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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: gregor_us who wrote (64764)6/28/2006 4:58:47 PM
From: UncleBigs  Read Replies (1) of 110194
 
I think Bernanke's whispering into Maria's ear was because gold was going parabolic, copper was going parabolic, emerging stock going parabolic, etc. A crack-up boom was coming into full blossom.

I really think it had nothing to do with foreign flows.

They needed to put a cap on speculation. He also whispered into Kudlow's ear that the Fed was prepared to "shock the markets" with a 50 basis point hike.

They put a cap on speculation without having to do anything. They were successful.

Now they are free to implement their pause and focus on the weak housing market, reduced wealth effect, lag of prior fed hikes, etc.

If they need to raise again in the future, they can. The last thing they want is to let deflating asset markets begin to scare the public into saving more and pulling in risk.

In terms of foreign capital flows, that can be fixed with call girls, economic hit men and the printing press.
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