The current state of Washington is a mess. Congress can't pass basic laws in area where 90% of Americans agree, Bernanke has been operating on his own for years, and policy has never been so out of line with the American People as it is today.
07/11/13 02:31 PM EDT
What in the world is Ben Bernanke doing?
What is so frightening about what is going on right now is that this un-elected, un-accountable individual has the power to change the entire risk parameters of the economy with an un-qualified market timing opinion that spits in the face of economic data. If you didn’t know that an un-elected central planner could change the entire complexion of risk overnight, now you know.
Look, I get the whole fear-mongering, love for Ben thing. Politicians and bankers who put the country on the brink saved us from themselves in 2008 – or so they claim. Even if you believe that, that was back in 2008-2009. We’re half-way through 2013 for God’s sake.
The last time I saw disgraced Lehman CEO Dick Fuld, he was living large at my golf club. Meanwhile, Tim “Turbo Tax” Geithner just got paid $200,000 to speak at an #OldWall conference. And bankers who are long FICC (Fixed Income, Currencies, Commodities) not to mention Bill Gross, have been begging and pleading with Bernanke for more ultra easy money. Is this the society Ben Franklin and Thomas Jefferson had in mind?
If it’s not self-evident to you by now that markets are going squirrelly on this, your internet connection must be down. Pardon the pun, but in a nutshell:
1. American Purchasing Power (US Dollar) is getting pounded on this
2. Gold, Silver, Oil, etc. (Bernanke Bubbles) are all ripping
3. Treasury Yields are having their 4th down-day in a row, after rising on employment #GrowthAccelerating
So here’s the deal: Ben Bernanke is not only going to a) time the economic cycle (even though his growth forecasts have been wrong 58-73% of the time, depending on what year you use), he’s also going to b) time the market cycle.
That’s just great.
Actually, to be balanced, what he’d say he’s attempting to do (which is unprecedented by the way during a recovery) isn’t timing, per se. I think these Keynesian types who have never risk managed a market or run a business in their life call it “smoothing.”
I call that reckless.
Here’s my policy advice: longer-term, Mr. Market is already pricing in #StrongDollar and #RatesRising. So just let it go pal. Let free-market prices and economic cycles clear. Or do what you’re doing and your legacy will be that of someone who kept trying to re-flate bubbles as they were blowing up.
If Bernanke doesn’t take Mr. Market’s advice on this, here’s what is most likely going to happen:
1. US Dollar Debauchery = Commodity Reflation
2. Commodity Reflation = Consumption #GrowthSlowing
In other words, with Oil prices ripping higher above the key, long-term risk line of $108.11/barrel earlier this morning, Bernanke once again clobbers everyday Americans. This is Washington at its finest: Congress can’t pass basic laws in areas where 90% of Americans agree; Bernanke has been operating on his own for years, but his policy has never been so out of line with the American People as it is today. It doesn’t take a Princeton PhD to recognize that inflation at the gas pump is a massive, and instantaneous, tax hike. Or doesn’t Bernanke remember the impact on consumers when he cut rates too early in the summer of 2008 – and triggered an oil spike to $150 a barrel?
Higher oil prices slow growth – prepare for that, new as of today, compliments of Bernanke.
This is not new territory for this conflicted monetary cat. Remember what he did with his “communication tooling” in September of 2012? He said he would print to infinity and beyond. Commodities, most notably gold, had their last hurrah on that.Then, within 2-3 months, markets were in bedlam, US Consumption growth tanked, and the USA printed a pathetic Q412 GDP number of 0.38%! Just awesome.
It’s especially awesome for the guy who gets paid to run Gold Bond funds. Why don’t we take rips on this volatility roller coaster over and over and over again? Bernanke is on the switch – we’ll have 3 coasters on the same track at the same time; he’s wicked good on timing! Indeed, he creates the timing. It must be awesome, playing God with people’s lives.
Speaking of God, what’s my economic strategy this morning? Prayer.
Seriously, what on God’s good earth (the actual God now, not the un-elected one) am I supposed to recommend you do on this? Lever yourself up with asset classes that are crashing? Fortuitously, we aren’t short anything related to Bernanke’s banker boy bonuses (FICC – Fixed Income, Currencies, Commodities). And we’re not short anything PIMCO yet either, so maybe I’ll just sell everything and take the rest of the summer off.
I’m getting really tired of all this un-American central planning anyway. We’ve had a great year, and there’s no way I’m letting whoever this guy thinks he is make me give it all back.
Americans, look at your dollars while you still got ‘em. “In God We Trust” it says. Not un-elected central planners.
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