Monday, March 2, 2009

Bernanke and Obama, the audicity of hope

I haven't blogged in a while as we went skiing with the family. That didn't prevent me from reading my iphone on the slopes and it gave me something to do on the way up.

The first article that caught my eye was of course the Obama/Bernanke optimistic announcements. What was interesting to me was the change in tone. It wasn't technical, it was just ... hopeful.

A part of me wonders if Bernanke's pronouncement is backed by the knowledge that he has ran the printing presses so much, that inflation is inevitable so he confidently forecasts "recovery", meaning inflation of asset prices and thus fake GDP increases in Q2 09.

The other part of me just freaks out, they sound confident because there is nothing else to say to prop confidence. And really there is nothing else the boys can do. At a moment where estimate of losses in the banking system run in the $5T, a paltry $1T in spending is just spin doctoring.

2 comments:

Army No. Va. said...

Hope is not a strategy! :-) ...

Obama is following FDR (taxes, govt programs) ...which means a long depression with some false recovery periods. 2011 taxes (income and reduced mortgage interest deduction) will hit the economy like a 2x4 aside the head just as it is recovering.

This stock market is looking a lot like 1931... Real estate market is already worse in most areas. $400K condos in Orlando can't sell at $40K. California houses were $500K, not moving at $150K. Phoenix metro - $289K...now as low as $50K.

Maybe like Japan....maybe worse.

Marcf said...

Japan would be a great outcome, however I don't think we will be so lucky to be honest.

I agree with your bleak outlook but have a different causality. Debt deflation is leading this depression, I don't think the FED/Govt will do the same stupid things that were done the first time around, I also am starting to thing that the scale of things (debt to GDP) is so out of whack that there is NOTHING the authorities can do. Hence my post btw, hope is not a strategy for sure!