyst position there with an MBA and 4.0 GPA and 7 years experience a CPA and a Series 65 License and they chose someone just out of college with an English degree over me to be a financial analyst. So if you have your IRA with WFC, the person handling your retirement account might be an expert in English or art. You can sleep well at night knowing your money is in good hands.

Anonymous said...

"fool in the shower"

I thought that analogy 'stemmed' from what happens to a guy who carelessly picks up Bubba's dropped soap in the prison shower...

Edgar said...

WASHINGTON (AP) -- The chief executive of Freddie Mac estimated Tuesday the mortgage finance company will lose an additional $5.5 billion to $7.5 billion over the next few years as the housing crisis worsens and home-loan defaults rise.

He wishes!

Anonymous said...

He just cut rates in 0.25...
I wonder how much longer will this go on until all truth is revealed... thats what you get when you have an important part of the economy fueled by uncheked debt.
I wonder also when will this happen back here, where families have a 125% debt/earnings ratio...

Anonymous said...

The chart looks like a cliff

Anonymous said...

Expect $5.00 per pound hamburger and $5.00 per gallon milk soon

~~~

We're past that. $7 for a gallon of milk and oraganic beef $6-7 in Florida.

Anonymous said...

Our Central Bank is the greatest bank in the world. No one even comes close. People from around the world will continue to pour money into the U.S. because we are the most reliable nation on the face of this earth. We also have a financial system that is transparent, unlike other countries. So go ahead and continue to talk all of this "economic collapse" nonsense. America will march on.

Yup, Bush/Cheney/Paulson/Bernanke/Corrupt GOP love fools like you.
Oh, one more thing, shouldn't you be fighting in Iraq, patriot?

Anonymous said...

OF COURSE he is going to cut 1/2. If you believe otherwise I have some oceanfront propery in Iowa to discuss with you.

The dow isn't up 1000 over the past week for nothing. The insiders know what's happening.


Hey Ed, you have as much credit from now on as Bush.

Anonymous said...

This just in (and it felt sooo good, as Karl Rove would say):

1,000 calories from junk food = $1.70

1,000 calories from healthy food = $18


Enjoy your GOP.

Stuck in So Pa said...

Anonymous said...
>> 1/2: revolution

NOT!

Just last week I asked my 21 yr old niece what she thought about rate cuts, the economy, and the housing/credit crunch.

Blank stare. Speechless. Clueless.

Just like your typical, average American citizen.

December 11, 2007 2:50 PM
----------------------------

I have given up even bringing up the economy or housing in my area, unless someone else starts the topic. No freaking clue what so ever! So stupid, so pathetic! But, clueless means at least they can sleep like babies! Me, I worry for my country and it's people.
---------------------------


keith said...
good point on the niece, but 90%? of americans don't know who the fed is or what it does

but 99% of americans know what the price of gas is

get it?
----------------------------
But those 99% look at gas prices and curse big oil and arabs under their breath, not heli-Ben or the fed, or themselves and their gas guzzling suburban assault vehicles. Stupid, spoiled, Americans are overdue for an awakening.

Ed said...

Gotta give the man credit. He did the right thing. Well he did the wrong thing, by raising. But he did the right thing by only going 25 instead of 50.

Gotta be happy with small victories sometime

Ed said...

In the end, I got a dependable car that I did not have to worry about for a couple of years (oil changes included), which probably cost me the same it would have to fix the jalopy every time it broke down.

===============

Agree. As long as you know what you're doing a lease can be beneficial. If you want a new car, leasing is a better bet than buying in most cases. Especially if you have top credit and know how to negotiate.

Anonymous said...

Just last week I asked my 21 yr old niece what she thought about rate cuts, the economy, and the housing/credit crunch.

Blank stare. Speechless. Clueless.


Well, to be fair, when I was 21, my only concern was getting high and pick up hot European girls at the bars and nightclubs around the Santa Monica Promenade. Did anyone here use to hang at the Ned Kelly's or Teaser's? It's much more fun to be just a clueless kid.

What too do? said...

I figured a quarter percent, while open to the possibility of a 1/2% cut if the fed was in panic mode. What this tells me is maybe we are a little harsh on Bernanke.

He had to cut the rate! What would have happened if he held steady. At least it was the minimum. Sounds like a compromise to me. Things are getting very interesting.

Anonymous said...

"WFC is run by morons. I applied for an analyst position there with an MBA and 4.0 GPA and 7 years experience a CPA and a Series 65 License and they chose someone just out of college with an English degree over me to be a financial analyst. "

I would have done likewise. Anyone with a 4.0 GPA is trouble. Either you went to a shitass college where a pulse gets you a 4.0 or you spend 24/7 hitting the books and/or kissing ass to the professors.

Either way I want nothing to do with you.

Anonymous said...

Just last week I asked my 21 yr old niece what she thought about rate cuts, the economy, and the housing/credit crunch.

Blank stare. Speechless. Clueless.
-----------------------------------

21? Is she hot?

Seriously, though, when I was 21 i was in the army chasing froline around in west germany. I saw the dollar go from $1==~1.5 marks to $1==3.8Marks and then back down into the 2s. too young and stupid to take advantage of it, should have bought marks at 3.83.

Anonymous said...

I would have done likewise. Anyone with a 4.0 GPA is trouble. Either you went to a shitass college where a pulse gets you a 4.0 or you spend 24/7 hitting the books and/or kissing ass to the professors.

Either way I want nothing to do with you.
---------------------------------

Or they are f'ing smart, which would be a threat to you.

Anonymous said...


I would have done likewise. Anyone with a 4.0 GPA is trouble. Either you went to a shitass college where a pulse gets you a 4.0 or you spend 24/7 hitting the books and/or kissing ass to the professors.

Either way I want nothing to do with you.


You are the typical HR idiot. That's why Merrill, Citi and other US companies are going in the toilet. My company was hiring people with a dance or art major to become IT analysts when I knew people with computer science and other IT degrees who couldn't find a job. Then the companies complain that they can't find good help and need to bring people from India and China. Idiots like you in HR are destroying the economy by hiring unqualified employees.

Anonymous said...

Either you went to a shitass college where a pulse gets you a 4.0 or you spend 24/7 hitting the books and/or kissing ass to the professors.


My school has the highest avg SAT scores, second highest GMAT scores, lowest acceptance rate, and most credit hours required in the state. If you think you can get a 4.0 by kissing the asses of 17 different professors for 53 credit hours, you obviously have never been to college. Most of them wouldn't give you two minutes of their time to talk 1-on-1. Anyway, I don't have trouble finding a job. I was referring specifically to Wells Fargo. Thanks for playing, dumbass

Anonymous said...

I expect BB to continue to chart a very careful course through treacherous waters. He needs to defuse the credit crisis and restore liquidity (albeit at lower prices for many assets), head off a depression (but perhaps not a mild recession), and prevent a run on the dollar (but allow an orderly, gradual decline to correct the balance of trade).

I think he's doing a good job solo, but he needs help, badly, from the next president. BB can't reduce the size of the federal deficit, and he can't fix an idiotic energy policy that has left us beholden to foreign suppliers of oil and gas.

Anonymous said...

I would have done likewise. Anyone with a 4.0 GPA is trouble. Either you went to a shitass college where a pulse gets you a 4.0 or you spend 24/7 hitting the books and/or kissing ass to the professors.

Either way I want nothing to do with you.


Or could be that you don't even have a degree or are jealous of us, honor students with high GPA.

Only in America that morons applaud mediocre academic performance. No wonder, just look at the deeds of our C- president.

Since academic performance is not important to you, I bet that you wouldn't mind a C- doctor, who flunked a few times, performing a heart surgery on your little kid, right? This is the new America run by GOP, let's all embrace the dumbing down of the USA!