Posted on 01/22/2008 7:36:58 AM PST by Perdogg
There's a global stock market tsunami gathering force. It may hit US shores very hard this morning.
Much of this is panic over a US recession threat that has yet to clearly materialize. The world sell-off also vastly over-estimates loan and credit problems among international financial institutions.
In any event, world central banks should immediately reduce rates and add liquidity first thing in the morning, no matter what the time-zone.
(Excerpt) Read more at realclearpolitics.com ...
I love reading Kudlow’s fairy tales. They’re thigh-slapping hilarious.
Gotta give the guy credit: he’s an optimist. He could be at the bottom of a deep mineshaft with water rising all around him and rubble coming down the shaft and he’d be saying “I can still see daylight, so we’re still in the mining business!”
Did you catch him this morning on CNBC? They asked him if the Fed move this morning indicated panic, and he said, no it wasn’t panic, they were just reacting to the plunge in the markets. Glad he cleared that up.
Yea, I heard that.
And he’s calling for an unprecedented, co-ordinated easing from world central banks... and this would indicate planning, not panic.
Riiight.
Kudlow is the #1 reason why I’m increasingly sarcastic at every pronouncement by economists. They’re so in love with their macro-economic indicators and so utterly disconnected from actual market action.
And rather than yell for help, he would close his eyes and quietly wait for the invisible hand of the market to lift him out.
In other words, they weren’t panicking, but reacting suddenly to panic. Heh.
Almost like Kudlow is on the govt payroll.
He’s like a broken record: Economy is fine, no recession and no bear market in sight.
When he goes bearish - load up! - it’ll be the bottom..
We’re clearly not in a depression.
The banking system is clearly having a liquidity crisis, which isn’t easily measured by economists and their silly government stats.
Damn TD Ameritrade won’t let me log into my account this morning. Anyone else have problems getting into this online broker?
The rest of the central banks need to address their own liquidity issues in their own national banking systems. That might or might not be done by playing with interest rates.
The ECB pushed a half-trillion dollars in short-term liquidity into the EU banking system just before Christmas - but they didn’t play with interest rates.
Volatility (the VIX) reached levels this morning similar to August and March of 2007. It’s likely that the market has reached a point where it might stabilize in the near and intermediate term (I’ve given up trying to call bottoms).
I think the Fed cut contributed to this, but then again, the markets in Europe rebounded nicely from their lows overnight. It’s possible that this was due to rumors of the Fed cutting and of other central banks preparing to cut.
Kudlow will never be content until he can get his Yahoo shares pumped back up to over $400. I don’t think that “fundamentals” is a word in his personal dictionary.
It isn’t panic. It’s the Fed acknowledging reality, and admitting that it’s been wrong (but for today only).
Kudlow is a Pollyanna, but he’s been calling for big rate cuts, and he acknowledges the yield curve as an indicator. He’s been right and the Fed has been wrong.
I’ll go with your “acknowledging reality” if you concede that the data that went into their famous oft-repeated policy of “data-based decision-making” that wasn’t obvious in the past week was multi-percent stock losses all over the world.
A guy on CNBC right now is claiming that MBIA/Ambac problems are the obvious catalyst for today’s Fed decision, but we all know that’s BS. How can a triple-A rated company issue bonds (1) at 14%, (2) that drop 30% in face value in two weeks. And it’s been obvious for weeks and weeks that MBIA, Ambac, et al are dead companies walking.
Ah the new CNBC guy and Kudlow wannabe Dennis Kneale is on, oh that guy is a trip.
Yea, he’s been calling for big rate cuts, true, but he keeps pointing to his silly economic indicators as a sign that “nothing is wrong!”
Here’s a fairly typical example of his nostrums:
http://kudlowsmoneypolitics.blogspot.com/2007/03/bull-run.html
He’s on the record from way back as saying that the sub-prime problems were small, contained and wouldn’t spread. Recent events with Ambac and MBIA sorta kick that premise into a bucket, eh? What’s he got to say about the CDS issue? Nada. Probably won’t recognize it is a problem until it is well along the blow-up curve.
The Fed... well, the Fed has been asleep at the switch all the way back to Greenspan’s reign. The Fed is clearly guilty of gross malfeasance WRT to absurd lending practices that created the liquidity crisis now, but that was mostly on Greenspan’s watch, and with Greenspan’s approval of “non-traditional mortgages” and so on.
What surprises me about Bernanke’s Fed tho is that the blow-up started last July. By August, the Fed could no longer ignore the issue. Now, if I were Fed Chair, I would have “invited” the heads of major money center banks down to a little pow-wow at the NY Fed and said: “No one expects the Spanish Inquisition! Confession is good for the soul! What do you have on and off your balance sheets, WTF is this crap, where is it, how much of it do you have and let’s talk about this ‘mark-to-model’ mental masturbation you guys have been doing!”
The Fed is behind the curve because they refuse to take actions they could take to get the data - not in dribs and drabs, but get a for-real, big-picture look at how big this mess is.
But Bernanke doesn’t want to exercise the authority the Fed has over the banking system. He (and Greenspan) are far too “hands off” about how the banking system is working - and the results are showing that the children need some supervision.
Kneale — watching him is like dropped acid. I hear colors and see sounds - and none of it makes any sense.
What I want to know is how the triple-A rated company’s CEO/CFO signed off on their SEC filings - and why they haven’t been arrested and charged with violations of SarbOx?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.