Guys, there really is no reason to second guess the fed- because I can tell you through simple logic EXACTLY what is going to happen.
First, everyone who has a brain KNOWS we are in the biggest equity bubble in the history of our country. Everyone knows it will eventually burst. And greenspan in particular knows that because of his idiotic liquidity injections, the market has risen to heights from which it cannot "soft land."
He KNOWS there is no other option except collapse.
Now, once you understand that he knows it, and all the other fed governors know it, what is the only thing left for them to do?
You guessed it- cover their ass. You must understand, folks, that greenspan will probably be hunted down by mobs if the market were to collapse after an interest rate rise.
Imagine if he raises one morning, and the market goes down 30% over the next two days?
First of all, his political career, as well as all the others on the BOG, will be over. Instantly. They will never be reappointed. End of story. Their families will be harassed, they will be spit at, and their lives will be miserable from now until the end of their days.
The only thing he can do, is to do exactly what he has been doing. Notice in his speech two weeks ago that he said "There is no way to predict a bubble or to recognize one until after it bursts."
That was the single most important sentence he has uttered in his political life. He wants people to believe that there is no way he could have seen the collapse coming. He wants to have his hands washed clean. When the market does collapse, he will say "I never saw it coming, I thought productivity would keep us going forever."
He has dug his own hole, and there is no way the country can get out of it. The best he can hope for is to get out of this situation with some shred of dignity.
His only interest at this point is to PASS THE BLAME to someone else. Nothing else matters to him at this point. The market will crash, he knows it. The best result he can possibly hope for is the crash to occur without him being blamed for it.
And remember, if he tries to raise rates again, and the market does tank, HE WILL BE BLAMED.
Therefore, he won't raise. Not a chance in hell. |
