Well as I posted before I am an A$$hole so though I doubt he would do it, AG has to know we will rally hard if he doesn't raise. For that reason if I was him, I would raise anyway then if the market started to crash, I would take it back but give a stern warning that if they so much as raise an internet or semi company 5% in the next 6 months, he will raise two basis points and see what happens. Of course I know that will never happen but it is nice to dream. <ggg>
AG has to know what will happen if he doesn't raise so for that reason, I think he might actually either do it or announce a tightening bias. Despite the market's action, he has to be seeing the 25 dollar oil, tightening labor market, rising commodity prices, rising gold etc that all point to problems on the horizon.
AG talks in Greenspeak but the way I have been decyphering his comments, he has clearly been warning the markets of the world. When he said we were not an island of prosperity, that meant to me that we will help out Asia to some degree but we are going to concentrate on our own economy. When the first signs of inflation started, he switched from bailing out Asia mode to defend the dollar and if that kills imports...Oh well, life is tough. With the trade imbalance reports of late, I think he could care less if the dollar rises and imports drop as exports get stronger. He raises rates, and home sales will slow as they get more expensive and the market starts dropping making the "new rich" less confident they can make payments from stock gains. When he admitted to watching stock valuations and letting them influence policy, that told me that despite saying no one could realize it was a bubble till it was over, he has decided it IS a bubble and he wants the air out NOW!!! The post I read where earnings went up 7% on the index yet the index is up almost 40% sent shivers down my spine. Everyone argued if we were in a bubble or not before but at that type of gain on those earnings, we have to be in one now.
AG is no dummy and he may not stick around for another term. I doubt he wants to pass this on to the next poor appointee. He probably wants to fix this monster he created and move on in life. Reubin sure knew when to leave and we have to wonder if maybe AG told him his plans and Reubin figured it was time to get teh heck out of dodge while the gettin was good. This way, if it all blows up, AG gets the blame and Reubin is no where around.
Good Luck,
Lee |
