Fed Theory - what do YOU think will happen?

[Tet]

Re: Fed Theory - what do YOU think will happen?

BOE may still be running things. We'll find out after 9/18.

By the way, the word is pronounced Empah and some believe that the US is being eased back into it. Remember, Sir Colin Powell received his Knighthood from the Queen.

I notice Sir Alan Greenspan received his, plus Sir Templeton. I don't disagree that the BOE still runs things, it's just that they can do so from this side of the pond.

[c1ue]

Re: Fed Theory - what do YOU think will happen?

I agree with Rick Bishop. It's going to be an astounding, market confounding 'no cut' and all us longs in gold and silver are gonna take a bath.

Bernanke then gets to strut around proclaiming his stern central banker credentials.

Lukester, RickB,

Note I am saying that a 25 bp cut will also tank the markets, but not as much as a no cut.

What no cut means is that China has directly threatened the T-bond nuclear option if there were a cut.

Bernanke has the backbone of an amoeba - there can be no other explanation. So far he has talked tough, but done every single possible thing to drive down interest rates and increase credit EXCEPT cut the funds rate.

What makes the funds rate so different? Nothing other than that it would officially and publicly mark him for what he truly is.

And to be fair, what the rest of the Fed governor's are. B-nank is after all only the spokes-model.

[Guest]

Re: Fed Theory - what do YOU think will happen?

C1ue -

You wrote: << Bernanke has the backbone of an amoeba >>

You want to take this up with Flow5? Good luck! He even has Finster and Bart waving the white flag, out in sheer exhaustion. ( Flow5 is LAVA !! )

[c1ue]

Re: Fed Theory - what do YOU think will happen?

You want to take this up with Flow5? Good luck! He even has Finster and Bart waving the white flag, out in sheer exhaustion.

You're just trying to start a fight - lava and glacier :p

Seriously, I don't see anything from flow5 that contradicts what I said - he is just exploring the many other ways B-Nank can do the dirty without necessarily cutting the funds rate.

Same goal, different tools.

[rabot10]

Re: Fed Theory - what do YOU think will happen?

I agree with Rick Bishop. It's going to be an astounding, market confounding 'no cut' and all us longs in gold and silver are gonna take a bath.

Bernanke then gets to strut around proclaiming his stern central banker credentials.

Rick does this mean we have to split the pot if we win the call, or do you get to win the pot alone 'cause you placed the bet first? Or are you gonna give me the pot because I'm starving over here?

It's all mine Lukester lol. And I don't think that we will take a bath on Gold or Silver, jmho

[rabot10]

Re: Fed Theory - what do YOU think will happen?

I would think business already stopped spending and home buyers already stopped buying. Too late in the game not to give the cut, I don't think it's in anyone's best interest for Fed Surprises. ECB cuts, Canada cuts, NZ cuts, Australia cuts, Japan doesn't raise, South Africa cuts, Brazil continues to cut, Russia cuts, China cuts and the race to zero begins.

Hey U could be correct I’m just guessing, and as many of my friends would say I am an Idiot lol. But I must point out I have a lot more money than any of my friends

[Guest]

Re: Fed Theory - what do YOU think will happen?

Rick Bishop -

You wrote:

<< But I must point out I have a lot more money than any of my friends >>

Good so it's settled. If you win this bet despite all odds, I get the pot, 'cause I'm not yet comfortable with how much money I have and also, I suspect my friends are doing a lot better than they have been letting on. :rolleyes:

[rabot10]

Re: Fed Theory - what do YOU think will happen?

Hey I wanted to get my point across – what I am thinking is the Fed only has so many bullets to play. (lowered rates) Ok if that is the case it may be to soon to shoot the first one – they may want to wait and see what happens before they move. I guess we will see next week.

[Guest]

Re: Fed Theory - what do YOU think will happen?

Deflation is grinning and gaping back at the Fed like a black hole - at the outermost edges there is only a whisper of gravity. The savvier Fed governors know that little whisper of gravity can suck them down faster than they know how to counter.

The academic newbie on the FedHead seat may be a rookie, but I doubt he's by any means stupid. He must be aware that hanging around till the last second before giving the markets some air is walking a very fine line in our present environment.

"No cut" is the long end of the odds, not the short, likelier end.

[Ant]

Re: Fed Theory - what do YOU think will happen?

I guess no one else is willing to risk their carefully-cultured iTulip reputation to speculate here on the Fed, etc.:rolleyes:

bok bok bok bagawk

Ok, you goaded me into it... :P

While I'm aware that this is a long shot, I predict that the Bernanke Fed will hold rates where they are.

They will also keep the discount window open, keep their existing bias, and make concerned noises in their comments about housing, etc.

Reasoning:

1) Oil, Gold, and every other commodity priced in dollars - 'nuff said.

2) While I've stated elsewhere my conviction that the overall jobs situation is a lot weaker than the number indicates, the fact is that the number is still pretty good, and with Boomer retirements pending, is likely to stay that way.

3) Recent operations have shown that the Fed does not need to cut FF in order to provide necessary liquidity.

There's more, but you guys know most of it a lot better than I do, so I'll end it there.

I'm a little nervous about this prediction given that the Street is 100% unanimous in predicting a cut, and they undoubtedly have better information at their disposal than I do... will see how I do tomorrow

[c1ue]

Re: Fed Theory - what do YOU think will happen?

Ant,

I hope they do what you say, but I have no faith in that.

My 'Fed Model' is as follows:

1) Protect interests of Reserve Banks including JP Morgan
2) Protect interests of the financial system
3) Maintain Fed aura
4) Keep the American government happy or at least neutral
5) Keep the American people happy

Foreigners don't count - they neither vote nor employ ex-Fed heads. Commodity prices fall into the same category - since everything is imported, it is a trivial exercise to point to price increases as 'foreign profiteering' or 'corporate profiteering' as opposed to the monetary inflation it is.

We're at the stage where both the reserve banks and the financial system is in trouble - this is more important than anything else.

The only reason 3) isn't already out the door is the banker's inherent dislike for all or nothing behaviors - why kill the Fed credibility built up since Volcker unless there is a guaranteed positive outcome?

[Rajiv]

Re: Fed Theory - what do YOU think will happen?

A half point as I said -- the drunken spree continues!

[c1ue]

Re: Fed Theory - what do YOU think will happen?

Well, now we know.

Fed aura doesn't matter.

B-nank is a full shill.

Let the dollar collapse begin!

[zoog]

Re: Fed Theory - what do YOU think will happen?

A half point as I said -- the drunken spree continues!

Looks like Rajiv wins a wooden nickel, or somethin.

[Guest]

Re: Fed Theory - what do YOU think will happen?

The fix is in - 50 basis point cut!

Bernanke the stern inflation hawk has spoken.