T*C
发帖数: 5492 | 1 http://seekingalpha.com/article/868661-enough-already-with-the-
When Ben Bernanke became chairman of the Federal Reserve in 2006 he promised
a significant change. The Fed would be much more "transparent" in letting
markets and the public know more about its inner workings, its concerns, its
internal debates, its potential decisions. He has certainly kept his
promise.
But sometimes I yearn for the days of former Fed chairmen Paul Volcker and
Alan Greenspan, who revealed nothing of what the Fed was thinking. Greenspan
was particularly adept at befuddling even Congressional committees with his
famous "fed-speak" language that left committee members and analysts asking
afterwards, "Wha'd he say?"
That approach of providing no transparency helped get the economy through a
lot of problems during their combined decades in office. We only found out
long afterward how worried the Fed had been at various times, knowledge that
no doubt would have resulted in several panics had the Fed been transparent
with its concerns at the time.
How well has it worked out having the Fed providing more transparency since
2006?
In February, 2008 in the early stage of the 2008-2009 recession, we saw Fed
Chairman Bernanke and then Treasury Secretary Paulson in televised
Congressional hearings on the economy and financial markets. You would think
all participants would want to boost the chances of their new rescue
efforts working, by providing the public with as much positive bias as
possible.
But no, in the interest of full transparency, we had Bernanke warning about
how the Fed expected still more negative pressure ahead from the housing
collapse, worsening labor markets, a credit crunch that may have still more
shoes to drop, and revealing that the Fed was also beginning to worry about
the potential for rising inflation.
That was really brilliant. Spend big bucks on stimulus plans aimed at
boosting public confidence that more serious problems could be averted, and
then completely undermine the effort with transparency that revealed still
more worries in the Fed's thinking.
Since then the transparency has increased. The Fed's statements after its
FOMC meetings have become more revealing, the actual minutes of the meetings
are now released within a few weeks, and this year Chairman Bernanke has
begun holding a press conference following the meetings to provide any
lingering information or questions not provided in the FOMC statement.
The result has been that over the last three years markets have been forced
to focus not so much on the normal driving forces of markets, the economy
and earnings, but on what the Fed is worried about, what its members are
thinking, what tools it is discussing that it could bring into play if
needed, and what might trigger potential market-moving action.
And Chairman Bernanke admitted in his press conference yesterday that the
Fed is targeting the stock market as a large part of its effort to improve
the employment picture. He seemed to agree that QE1 and QE2 did not result
in the additional liquidity going directly into jobs and the economy, and
QE3 may not either, but that it will hopefully lower long-term interest
rates, including mortgage rates, and possibly increase asset prices. And he
said, "To the extent that the prices of homes begin to rise, consumers will
feel wealthier, they'll begin to feel more disposed to spend. So house
prices are one vehicle. . . . And stock prices - many people own stocks
directly or indirectly. The issue is whether improving asset prices will
make people more willing to spend."
One has to wonder.
If using interest rate cuts, and then QE1, QE2, and "operation twist" to
bring 30-year mortgage rates down to generational lows of 3.6% has not jump-
started the housing market to any great extent, would 3.2% make any
meaningful difference? Mortgage rates do not seem to be the problem for
would-be home buyers. Tightened lending practices, lack of jobs, and
uncertainty about the future are the problems.
Will the dramatic action have its apparent other desired result, another leg
up for the stock market. Or will it result in a sell-off, given that
expectation of the Fed action has pretty much been factored in since the
market's June low?
For investors, it was bad enough that the action alone indicated the Fed
believes the economy and threat of a global recession have become so
alarming that it could wait no longer and had to fire off such a huge
barrage of measures all at once, virtually emptying its arsenal of
meaningful weapons.
So the further uncertainties Chairman Bernanke felt compelled to provide in
his press conference were not needed, and may have done more harm than good
to the Fed's intentions.
Bernanke certainly did not take European Central Bank President Draghi's
positive and encouraging approach. In promising ECB action Draghi said "The
ECB will do whatever it takes to save the euro - and believe me it will be
enough."
But in his press conference, while saying the Fed's target is unemployment,
Chairman Bernanke kept repeating that the Fed's monetary action "is not a
panacea," that it will not solve the unemployment or slowing economy
problems, that it can only "provide some support," and that further help
would have to come from the fiscal side (Congress). He also said several
times in response to questions that "the Fed does not have tools that are
strong enough to solve the unemployment problem."
The Fed's action would have a better chance of producing the sustained
positive market reaction the Fed apparently is after, if the Fed had simply
taken the action and shut-up. Chairman Bernanke's penchant for "transparency
" has caused enough problems and uncertainties over the years since adopted.
And it created enough uncertainties again this time that a positive market
reaction is far from assured. | X*****s
发帖数: 2767 | 2 re
promised
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Greenspan
his
asking
【在 T*C 的大作中提到】
: http://seekingalpha.com/article/868661-enough-already-with-the-
: When Ben Bernanke became chairman of the Federal Reserve in 2006 he promised
: a significant change. The Fed would be much more "transparent" in letting
: markets and the public know more about its inner workings, its concerns, its
: internal debates, its potential decisions. He has certainly kept his
: promise.
: But sometimes I yearn for the days of former Fed chairmen Paul Volcker and
: Alan Greenspan, who revealed nothing of what the Fed was thinking. Greenspan
: was particularly adept at befuddling even Congressional committees with his
: famous "fed-speak" language that left committee members and analysts asking
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