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So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
robo
Well-known member
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
Global: Tough Love
Stephen S. Roach (from Cap d'Antibes)
After years of excess accommodation, the US central bank may be trying to reclaim the "tough-guy" image that a credible monetary authority needs.
It’s been a long time since I said something positive about the Fed. That saddens me. The Board -- as insiders call the Washington-based Board of Governors of the Federal Reserve System -- was my first place of gainful employment after grad school. I spent seven wonderful years there in the 1970s, and there will always be a soft spot in my heart for this great institution. It has pained me no end to write of a Fed that lost its way in the bubble-infested waters of the past seven years. But now, for the first time in a long time, America seems about to get a meaningful dose of monetary discipline. Ironically, it could be tougher on the markets than on the economy. For investors, that’s a painful wake-up call, to be sure. But in the end, it’s absolutely essential in order to put an unbalanced, asset-dependent US economy on a sounder and more sustainable course. Three cheers for Ben Bernanke!
Of course, he hasn’t really done anything just yet. The Fed could disappoint -- and end up being all bluster and no action. Or there is always a chance it’s too late -- that America’s imbalances are so advanced, the only way out is the dreaded hard landing. But in my new role as the optimistic pessimist, I am willing to give Bernanke & Co. the benefit of the doubt. By talking tough in the context of only a fractional overshoot of inflation -- an overshoot that may be more statistical than real -- the Fed is sending an unmistakably clear message of a move to policy restraint. And by delivering that message in the context of down markets, the rhetoric of monetary discipline has an even stronger ring. If there’s ever been a time for America’s central bank to take on the markets, this must surely be it. Former Fed Chairman William McChesney Martin put it best in his legendary quip: "The job of the Federal Reserve is to take away the punchbowl just when the party is getting good." For years, the Fed has provided more than its share of refreshments at the biggest party of them all. Those days could now be drawing to an end.
A few weeks ago, I wrote of a crisis of confidence in central banking -- arguing that a profusion of asset bubbles was an increasingly perilous consequence of a successful journey on the road to price stability (see my 22 May dispatch, "Wake-Up Call for Central Banking"). My point was that at low levels of inflation, the policy rule of the inflation-targeting central bank results in exceedingly lower nominal interest rates -- the sustenance of an ever-expanding liquidity cycle. I argued that the monetary authority actually needs to broaden out its targets as it approaches price stability -- paying special attention to excesses building in asset markets. In effect, monetary policy needs to be conducted with an asymmetrical bias in those circumstances -- predisposed more toward tightening than accommodation. This has important tactical implications for the Fed: A tight-money bias at low inflation rates may well be essential if the US central bank is to succeed in satisfying its "dual mandate" of price stability and sustainable economic growth.
My reading of Ben Bernanke’s now-infamous 5 June statement is that he gets it. His hand-wringing over inflation actually seems exaggerated in the context of the downshift he is now expecting for US economic growth. In fact, his statement goes out of its way to speak of a transition to slower growth arising from the combination of higher energy prices and a cooling of the housing market. At the same time, his concern over inflation also seems at odds with some obvious statistical quirks in the aggregate price data. Yes, the core CPI is running at a 2.3% y-o-y rate through May -- in Bernanke’s telling words, "…at or above the upper end of the range that many economists, including myself, would consider consistent with price stability and the promotion of maximum long-run growth." The overshoot, however, is due entirely to the notorious "owner’s equivalent rent" of primary residences; excluding this key item -- fully 30% of the core CPI -- the core would have been 2.0% y-o-y in April ( and actually 1.9% excluding the entire shelter category). It is arguable whether the inflation alarm would even have been rung were it not for that statistical acceleration in one of the CPI’s most controversial components. And then, of course, there’s the financial market climate to consider -- an already-meaningful correction in global equity markets and a particularly sharp downdraft in risky assets such as emerging markets and commodities. In a still low-inflation climate, a risk-averse Fed might have been tempted to wait until the dust settles in the markets before flexing its policy muscle.
Bernanke’s conclusion that there has been an "unwelcome" deterioration of inflation -- and inflationary expectations -- can also be challenged on other grounds. The fractional rise in the hourly wage rate in May (+0.1%) throws cold water on the notion that tight labor markets are bidding up the price of labor. At the same time, the sharp recent correction in commodity prices challenges the belief that surging global growth is leading to a coincident boom in input prices that could further exacerbate incipient inflationary pressures. And on a structural basis, the ongoing pressures of globalization continue to act as powerful headwinds restraining any cyclical pressures building on the inflation front. Finally, there’s a tactical policy issue to ponder: At low inflation rates, the strict inflation-targeting central bank has the leeway to make a minor policy mistake; it can, in effect, afford to be late and come in after the fact with a monetary tightening -- suffering the consequences of what should be only a brief detour on the road to price stability. In short, there are plenty of reasons why Bernanke might have elected to wait out this so-called inflation scare. But he didn’t. In fact, he struck early in the game, and this message has been reinforced by a coordinated rhetorical assault by other members of the Fed’s policy-making body.
Maybe I’m reading too much into this, but I think there is an important implication of the Fed’s hair-trigger response to an arguable inflation scare: After years of excess accommodation, the US central bank may be trying to reclaim the "tough-guy" image that a credible monetary authority needs. And there is good reason to believe this sentiment is global in scope. Recent monetary tightenings by the ECB and by central banks in India, Korea, Turkey, South Africa, and even Iceland all speak to a similar disciplined mindset. And these actions all have comparable implications for the global liquidity cycle and world financial markets -- reducing the flow of high-octane fuel that has fed the multiple asset bubble syndrome of the past seven years. I am not saying that central banks are united in their views in targeting asset markets. But I do believe that a strict adherence to inflation targeting may have become a foil that now enables the authorities to turn their attention to other important issues -- namely, the increasingly dangerous excesses of a very powerful liquidity cycle.
This sudden outbreak of monetary discipline around the world very much fits the script of my newfound optimism on global rebalancing. The world’s biggest imbalance -- America’s current account deficit -- is a direct outgrowth of a property-bubble-induced shortfall of income-based saving. Lacking in domestic saving, the US must import surplus saving from abroad in order to grow -- and run massive current account and trade deficits in order to attract foreign capital. To the extent central banks have promoted asset-bubble-related global imbalances by overly accommodative monetary policies, an emerging bias toward monetary discipline is a very encouraging development on the road to global rebalancing. While it’s "tough love" for bruised investors, this may well end up being the requisite correction that clears the decks for the next upleg in the markets. Thank you, again, Ben Bernanke.
http://www.morganstanley.com/GEFdata/digests/latest-digest.html#anchor5
Global: Tough Love
Stephen S. Roach (from Cap d'Antibes)
After years of excess accommodation, the US central bank may be trying to reclaim the "tough-guy" image that a credible monetary authority needs.
It’s been a long time since I said something positive about the Fed. That saddens me. The Board -- as insiders call the Washington-based Board of Governors of the Federal Reserve System -- was my first place of gainful employment after grad school. I spent seven wonderful years there in the 1970s, and there will always be a soft spot in my heart for this great institution. It has pained me no end to write of a Fed that lost its way in the bubble-infested waters of the past seven years. But now, for the first time in a long time, America seems about to get a meaningful dose of monetary discipline. Ironically, it could be tougher on the markets than on the economy. For investors, that’s a painful wake-up call, to be sure. But in the end, it’s absolutely essential in order to put an unbalanced, asset-dependent US economy on a sounder and more sustainable course. Three cheers for Ben Bernanke!
Of course, he hasn’t really done anything just yet. The Fed could disappoint -- and end up being all bluster and no action. Or there is always a chance it’s too late -- that America’s imbalances are so advanced, the only way out is the dreaded hard landing. But in my new role as the optimistic pessimist, I am willing to give Bernanke & Co. the benefit of the doubt. By talking tough in the context of only a fractional overshoot of inflation -- an overshoot that may be more statistical than real -- the Fed is sending an unmistakably clear message of a move to policy restraint. And by delivering that message in the context of down markets, the rhetoric of monetary discipline has an even stronger ring. If there’s ever been a time for America’s central bank to take on the markets, this must surely be it. Former Fed Chairman William McChesney Martin put it best in his legendary quip: "The job of the Federal Reserve is to take away the punchbowl just when the party is getting good." For years, the Fed has provided more than its share of refreshments at the biggest party of them all. Those days could now be drawing to an end.
A few weeks ago, I wrote of a crisis of confidence in central banking -- arguing that a profusion of asset bubbles was an increasingly perilous consequence of a successful journey on the road to price stability (see my 22 May dispatch, "Wake-Up Call for Central Banking"). My point was that at low levels of inflation, the policy rule of the inflation-targeting central bank results in exceedingly lower nominal interest rates -- the sustenance of an ever-expanding liquidity cycle. I argued that the monetary authority actually needs to broaden out its targets as it approaches price stability -- paying special attention to excesses building in asset markets. In effect, monetary policy needs to be conducted with an asymmetrical bias in those circumstances -- predisposed more toward tightening than accommodation. This has important tactical implications for the Fed: A tight-money bias at low inflation rates may well be essential if the US central bank is to succeed in satisfying its "dual mandate" of price stability and sustainable economic growth.
My reading of Ben Bernanke’s now-infamous 5 June statement is that he gets it. His hand-wringing over inflation actually seems exaggerated in the context of the downshift he is now expecting for US economic growth. In fact, his statement goes out of its way to speak of a transition to slower growth arising from the combination of higher energy prices and a cooling of the housing market. At the same time, his concern over inflation also seems at odds with some obvious statistical quirks in the aggregate price data. Yes, the core CPI is running at a 2.3% y-o-y rate through May -- in Bernanke’s telling words, "…at or above the upper end of the range that many economists, including myself, would consider consistent with price stability and the promotion of maximum long-run growth." The overshoot, however, is due entirely to the notorious "owner’s equivalent rent" of primary residences; excluding this key item -- fully 30% of the core CPI -- the core would have been 2.0% y-o-y in April ( and actually 1.9% excluding the entire shelter category). It is arguable whether the inflation alarm would even have been rung were it not for that statistical acceleration in one of the CPI’s most controversial components. And then, of course, there’s the financial market climate to consider -- an already-meaningful correction in global equity markets and a particularly sharp downdraft in risky assets such as emerging markets and commodities. In a still low-inflation climate, a risk-averse Fed might have been tempted to wait until the dust settles in the markets before flexing its policy muscle.
Bernanke’s conclusion that there has been an "unwelcome" deterioration of inflation -- and inflationary expectations -- can also be challenged on other grounds. The fractional rise in the hourly wage rate in May (+0.1%) throws cold water on the notion that tight labor markets are bidding up the price of labor. At the same time, the sharp recent correction in commodity prices challenges the belief that surging global growth is leading to a coincident boom in input prices that could further exacerbate incipient inflationary pressures. And on a structural basis, the ongoing pressures of globalization continue to act as powerful headwinds restraining any cyclical pressures building on the inflation front. Finally, there’s a tactical policy issue to ponder: At low inflation rates, the strict inflation-targeting central bank has the leeway to make a minor policy mistake; it can, in effect, afford to be late and come in after the fact with a monetary tightening -- suffering the consequences of what should be only a brief detour on the road to price stability. In short, there are plenty of reasons why Bernanke might have elected to wait out this so-called inflation scare. But he didn’t. In fact, he struck early in the game, and this message has been reinforced by a coordinated rhetorical assault by other members of the Fed’s policy-making body.
Maybe I’m reading too much into this, but I think there is an important implication of the Fed’s hair-trigger response to an arguable inflation scare: After years of excess accommodation, the US central bank may be trying to reclaim the "tough-guy" image that a credible monetary authority needs. And there is good reason to believe this sentiment is global in scope. Recent monetary tightenings by the ECB and by central banks in India, Korea, Turkey, South Africa, and even Iceland all speak to a similar disciplined mindset. And these actions all have comparable implications for the global liquidity cycle and world financial markets -- reducing the flow of high-octane fuel that has fed the multiple asset bubble syndrome of the past seven years. I am not saying that central banks are united in their views in targeting asset markets. But I do believe that a strict adherence to inflation targeting may have become a foil that now enables the authorities to turn their attention to other important issues -- namely, the increasingly dangerous excesses of a very powerful liquidity cycle.
This sudden outbreak of monetary discipline around the world very much fits the script of my newfound optimism on global rebalancing. The world’s biggest imbalance -- America’s current account deficit -- is a direct outgrowth of a property-bubble-induced shortfall of income-based saving. Lacking in domestic saving, the US must import surplus saving from abroad in order to grow -- and run massive current account and trade deficits in order to attract foreign capital. To the extent central banks have promoted asset-bubble-related global imbalances by overly accommodative monetary policies, an emerging bias toward monetary discipline is a very encouraging development on the road to global rebalancing. While it’s "tough love" for bruised investors, this may well end up being the requisite correction that clears the decks for the next upleg in the markets. Thank you, again, Ben Bernanke.
http://www.morganstanley.com/GEFdata/digests/latest-digest.html#anchor5
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
Thanks robo; another good weekend evening read. You sure visit allot of different areas throughout the day. All I seem to find is the cookie cutter mainstream stuff. These reads are very helpful and do shed light on what many feel are complicated financial matters. Thanks.
Thanks robo; another good weekend evening read. You sure visit allot of different areas throughout the day. All I seem to find is the cookie cutter mainstream stuff. These reads are very helpful and do shed light on what many feel are complicated financial matters. Thanks.
robo
Well-known member
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
June 10, 2006
Central Bankers of the World, Unite Again!
by John Mauldin
Is the Fed right to be worried about inflation, or is that so last quarter? What do musty old academic papers suggest about Fed policy? And can we translate that into something that gives us a clue as to why markets around the world are in seeming lockstep on their way to the exits? (Quick, guess which market has done the best in the last month. No peeking!) Whatever happened to the diversification of our portfolios? This week we look at a wide range of topics trying to get some insights into where the markets are headed this summer.
http://www.safehaven.com/article-5330.htm
June 10, 2006
Central Bankers of the World, Unite Again!
by John Mauldin
Is the Fed right to be worried about inflation, or is that so last quarter? What do musty old academic papers suggest about Fed policy? And can we translate that into something that gives us a clue as to why markets around the world are in seeming lockstep on their way to the exits? (Quick, guess which market has done the best in the last month. No peeking!) Whatever happened to the diversification of our portfolios? This week we look at a wide range of topics trying to get some insights into where the markets are headed this summer.
http://www.safehaven.com/article-5330.htm
Wimpy
Member
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
The assumption, at least the way I'm reading Mauldin, is the central banks are in charge. I think the central banks are scared. Something has scared them real bad. The hedge fund crisis is now estimated to swing a 7 trillion dollar line. That is enough money to bury every central bank in the world and they know it.
All the central banksters can really do is bark. Once it becomes apparent they are a bunch of toothless old hounds...the barking (raising rates) won't have any effect. The world will realize all central banksters can do is print baskets full of junk.
And I disagree with Mauldin on his point they (central banks) are draining the liquidity from the system. At some point along this path raising rates will have exactly the opposite effect and interests rates will have to soar so high they will suck money off the moon. Until rates hit 20% plus we will be buried in paper as no one, anywhere, will want the monopoly money. There will be a mad dash for tangibles.
There will be jawboning and barking until it doesn't work anymore. Once the flinching stops the hedge fund black boxes will again be jumping on momentum wherever it is to be found. The central banksters will become insignificant little speed bumps and will be ignored.
These bureaucrats can be maligned, ridiculed, scorned and cussed, but the one thing that drives these ego maniacs insane is to be ignored. I'm grabbing a bag of popcorn and settling in for the show.
Side Note (and not a response to Robo): I'm still 100% I-Fund. Listening to all the whining and sniveling on this board over the recent market action would make one think they had rolled the dice in Vegas with money borrowed on their parent's farm...and lost it all. For goodness sakes, if you can't stand the heat get out of the kitchen and go back to your G-Fund and stay there...forever! You are rocking the boat with your jumping in and out and splashing water all over my reading material.
robo said:
The assumption, at least the way I'm reading Mauldin, is the central banks are in charge. I think the central banks are scared. Something has scared them real bad. The hedge fund crisis is now estimated to swing a 7 trillion dollar line. That is enough money to bury every central bank in the world and they know it.
All the central banksters can really do is bark. Once it becomes apparent they are a bunch of toothless old hounds...the barking (raising rates) won't have any effect. The world will realize all central banksters can do is print baskets full of junk.
And I disagree with Mauldin on his point they (central banks) are draining the liquidity from the system. At some point along this path raising rates will have exactly the opposite effect and interests rates will have to soar so high they will suck money off the moon. Until rates hit 20% plus we will be buried in paper as no one, anywhere, will want the monopoly money. There will be a mad dash for tangibles.
There will be jawboning and barking until it doesn't work anymore. Once the flinching stops the hedge fund black boxes will again be jumping on momentum wherever it is to be found. The central banksters will become insignificant little speed bumps and will be ignored.
These bureaucrats can be maligned, ridiculed, scorned and cussed, but the one thing that drives these ego maniacs insane is to be ignored. I'm grabbing a bag of popcorn and settling in for the show.
Side Note (and not a response to Robo): I'm still 100% I-Fund. Listening to all the whining and sniveling on this board over the recent market action would make one think they had rolled the dice in Vegas with money borrowed on their parent's farm...and lost it all. For goodness sakes, if you can't stand the heat get out of the kitchen and go back to your G-Fund and stay there...forever! You are rocking the boat with your jumping in and out and splashing water all over my reading material.
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
You know robo, if memory serves me correctly, I read somewhere in Ichiro's main thread he felt the I-Fund could likely see an 18% year in 2006. Even with all that's been shaking up the world markets... I kinda still can see it too. I've had my eyes on the world market numbers & the TSP I Fund particularly; have it clocked at 5.79% as of 9 JUNE 2006 for this year. 18% is still do-able. I'm not real sure about the C & S Funds being able to beat out the I Fund this year, but as you know... stranger things have happened.
You know robo, if memory serves me correctly, I read somewhere in Ichiro's main thread he felt the I-Fund could likely see an 18% year in 2006. Even with all that's been shaking up the world markets... I kinda still can see it too. I've had my eyes on the world market numbers & the TSP I Fund particularly; have it clocked at 5.79% as of 9 JUNE 2006 for this year. 18% is still do-able. I'm not real sure about the C & S Funds being able to beat out the I Fund this year, but as you know... stranger things have happened.
robo said:
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
OK Wimpy, I'm still just trying to understand this hedge funding business. I read this: Hedge funds elect to operate as unregistered investment companies. As a result, interests in a hedge fund cannot be offered or advertised to the general public, and are limited to individuals who are both "accredited investors" (those who have total incomes of over US$200,000 per year or a net worth of over US$1,000,000) and "qualified purchasers" (who own at least US$5,000,000 in qualified investments). Further, any one hedge fund is limited to 499 investors ("limited partners"). For the funds, the trade off is that they have fewer investors to sell to, but they have few government imposed restrictions on their investment strategies. The presumption is that hedge funds are pursuing more risky strategies, which may or may not be true depending on the fund, and that the ability to invest in these funds should be restricted to wealthier investors who are presumed to be more sophisticated and who have the financial reserves to absorb a possible loss.
http://en.wikipedia.org/wiki/Hedge_fund
So... is it the central banksters that will have to cough up the money these SEC unregulated mega rich hedge hogs are going to loose?
Man, I'm sorry for rocking your boat. I'm getting out. This is me, with my bamboo snag pole heading back to shore. :embarrest:
OK Wimpy, I'm still just trying to understand this hedge funding business. I read this: Hedge funds elect to operate as unregistered investment companies. As a result, interests in a hedge fund cannot be offered or advertised to the general public, and are limited to individuals who are both "accredited investors" (those who have total incomes of over US$200,000 per year or a net worth of over US$1,000,000) and "qualified purchasers" (who own at least US$5,000,000 in qualified investments). Further, any one hedge fund is limited to 499 investors ("limited partners"). For the funds, the trade off is that they have fewer investors to sell to, but they have few government imposed restrictions on their investment strategies. The presumption is that hedge funds are pursuing more risky strategies, which may or may not be true depending on the fund, and that the ability to invest in these funds should be restricted to wealthier investors who are presumed to be more sophisticated and who have the financial reserves to absorb a possible loss.
http://en.wikipedia.org/wiki/Hedge_fund
So... is it the central banksters that will have to cough up the money these SEC unregulated mega rich hedge hogs are going to loose?
Man, I'm sorry for rocking your boat. I'm getting out. This is me, with my bamboo snag pole heading back to shore. :embarrest:
Wimpy said:The assumption, at least the way I'm reading Mauldin, is the central banks are in charge. I think the central banks are scared. Something has scared them real bad. The hedge fund crisis is now estimated to swing a 7 trillion dollar line. That is enough money to bury every central bank in the world and they know it.
All the central banksters can really do is bark. Once it becomes apparent they are a bunch of toothless old hounds...the barking (raising rates) won't have any effect. The world will realize all central banksters can do is print baskets full of junk.
And I disagree with Mauldin on his point they (central banks) are draining the liquidity from the system. At some point along this path raising rates will have exactly the opposite effect and interests rates will have to soar so high they will suck money off the moon. Until rates hit 20% plus we will be buried in paper as no one, anywhere, will want the monopoly money. There will be a mad dash for tangibles.
There will be jawboning and barking until it doesn't work anymore. Once the flinching stops the hedge fund black boxes will again be jumping on momentum wherever it is to be found. The central banksters will become insignificant little speed bumps and will be ignored.
These bureaucrats can be maligned, ridiculed, scorned and cussed, but the one thing that drives these ego maniacs insane is to be ignored. I'm grabbing a bag of popcorn and settling in for the show.
Side Note (and not a response to Robo): I'm still 100% I-Fund. Listening to all the whining and sniveling on this board over the recent market action would make one think they had rolled the dice in Vegas with money borrowed on their parent's farm...and lost it all. For goodness sakes, if you can't stand the heat get out of the kitchen and go back to your G-Fund and stay there...forever! You are rocking the boat with your jumping in and out and splashing water all over my reading material.
Wimpy
Member
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
There will be an attempt to paper over the losses, but this ultimately creates distrust of ALL paper and stampedes money into gold and other tangibles. Central banksters hate gold and can't stand to see the price of it rise. It very effectively pulls back the curtain on their mischief.
The real losers in this fiasco are those who don't protect themselves from central bankster counterfeiting operations.
Fivetears said:OK Wimpy, I'm still just trying to understand this hedge funding business. So... is it the central banksters that will have to cough up the money these SEC unregulated mega rich hedge hogs are going to loose?
There will be an attempt to paper over the losses, but this ultimately creates distrust of ALL paper and stampedes money into gold and other tangibles. Central banksters hate gold and can't stand to see the price of it rise. It very effectively pulls back the curtain on their mischief.
The real losers in this fiasco are those who don't protect themselves from central bankster counterfeiting operations.
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
http://www.nytimes.com/2006/06/11/m...d=3&ei=5070&en=e835dc2046e312ab&ex=1150862400
It may need to be kickstarted to page one.
http://www.nytimes.com/2006/06/11/m...d=3&ei=5070&en=e835dc2046e312ab&ex=1150862400
It may need to be kickstarted to page one.
Birchtree
Well-known member
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
Wimpy,
You sure earned my admiration. Anyone that can take a $2.55 hit and hold the Marginot Line has displayed triumphant courage while under duress. Another that knows the virtues of pain management - have you reached the point where the body blows are starting to feel good. You more than likely will never see $18.00 again on the I fund. Recognizing your desire for cash - if I had some I would gladly lend you some for more purchases.
Dennis
Wimpy,
You sure earned my admiration. Anyone that can take a $2.55 hit and hold the Marginot Line has displayed triumphant courage while under duress. Another that knows the virtues of pain management - have you reached the point where the body blows are starting to feel good. You more than likely will never see $18.00 again on the I fund. Recognizing your desire for cash - if I had some I would gladly lend you some for more purchases.
Dennis
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
Those on the Fed open market committee who vote are human. Listening to Brinker's program yesterday he pointed out that the Fed increased interest rates 50 basis points around and end of the 1st or the beginning of the 2nd quarter in 2000 ... just as the stock market was slowly tanking to its low level around March 2003.
Could they blow it again with rate hikes beyond 5.5%? Most definately.
Those on the Fed open market committee who vote are human. Listening to Brinker's program yesterday he pointed out that the Fed increased interest rates 50 basis points around and end of the 1st or the beginning of the 2nd quarter in 2000 ... just as the stock market was slowly tanking to its low level around March 2003.
Could they blow it again with rate hikes beyond 5.5%? Most definately.
robo
Well-known member
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
Quips,
In my opinion the Fed will only go 1/4%! It's pretty much baked in the cake and in the Market. It's the language that will be the market mover. Do you get Money Talk on Demand or Bob's Market Timer. I get both and worth the money.
Quips,
In my opinion the Fed will only go 1/4%! It's pretty much baked in the cake and in the Market. It's the language that will be the market mover. Do you get Money Talk on Demand or Bob's Market Timer. I get both and worth the money.
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
I don't think a .5% hike would be so bad. As long as the language was "OK now we're done". I believe we are in pretty good shape this week for a rally no matter what the Fed does. A pause would be welcomed, a .25% hike is, as you say, baked in, and .5% with the right language would give investors that measure of certainty that they are always looking for.
Having said that, I've given you a day or two warning to head for the hills.
Dave
<><
robo said:
I don't think a .5% hike would be so bad. As long as the language was "OK now we're done". I believe we are in pretty good shape this week for a rally no matter what the Fed does. A pause would be welcomed, a .25% hike is, as you say, baked in, and .5% with the right language would give investors that measure of certainty that they are always looking for.
Having said that, I've given you a day or two warning to head for the hills.
Dave
<><
D
Dave M
Guest
Robo, the chart in the Safe Haven article would've made our M_Mate happy, I think. But the geographical clustering is interesting. Why? Also, his emphasis on expectations is instructive.
Dave
Dave
Re: So, how bad could our TSP Accounts be hurt by who Bush picks to replace Greenspan?
I get Brinker's newletter and tune in to his weekend program either on the pc or the local radio.
Oil is still the thorn in the side of investors. Brinker swears up and down that high gasoline prices -- if anything -- act as a tax on the economy and are NOT inflationary. I tried to call his show a few times to ask about big picture about the phenomena: those billions of dollars going overseas to the generally unsympathetic, unfriendly nations that we import our oil from.
What do they do with all those dollars? Buy treasuries or buy gold and other commodities? Or do they just spend them?
If the Fed would want to find a useful purpose I would say it should track the dollars we spend for OPEC oil and find out, really, where it is all going to. Then maybe we could have a clearer picture of inflation risk, if not worse things.
I get Brinker's newletter and tune in to his weekend program either on the pc or the local radio.
Oil is still the thorn in the side of investors. Brinker swears up and down that high gasoline prices -- if anything -- act as a tax on the economy and are NOT inflationary. I tried to call his show a few times to ask about big picture about the phenomena: those billions of dollars going overseas to the generally unsympathetic, unfriendly nations that we import our oil from.
What do they do with all those dollars? Buy treasuries or buy gold and other commodities? Or do they just spend them?
If the Fed would want to find a useful purpose I would say it should track the dollars we spend for OPEC oil and find out, really, where it is all going to. Then maybe we could have a clearer picture of inflation risk, if not worse things.
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