The Fed Flinches

NEW -> Contingent Buyer Assistance Program
I just watched Lou Dobbs. Why the hell in the world anyone would want to be on his show? He won't fuxking let them talk!



Lou Dobbs just had Jemery Seigel on the show, and he barely let him talked for more than five sentences!! When Jemery Seigel was trying to tell him that deficit of 5% of GDP is not that bad, Lou just shut him up and try educate Seigel!!! WTF!!
 
I checked that "horror stories" link and I think the title misrepresents what Bernanke is supposedly saying. The article claims Bernanke says next year will be "bad" and the recovery slow because of housing. I wouldn't call that a "horror story". Seems just realistic to me.
 
Check out this video of a "future" trader taking a big hit due to market's gyrations and blowing up. WARNING - lots of F-bombs but a good warning to novice traders (myself included). It would have been funnier if it didn't happen to me during the dot-bomb bubble. Note: he was trading YM = Dow futures and ER2 = Russell 2000 futures.





http://highprobability.blogspot.com/
 
Hehehe... That was funny. Been there, and f-bombed just like that. Thank gawd I didn't lose $30k, and thank gawd it wasn't my life savings. A good lesson here, do not play with what you wouldn't be willing to lose. Hopefully he held his position, and he only lost about $5k and not $30k. And, hopefully he didn't get stupid, and try to get in a short position. Otherwise, not only did "Wall Street" take his money before, but they loved taking his money again.





It reminds me, that everyone should <a href="http://cowles.econ.yale.edu/P/cd/d11b/d1172.pdf">read this Shiller paper</a>.
 
I can relate to that futures trading video. I have never had a disaster like that guy, but the emotions on a losing day are the same.





So much for the rate cut saving the market...
 
<p>Why can we not get this guy as our Fed chairman?</p>

<p><a href="http://www.cnbc.com/id/22797716">www.cnbc.com/id/22797716</a></p>

<p>"Instead, Trichet emphasized the need to fight inflation, saying "<strong>In demanding times of significant market correction and turbulences, it is the responsibility of the central bank to solidly anchor inflation expectations to avoid additional volatility in already highly volatile markets</strong>."</p>

<p>Wow, economic logic rather than reactionary actions. . .how weird is that?</p>
 
http://www.nytimes.com/2008/01/23/business/23leonhardt.html?_r=1&hp&oref=slogin

This NYT writer finaly hit the nail on the head. Cites a 30 percent decline in markets across Florida, California to make homes a more affordable and to establish rents and income parity - Thank you!
 
<p>"Why can we not get this guy as our Fed chairman?"</p>

<p>Yeah, I was saying the same thing when I first saw that on Bloomberg. Maybe the older (I mean really old) Europeans had taught their children well. These children are now 40-60 year old policy makers. The lessons of adding monetary inflation to existing inflation could lead to hyper-inflation, and how that ravaged Germany even before the War, and what it ultimately did to the whole world!</p>

<p>If the Fed dose follow through with another 50bps cut on their schedule meeting later this month, the pressure from the Euro/Dollar might be too great for the ECB of hold out much longer.</p>

<p>Thank goodness I have some Gold as a hedge, although I would much prefer my Gold position not to perform too well, and my dollars' buying power preserved.</p>
 
<p>The stock market has clearly violated yesterday's low. Will Bernanke take this as a cue that he is pushing on a string here and just let the markets do what needs to be done? or that he has not done enough? I fear he is thinking the latter.</p>

<p>First move: take the real fed funds rate to negative territory. Second move: when there is no more room for rate cuts (nominal rate hits zero), call in the helicopters, and live up to his reputation. Third move: resign and write a book that blames Greenspan.</p>
 
<p><a href="http://forums.irvinehousingblog.com/account/261/"><em>IrvineCommuter</em></a><em> said</em> </p>

<p><em>Someone on CNBC was saying how it was actually a 300 point rally from 10:30 a.m. EST. That is like saying that the patient is good since they only had to amputate one of his legs. </em></p>

Well, that's another 600 point rally today. What's that like saying?
 
<em>"Well, that's another 600 point rally today. What's that like saying?"</em>





Short covering. A sustainable rally requires buying by institutions who are planning to hold the asset for 3 to 5 years. Given the future outlook for depressed earnings, the institutions will not likely be loading the boat right now.
 
Maybe it's just me, but I prefer short term rallies. Buying when things are oversold and selling when things are overbought can be profitable. Especially when there are inverse ETFs and leveraged inverse ETFs that make playing the downside even easier.
 
I guess the 75 basis point cut was not enough...





<a href="http://calculatedrisk.blogspot.com/2008/01/fed-funds-market-expects-50bps-cut-next.html">Fed Funds: Market Expects 50bps Cut Next Week</a>
 
My point is that MSM is still trying to make it sound like nothing has happened. Nothing has changed economically and yet Wall Street still want to "rally". Look at the biggest "winners" today, they were banks and the homebuilders. Does that sound like good investments?
 
<p>Right.</p>

<p>I guess some douchebag discussions about POSSIBLY bailing out some bond insures magically vaporized the thousands of REO's on the market.</p>
 
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