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Wednesday, January 27, 2010

Cleaning House

Adam Warner:
Time To Take Care of Some Family Business? -- Should Ben (Bernanke) and Timmy (Geithner) keep their jobs? How about we take care of some family business here? I mean obviously not saying we should have goons shoot them, but wtf, let's clean house. Seriously...

I kind of agree with Bob Marcin's general point here.
Bernanke Out? QE Out? FHA Out?

It's a load of crap, I say. What's that?

It's a load of crap that we have to manage the economy for the sole sake of the stock market's reaction.

Bernanke can go. Geithner can go. 0% interest rates can go. QE can go. The economy and the markets will survive as long as we have competent replacements for important slots and policies that do the right things. We can make necessary changes without causing the end of the world.

First the bulls said we needed the Infinite Intervention to save the world. Now they say we must keep it and its cheerleaders in place to save the bull market. What kind of crazy world do we live in when stock paper asset prices determine our economic policies?

If 2% is the correct fed funds rate and Volcker is the right Fed head, and if the Fed must stop purchasing trillions of mortgages, then those things must happen -- even if it means a pullback in share prices.

We got into this mess because Greenspan and Bernanke wouldn't ruffle markets, always pulling out the interest rate cuts in a financial decline -- i.e., the Greenspan Put. The bulls who say we must coddle the equity markets with bad policy like too-big-to-fail and won't-it-rile-the-markets and can't-stop-the-QE are putting short-term paper profits above the right long-term decisions. And that's a shame...