Honeyoneohone - Excerpts From Brinker's Moneytalk Monologues:
Aug 25, 2007 6:44 PM
Saturday, August 25, 2007, Moneytalk, Bob Brinker said:
"Now you know, I've been critical of the Federal Reserve, highly critical up until August 17th for first of all, pushing the Federal Funds rate too high at 5 ¼ , second of all, pushing the Discount Rate too high at 6 ¼ and third of all, pretty much ignoring what was going on in the sub-prime mortgage sector - holding the line with this nonsensical statement - absurd statement that the Federal Open Market Committee published following their August 7th meeting. Their August 7th meeting when they reiterated their stance that, I'm paraphrasing, that the primary concern was inflation. Now of course, that was utter nonsense, and to their credit, they recognized it was utter nonsense when they did a complete 180 ten days later on August 17th and decided to focus on where they should be focusing, which is on the economy.
But you know some people will say - if I'm right, if my theory on this is right - how could the Fed be so wrong in waiting to August 17th to see the light. And I think it's basically what happens in the case of rookie status. We have a Fed Chair who has promise, but he's a rookie. He's a rookie at the job of Fed Chairman. It's a tough job because the Fed Chairman is the most powerful person on planet Earth.
Now there are government leaders, like the President of the United States and the Prime Minister of Britain and all these other people around the world who think they're so powerful. Well they're all powerful - they are powerful, but they're not as powerful as the most powerful person on planet Earth - that's the Chairman of the Federal Reserve. Because the Chairman of the Federal Reserve has the power to cause a depression, a depression, that's how much power he has - forget about a recession. So that's where the power is. Now that's why it's such an important job.
Now a lot of us were thinking, well Ben Bernanke looks like he has a good background for this job and we were hopeful. And I'm still hopeful. I'm still hopeful that Obi-wan Ben can do a good job over a long period of time. But come on, the Fed blew it on this. They should have never waited to August 17th to create this monetary ease that we are now seeing. And it was a rookie mistake - and that's why it's forgivable. Because when a rookie makes a mistake and he looks like he's got solid prospects and solid fundamentals going forward, you say, you know, it's a rookie mistake, but this person has good credentials and I'm going to stick with him. And that's my attitude with Ben Bernanke - I'm not giving up on Ben Bernanke because he and his compadres at the Fed make a rookie mistake.
And I'm not blaming Ben Bernanke for that bizarre statement that was made on August 15th by that Federal Reserve Bank President in the Midwest about only a calamity would cause us to cut rates, I'm paraphrasing but it's very close to what he said. I'm not blaming Ben - Ben Bernanke didn't say that. So I'm not blaming Ben for that, but we have to tell it like it is here.
I mean, the mortgage companies can put lipstick on the pig when they process loans for people who are never going to pay them again like they did in the sub-prime sector - yeah, they can do that, but here on Moneytalk, we're not going to put lipstick on the Fed. The Fed is what it is and up until the 17th of August, they blew it. But as of the 17th of August onward they are doing fine."