-- Posted Friday, 9 November 2007 | Digg This Article | Source: GoldSeek.com
Rick’s Picks
Friday, November 9, 2007
“Phenomenally accurate forecasts”
To many of those who attempted to trade yesterday, the yo-yo action may have seemed like a game of “fetch” with a dog. You toss the ball as far as you can, Fido brings it back to you, panting for more. You fling the ball even harder the next time. Pooch tirelessly retrieves it, then does it again. And again. And again. And so it went yesterday on the New York Stock Exchange. Each toss sailed a little farther, until finally, with two hours remaining in the session, a particularly energetic fling sent the Dow Industrials down 220 points. Would Fido be able to find the ball, much less retrieve it? You needn’t have asked. With the clock running out on the game, the dog scampered down the field, picked the ball up in his teeth, then ran an obstacle course back to the source, pausing to sniff anything that moved or had been peed on.
Some attributed the stock market’s less than miraculous recovery to the usual short-squeeze factors. And of course, there was plenty of that. But there was also Helicopter Ben, who was on Capitol Hill yesterday telling it like it is. Sort of. We can’t recall ever seeing stocks tank on a day when a Fed Chairman was testifying before Congress, and yesterday was no exception. Not that Bernanke had much to say. He called the economy “resilient,” a description that would be hard to refute. It’s an understatement, really, considering that consumers appear to be chugging along even though the country is in the midst of the worst real estate downturn since the Great Depression.
A Coy Fed Chairman
Bernanke allowed himself a pat on the back when he asserted that recent easing by the Fed had put inflation and the risks to growth roughly in balance. But he was being a bit coy here, since, as everyone knows, a little inflation in the housing sector would be as welcome right now as rain in the middle of a drought. Maybe it’s time to give the Fed chairman a new nickname, since the helicopter from which he supposedly stood ready to dispense hundred dollar bills to beleaguered debtors is never going to get off the launching pad, not as long as he continues to spout the oddly illogical argument of future inflation in a debt-saturated world. In fact, we are at the beginning of a deflationary collapse whose destructive power will come from more than $500+ trillion worth of metaphysical financial instruments currently in play globally. Under the circumstances, inflation is going to be about as big a worry as whether our house pets are getting enough fiber in their diets.
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