Senator Jim Bunning threw a strike right down the plate with his excoriation of
Bernanke & Co and the Fed today. Bernanke offered no response. But Hall of
Famer Bunning still knows how to pitch that’s for sure. [Some say he isn’t right
mentally but he was throwing strikes today and sounded the sanest of the bunch.]
The rest of the pols just mumbled the same garbage while a couple of
spotlight seekers [you know who they are] wanted to discuss short-selling and
speculation. I guess they only want to discuss the latter when things aren’t
going their way.
But, Bunning has things right.
“I'm deeply
concerned about what the Fed has done in the last year and in the last decade.
Chairman Greenspan's easy money in the late 90s and then following the tech bust
inflated the housing bubble and created the mess we are in today
.
Chairman Bernanke's easy money in the last year has undermined the dollar and
sent oil to a new high every day and an almost doubling since the rate cuts
started.
The Fed is asking for more power but the Fed has
proven that they can not be trusted with the power they have. They get it wrong,
do not use it, or stretch it farther than it was supposed to go in the first
place. As I said a moment ago, their monetary policy is the leading cause of the
mess we are in. As regulators, it took until yesterday to use the power we gave
them in 1994 to regulate all mortgage lenders and then they stretched their
authority by buying $29 billion worth of Bear Stearns assets so J.P. Morgan
could buy Bear Stearns at a deep discount.
Now the Fed wants to be a
systemic risk regulator, but
the Fed is a systemic risk.
Giving the Fed more power is like giving a neighborhood kid who broke a window
playing baseball on the street a bigger bat and thinking that will fix the
problem.”
Amen, brother!
The other big news today was oil prices
dropping nearly 5% today. I think you have to expect this kind of volatility at
these prices. Will consumers be encouraged by this? Hardly.
Today’s
volume and breadth data reflect a market favoring a few big names while most
issues are falling.
Stocks rallied on the oil price drops but by the end of
trading still couldn’t overcome other prevailing problems.
The markets are oversold. In an environment like this
they can stay that way longer than most expect. It is a bear market but rallies,
sometimes breathtaking, happen as well. So, if you’re not short already, you
would be taking chances initiating fresh positions here. There will be plenty of
pundits trying to get you to bottom pick their offerings. Be very careful in
that regard.
I think Senator Bunning acquitted himself well today and
Bernanke’s silence was telling. Bush made a horrible presentation today but
public speaking has never been his strong suit. I didn’t listen to Paulson &
Co.
Have a pleasant evening.
Disclaimer: Among other issues the
ETF Digest maintains long or short positions in: SPY, SDS, MZZ, IWM, TWM, QQQQ, QLD, XLY, SCC, XLI, SIJ, IYR, SRS, GLD, DBP, DBA, DAG, EFA, EFU, EEM, EEV, EWJ, EWV, EWZ, RSX, FXI and FXP.
