March 07, 2008

Next Fed meeting is March 18. What's Helicopter Ben Bernanke gonna do?



* Gold at $1000 and soaring
* Oil at $104 and soaring
* Inflation roaring
* Dollar at record lows
* Home prices tanking
* Stock market crashing
* Economy going into the toilet

And to complicate matters, it's an election year, and the incumbents are screaming at Ben to make the bad thing go away.

So what's poor Ben do next?

* Raise 1/4
* No change
* Cut 1/4
* Cut 1/2
* Outright panic and cut 3/4
* End of the world and cut 1 full point
* Quit

And for the inflation / deflation discussion, it sure is looking as many have predicted here that we're seeing asset price deflation combined with commodity and consumables inflation, with a period of planned dollar destruction along the way.

It's tough to imagine it sucking more than it does right about now. But remember, we're just starting. Alt-A and Option ARM are next.

77 comments:

Mitesh Damania said...

I think what'll happen is as house prices go down Ben will jack up the fed rate so that the interest rates on mortgages will jump. Hence, a chunk of people still won' be able to afford a home.

Anonymous said...

probably cut because they don't seem to realize people can't afford their homes even with 0% interest. they have distorted inflation measurements, and they claim money supply doesn't have to do with value of the $.

eric in vegas said...

If the jobs numbers suck there will be an emergency rate cut to keep the market from tanking. He's obviously going to cut 1/2 a point at the March meeting. He's eventually going to drop to 1%.

Anonymous said...

it will be a 1 point cut folks.

Its got to be done! Either way we bleed. And were bleeding very fast. With a full 1 point cut it will open up the DAM and will see whats left after the DAM spills its raft!

Anonymous said...

are they too silly to recognize that if they keep lowering rates and inflation keeps roaring, lenders will have to charge more since future payments will be worth less and less? this is why I think they will lower rates, because they don't care or they don't get it and do the exact wrong thing.

Anonymous said...

good day for him to call in sick.

Frank@Scottsdale-Sucks.com said...

Another cut.

No complaints here though, as the international portion of my business is exploding so quickly that I had to move distribution to a larger facility.

Anonymous said...

I just listened to Dave Ramsey on the car radio while running errands tonight. Man! That guy is a pompous in-denial DICK!

gadfly said...

In a last throw of the dice Bernanke cuts rates by 3% and tells reporters "It's death or glory." Aaaaaaaaaaaaaaaaaaah.

Ed said...

Dude does't know anything but to lower. Probably 50 cut.

tater said...

He'll announce another interest rate cut the rate, and it will be at least another 1/2 point. CD rates will drop down to -1%, and the people with savings accounts, money market accouts and CDs will end up using their dollars for stuffing their pillows.

The banks will love him, though.

fish said...

The goldbugs (and I count myself in that camp) are saying that a one point cut is a done deal. It may take two fed meetings to do it but it will happen!

I wonder if Ben regrets campaigning for this job (and do you suppose that he is out of needles for his Alan Greenspan voodoo doll yet?)?

Anonymous said...

"Sometimes I wonder whether the world is being run by smart people who are putting us on, or by imbeciles who really mean it"
-- Mark Twain

Anonymous said...

Ramsay not Ramsey.

And yes he is a dick. Although I doubt he is in denial. I think he knows fully well what's going on. But he is heavily invested in real estate and figures he can keep it propped up a little more while he unloads.

Anyone who gets financial advice from a radio show (or a blog for that matter) deserves what's coming to them. So I have no sympathy for the idiot callers of his show.

Anonymous said...

The man will cut a half but look at what is waiting for us.
1. More inflation
2. Dollar value less and less
3. Municipal bond failures mount-pensions at risk.
4. BANKS!!!-No money to lend.
5. Countrywide still writing loans like crazy to unqualified applicants
6. College loan crisis coming to a student near you!
7. Those lovely gas prices rise near $5 per gallon.
8. European prediction that we go down in September of 2008 after 3rd Quarter reports all come in with the bad news.

Stuck in So Pa said...

Im thinking 3/4, although 1 would be great, all the way down to zero in one cut would be too much to hope for. We will probably get there right before election day. After that ......look out!

Anonymous said...

William Poole (St. Louis Federal Reserve) said "It caught all of us off guard, the Fed did not see this coming any more than all the Investors". He also said that we are not actually in a recession, we might have a mild one which is expected every decade or so. So what do you mean, Ben is panicking when two days ago his cohort give a radio interview like that. Was Poole lying through his teeth or is he just "stupid"? Does anyone in the Federal Reserve have a conscience. Does anyone in the Bush administration have a conscience! Why are we only making decisions based on the political outcomes when we may not have a country left to care about. It's ironic, the administration that wraps itself so much in the American flag may be the one that causes our demise as a Super Power if they continue with their crazy economic policies.

Paul E. Math said...

He'll cut. Probably a quarter or a half. Bernanke has already shown that he doesn't really care about inflation or the dollar anyway.

Paradoxically, the stock market will react positively to the news of the cut as most investors think that the interest rate is more important than the health of the overall economy and they still believe in the fed, bernanke and santa claus.

Anonymous said...

He is now BLAMING the Finance Secretary PAULSON for the Mortgage Mess !!!!!!!!!!!

LOL

Anonymous said...

The Fed should cut interest rates to all the way down to zero. We Americans have nothing to worry about. The world will continue to lend us money because we have the world's reserve currency, we are the largest economy and everyone in the world depends on the U.S.

Anonymous said...

Expect 1 % cut:

Wether a .5 emergency or 1.0 at once is irrelevant - it's got to be at least 1% this month *SOMEHOW*.

christiangustafson said...

Please cut please cut please cut!

I'll need a bounce to re-enter some short positions. Exiting to cash soon.

Short any pops. Short all pops.

Malcolm said...

death of a thousand cuts :(

Metroplexual said...

What is to stop him from doing the greenspan hail mary throw of 1% for a year or two? This guy is hoping people refi their way out of foreclosure.

Anonymous said...

uncle Ben called for the banks to reduce the principal amounts for underwater homeowners. This could actually turn into a huge revenue generator for the Treasury.Any foregiven debt is viewed as as gain by the IRS. This is similar to a short sale -when the lender forgives the amount owed and the homeowner would be taxed on the amount foregiven . As an example if 100k were foregiven the homeowner would owe 20k-30k in taxes .. Everybody would win here.Maybe obama could campaign on writing new laws to save the poor people from this problem...

Erik said...

Something tells me he's gonna cut at least 3/4, maybe a full point. $120 oil, here we come!

Anonymous said...

Cutting rates won't help because the lenders are insolvent

Anonymous said...

Full point.

Ben was rather explicit in his testimony. And I believe him when he says he doesn't give a damn about inflation or the dollar....he thinks those will take care of themselves. He sees his job as cutting rates as quickly as possible. ZIRP is only two or three meetings away.

johnmontana said...

He should be fired and Congress should provide some oversight of this organization that will wreck the dollar if left to their own devices.

Anonymous said...

There is no helping the homeowners so he may as well jack up the rates, save the dollar, which will lower the costs of goods and bring back confidence.

Anonymous said...

He should be fired and Congress should provide some oversight of this organization that will wreck the dollar if left to their own devices.

______

Oh, CONGRESS should provide oversight, should they? Those corrupt, incompetent stuffed suits?

Ha ha ha haaaaaaaaa!!!!

Good one.

The Fed is not even a gov't agency. It was set up to keep things nice for BANKS. Try to understand and remember that.

The dollar is going much lower no matter what anyone does. You can call for oversight or whatever you want. It's too late.

Kathy in Blue Bell said...

Look there are no good options, you can go with what's going to hurt people/the economy immediately but possible help shore up the dollar and stop debasing the currency, or you can go with dropping the worthless paper out the helicopter, solving nothing and lowering the credibility of the dollar further. I figure Ben's going with the debasement path and cutting the full 1%.

Anonymous said...

100% agreement on that Dave Ramsay blowhard. Total idiot.

Anonymous said...

Here is what it takes for the USA to get back on track:

1) Balance Budget Amendment.

2) Raise interest rates 2 full points

3) Set maximum price for oil purchase at $65 dollars for 2008.

4) Nationalize CITGO.

5) Mandate an ad-valorem TAX on SUV and truck with a 5 year phase-out penalty.

6) Start drilling in Anwar , Alaska and Gulf Coast.

7) Prosecute Mozillo , INC.

8) No HELOCs and no Equity loans allowed.

9) Reinstate the DRAFT

10) Make Lobbying and PAC illegal.

11) Polling will be prohibited in any election.

12) Prosecute all liar-loans.

million said...

new job #s out today are terrible- FRB to cut... 75bps. i really doubt if they will cut by that much but these guys are complete a-holes so nothing is beyond them.

Anonymous said...

"Any foregiven debt is viewed as as gain by the IRS"


PSSSST: http://tinyurl.com/2t5ypp

Not anymore.

Anonymous said...

His goal is probably to make the world pay for America's excesses. So he'll do whatever he needs to deflate the debt.

The best way to do this is to let the dollar tank. This means inflation and US dollar debt in foreign hands worth much less.

Foreigners with their wealth funds will accelerate their purchases of US assets. These will underperform and become worthless due to a collapsing US economy and then Americans will get to buy them back for pennies on the dollar in a few years time. And America will, once again, get to laugh at the rest of the world.

But all this has to be done withouth foreigners feeling screwed and starting WW3.

That's their goal if the US is being run by intelligent people.

Anonymous said...

Quarter point market goes down alot
1/2 point market goes slightly down
3/4 point market goes up then goes down when oil goes up alot
1 point Market shoots up dollar shoots down then market shoots down

Hold steady Market plummets, the dollar shoots up, commodities shoot down and then back to business as usual.

Anonymous said...

I'm 50/50 on .5 - .75. It'll depend on how things continue to go between now and the meeting. If market keeps tanking and the bad news keeps rolling in (ie jobs), i'd bump it to .75 - 1.0.

I'm thinking he'll get to 1% asap in 1H this year and then try to hold for as long as possible before zirp-ing.

Anonymous said...

the Fed said it will make $100 billion available to a broad range of financial players through a series of separate transactions starting on Friday.

Anonymous said...

Piss and sh1t his pants, shake uncontrollably, cry for his mommmy, and the get into the fetal position in the corner of a room.

Anonymous said...

A realtor called me from RealtyTrac and somehow we got on the subject of bidding and the process. He told me that the opening bid aka balance amount for a home set for auction, which in my case is set at 85k, has to be paid in cash within 24 hours of the winning bid and the rest is financed. Question, who is walking around with 85k? The winning bidder either has to be a bank or an investor, which maybe the case but still with the economy the way it is I don't see it happening. Also, there was a 70% change in home prices with this sham of a boom. 70%! Looking at the Tax data, around 8% seems fair-haired but not 70. I think a lot of people have lost the realization of what 100k is exactly. It’s a lot of money. I know an early 30’s family that bought a home for 400k and put down 80k from their overpriced sale of their previous home. Now, He is at High School Teacher and She works at Phoenix College. Combined, they probably make 90k. She probably brings home 3k and him 2k. So 5k and there mortgage with insurance and tax is probably close to 3k. Now, this home is on a 10yr arm... I don't have a crystal ball but after ten years of paying almost 3k a month, which will be draining enough, how can they cope with the adjustable then? So are we going to have this real estate problem in ten years all over again? Our parent generations are nothing like our generations (mid 20’s early 30’s). I know people in their mid 20's early 30's that can't even raise their kids alone, yet we are buying 400k homes? Lets not talk about the youngsters living in video games and can’t even wash there own aces properly. This world is in for a rude awaking. I’m not saying everyone, but it seems like the majority. This is my advice, Try to think long-term. Don’t buy a home knowing that you need to have a roommate to cover the cost until you graduate school and then hope that there is a market for your skills. Don’t push your bills to the limit of your pay checks so you are strapped against the wall. Rule of thumb, your mortgage payment and your auto should be at most, 2/3’s of your income. You can use a calculator right? Eno Mane Here!!! Nice site

Anonymous said...


3) Set maximum price for oil purchase at $65 dollars for 2008.


How will you force the sellers to sell at $65 when the spot rate is $100? Why not set a maximum price for food, insurance, rent, houses and everything else too? Why hasn't anyone else thought of that? It's so easy to govern.

Anonymous said...

* Gold at $1000 and soaring
* Oil at $104 and soaring
* Inflation roaring
* Dollar at record lows
* Home prices tanking
* Stock market crashing
* Economy going into the toilet

Don't forget

* Bank system bankrupt!

k.w. - southern ca. said...

He'll cut, and cut and cut - until his banker buddies and wallstreet cronies are content - but it still won't do any good.

The problem is there is now a lack of trust witin lending institutions, everyone wants real money, which unfortunately is being devaluated lower and lower every day.

Anonymous said...

Frank@Scottsdale-Sucks.com said...
Another cut.

No complaints here though, as the international portion of my business is exploding so quickly that I had to move distribution to a larger facility.

March 07, 2008 8:44 AM

What are you saying here, Frank, you had an orgasm while in Europe?

k.w. - southern ca. said...

Think macro-economics, beyond your own monitary success. This is not good for the nation as a whole.

Unfortunately, I don't blame you for moving your business outside of this country, we've pretty much told citizens here that doing business in the US will be a losing proposition for most.

Frank@Scottsdale-Sucks.com said...
Another cut.

No complaints here though, as the international portion of my business is exploding so quickly that I had to move distribution to a larger facility.

Anonymous said...

t bills yeilding at auction 1 percent already.?

Anonymous said...

I'll follow what the gamblers say: 50 basis points. Though maybe the rest of the board will have some sense and do the right thing and raise it 25.

Though if he'd quit at the same time, that'd be nice.

k.w. - southern ca. said...

Have you given thought to what percentage of American People would be able to buy those assets back? I would expect only a handfull, and that group aren't the ones working to produce the bulk of goods and services in this country.

There's nothing good about what's happening now, especially for the hard working middle-class citizens of this country, those people who have continually footed the bill to keep this country from going into total collapse and anarchy.

Some people on this blog have mentioned that we're at a turning point, a changing of the guard for this nation, and I agree with that thought - it's long past due that something is actually done right in this country, for the benefit of *all* citizens, not just the select few.

Anonymous said...
His goal is probably to make the world pay for America's excesses. So he'll do whatever he needs to deflate the debt.

The best way to do this is to let the dollar tank. This means inflation and US dollar debt in foreign hands worth much less.

Foreigners with their wealth funds will accelerate their purchases of US assets. These will underperform and become worthless due to a collapsing US economy and then Americans will get to buy them back for pennies on the dollar in a few years time. And America will, once again, get to laugh at the rest of the world.

But all this has to be done withouth foreigners feeling screwed and starting WW3.

That's their goal if the US is being run by intelligent people.

Anonymous said...

I can see Ben resigning at some point. I don't think he wants to deal with this crap much longer.

At that point, the Shrub will put FEMA in charge of the Fed. ;-)

Anonymous said...

It's a certain .75 rate cut. There will be another .50 basis point cut, and then it's over.

Do you think you've seen inflation now? Wait until you see what happens if banks stop sitting on all this "liquidity" they're borrowing from the Fed and start lending it.

You this the housing collapse is bad? You wait and see the deflationary scenario when the Fed runs out of room to cut interest rates and we become Japan x2.

It's all bad.

Lady Di said...

It doesn't matter what he does.

We're bankrupt. Ben knows this. He is just trying to prevent the mass panic that would occur if the herds found out.

Protect yourself. As one of my favorite financial advisers (Jim Sinclair) says, put as little financial intermediators between you and your money.

Anonymous said...

Who cares? If you don't have a job, many of these issues won't matter.

http://money.cnn.com/2008/03/07/news/economy/jobs_february/index.htm?cnn=yes

Anonymous said...

I own gold and silver along with a bit of XOI. A large portion of my income comes from outside the US. I hope he cuts to negative territory. Gold will skyrocket as will oil. I have more business than I know how to handle now, another 10% drop in the value of the $USD and I'll be working 24/7 to keep up.

Bring that shit on.

Anonymous said...

Cut 1/2 point - he needs to keep some slack for the next round of foreclosures and there's no way these chumps are going to reverse course and raise - booya!!

beclouded said...

crap in his pants and apologize for it.

Anonymous said...

Again cuts 3/4.

It's not like its going to change anything anyway. And he knows it.

The market is tanking and Im laughing.

Dny

Anonymous said...

Only $20,000 rebate checks will save the economy from doom.

Anonymous said...

“At that point, the Shrub will put FEMA in charge of the Fed. ;-)”

Shrub, “Good Job There Benny"

Anonymous said...

i don't see how Congressional oversight will help either. they're clowns who care more about baseball. per Ron Paul, some of them didn't even realize we have a fiat currency.

look at the Republican front runner. he just lists a bunch of names when asked about the economy. stupid elects stupid. we need competing currencies. Congressional oversight of the Fed won't solve anything.

satan is a republican said...

Ben will hire DOPES to head his emergency task force on economic and stock market stabilization. Suzanne the former realtor with be hired away from her established territory on Sunset Avenue as a 'recreational consultant' to the task force and will have her own private office at the local pool suites adults-only resort.

BondsOfSteel said...

Ben "inflate me" Bernanke.

Anonymous said...

I'd quit citing health reasons, but then thats just me. Maybe Ben loves the attention?

Anonymous said...

Considering the previous cuts have sent the stock market into "panic mode", I am not so certain of additional slicing.

A 1% cut would cause unbelievable panic. He's not big cuts in the past and it had no net effect. Eventually, the wall street boys are going to start flexing their muscle.

And incidentally, I have a suggestion on how to stop the wave of foreclosures. Instead of reducing loan amounts or sloshing money into the system, I would put a temporary moratorium on foreclosures from individuals who actually HAVE the capability of paying.

How many people now are walking away from residences and speculative plays despite the fact that they can actually maintain their payments? To me, that is eggregious behavior to the max. Start treating those contracts like they were written in stone. And if these idiots bought high, well screw them. Allowing them to walk away despite the fact that they have assets and salaries to cover their mortgages is ludicrous. Let them twitch in the wind.

Mammoth said...

- - - - - - -
KW said:
“Think macro-economics, beyond your own monetary success. This is not good for the nation as a whole.”
-----------------------------
Tell that to Boeing, who is crying “INJUSTICE!” over the Air Force awarding the refueling tanker contract to Airbus.

Didn’t Boeing farm out most of the components of the 787 to overseas suppliers? That decision certainly wasn’t good for the nation as a whole, either, nor did it turn out to be a good one for Boeing, since their overseas suppliers are not able to deliver on time and the new airliner’s schedule has slipped yet again.

BTW, Boeing didn’t care about injustice when it jerked the rug out from underneath tens of thousands of loyal employees a few years back. For some reason I don’t thing that laying off tens of thousands of people is good for the nation as a whole.

Payback’s a Bitch!

-Mammoth

Andrew Hac said...

The Americano is as toasted as a snapper turtle skewered on a stick from head to ass all sizzling, juices dripping, fat popping over a bed of white hot charcoal grill.

Americano = Grilled Snapper Turtle

Heeeee... Haaaaa... Arrrrr...

The mentality of the average Americano is just amazing, if not stupefying.

A Circuit City Sale Associate is able to buy a $500K house.
A Shoe Sale Man is driving an Audi.
An uneducated, illiterate, ignorant Ford factory auto-assembly worker makes $40/hour.
A single driver is driving a stupendous, big-ass, chicken-coop For SUV Expedition so he/she can feel proud about being an Americano. That is stupider that a dog.
Illegal immigrant is getting welfare, medicare and medicaid free health care, free school lunch, free education, pay no tax, every thing is under the table cash.
The Iraqi has Weapon Of Mass Destruction.

Talk about brain-dead zombie, blind-as-a-bat crapper. Maybe that is the reason why there is such word as "Trailer White Trash", "BORKAFATTY" AKA The Pig chomping at the feed trough...

Peter T said...

* Gold at $1000 and soaring
* Oil at $104 and soaring
* Inflation roaring
* Dollar at record lows
* JOB MARKET DETERIORATING

There will be no wage inflation, therefore the Fed will cut. I guess by 0.5%, to not provoke a long-bond revolt, which would hurt the economy more than a Fed cut would help.

* Home prices tanking
* Stock market crashing

Not exactly inflationary, good time to cut.

Peter T said...

> I just listened to Dave Ramsey on the car radio while running errands tonight. Man! That guy is a pompous in-denial DICK!

What did you dislike about him so much? I disagree with lots of what he says, but his main message is on target: Get and stay out of debt!

yoski said...

Cut 4% to -1%. Pay us to take that worthless crap of his hands.

Anonymous said...

He will cut .75 but the market and the lenders wont care. The banks are in full on protection mode, and refuse to lend at any rate. The banks are playing chicken with the government for a bailout. The government is holding out until the price is right.

barney said...

"Didn’t Boeing farm out most of the components of the 787 to overseas suppliers? That decision certainly wasn’t good for the nation as a whole, either, nor did it turn out to be a good one for Boeing"

???? you're thinking short term. long term, Boeing wins.

whitey is the devil said...

The evil white man will cut rates just to make things harder for women and minorities

Deep Thought said...

I'm in for 3/4, but will check a raise (cut) to 1.0.

Uncle Ben will panic the market with anything over .5, but he does not see it yet.

My question is, when do you start to go back into the market? I'm thinking at 10,500 I'll start to phase in, with "all in" at 10,000.

Thoughts??

42

Anonymous said...

.







PUNT







.

Anonymous said...

Ben resigns, Fed disbands, GW turns it over to "faith based controllers".

That cloud of smoke in the distance was your wallet.

3 things needed to control society:
1. A form of money for the exchange of goods and services.
2. Central bank to control the value of the peoples money.
3. A religion with the promise of a messiah, to give the people comfort when you take away their money and goods.

That'll do it.

Anonymous said...

Looking for DX 68.
Rate cut probably 1.0
Mortgage rates very slightly
less - banks want to keep
rates about where they are.