Wednesday, August 12, 2009

When Bernanke Speaks...Should We Really Listen?

Today, the Federal Reserve, headed by Chairman Ben Bernanke, concluded its Federal Open Market Committee Meeting with a statement that seems to say that the economy is "leveling out" (Click to See Full Story). Of course, the stock market responded with another up-day.

But, I would caution about Mr. Bernanke's "leveling out" comment. He did the same thing in February and, by all rights, things have only gotten worse. Back in February I wrote this:

Bernanke Pushes Stocks Up

Almost, as if any good news would be a reason to buy stocks, our stock markets are "all" up over 3 percent and the "Dow Jones Industrial Average" finished up 232 points. Fed Reserve Chairman Bernanke seems to be the primary driver for this rally. In a Congressional hearing, earlier this morning, Bernanke said that the recession "could" be over in '09 (See Full Story).

Now, before you uncork the champagne and start buying up all the beat-down stocks you can find, you would be well advised to look at what "Carnac the Magnificent", Mr. "Big Ben" Bernanke, said to Congress in April of just last year: "Recession is possible, but recession is a technical term ...I'm not ready to say whether or not the U.S. economy will face such a situation..." (See Full Story)

Now, for me, I don't think Bernanke can really be trusted with his defective little crystal ball. If what we are going through, right now, is just some kind of "technical" situation, I'd really hate to see what an actual, not "technical," recession looks like.
Once again -- just as then -- I think it would be wise to leave the champagne on ice.

No comments: