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Ben, maximum associates would swerve you away

I don't perceive to a word they say

They don't see you as I do

If they had a playmate approaching Ben.

From the Song: Ben

Copyright 1972 Walter Scharf/Don Black

Performed by Michael Jackson

Beautiful words, right? The tune, if you cognize the song, is pretty lovable as healed. The irony, of course, is that Michael Jackson is cantabile this dazzling poem to a RAT. That's right, a large, hairy, dirty, awful (and assertive) rat! The piece of music is the metrical subject for the flick of the identical signature.

The "Ben" I desire to pronounce about, however, is Ben Bernanke, Chairman of the Federal Reserve Board. He is no rat. Quite the contrary, although I do not cognize him personally, he exudes, to all outward appearance, wholeness and expertness.

The Wall Street Bulls, however, may cured position him as a rat. Unlike Alan Greenspan, who bowed (kowtowed, even) to ambassadorial trauma after September 11 and slashed the Fed Funds Rate aggressively, to column up panic-struck funds markets, Bernanke is, for the furthermost part, conformity his pulverisation dry, in directive to make certain whether the recent kerfuffle and sub-prime quagmire is, indeed, a menace to the overall economic system.

Greenspan's whereabouts did, in fact, relief to reference a sinking market, as all right as to minify and pare the recession of 2001-2002, in recent times extended sufficient for the school ripple to be replaced by a concrete material possession burble. The last mentioned burble was, it seems, just about totally a function of historically low taxation brought to us by Mr. Greenspan. It likewise was the wellspring of the sub-prime debt fiasco and marauding disposition practices, which enabled those beside problematical trustworthiness either to acquisition homes they could not afford, or to use their existent homes as "piggy banks" for seemingly unmeasured client outlay sprees. In the interim, these lenders raked in very big origin fees, and the system hummed, as the empire spent, and dog-tired and dog-tired. All the while, the lenders knew (and the borrowers should have celebrated) that a day of figuring awaited; a day on which the teaser mortgage tax would reset. Those life are upon us now, and nearly everyone, it seems, from the sub-prime recipient to the lenders, to the fence fund managers impoverishment Mr. Bernanke, Greenspan's beneficiary to bail them out. Thus far, nevertheless below out of the question hassle from the Bush Administration and the said business organisation and consumer groups, it appears that Bernanke may not be so likely to dramatic work ball.

Bernanke, you see, does not seem to take in the Fed's little as state a embankment resistant the stupidity of consumers and the excess and unruliness of the business unrestricted. On August 30, second common fraction GDP was revised up to 4.1%. That suggests rugged growth in the discount. Unless the sub-prime development has categorically reversed that tendency (and nearby is simply no data, one way or the remaining on that point, as of yet), a at fault Fed would no problem have to cross-examine the prudence of threatening revenue enhancement into specified a burgeoning system motor. Interestingly, many an of the "talking heads" of the firm village william tell us that the economy continues to be strong, and the suspicion of the planetary while, in the very breath, frantically spurring Bernanke to improve. Why? Are they won over that a financial condition is upon us? Perhaps a few are. But maximum economists tell us that we should predict nodule (slower growth, but growth, yet) through the end of 2008.

No, I reflect that the docket behind these calls to collection is overmuch more than parochial and transparent. The kindness for fringy homeowners on Main Street exhibited by the remarkably outstandingly salaried denizens of Wall Street is touching, to be in no doubt. But what is truly dynamical this educate is that the monetary and governmental momentum centers want the income markets reclaimed from their own excesses. They deprivation the cattle market to propagate its most recent meteoric rise, and they privation the monetary employment industry to hedge the knock-on effect of its direction and desire. Significant charge per unit reductions will apparent bring home the bacon these results, but will besides gun trigger a added illness of the U.S. Dollar and, if the implicit scheme is really as unbroken as the numbers would suggest, such as a cut risks heating it, and delivery wager on that which the Fed claims to be repulsed by preceding all: economic process.

Bernanke is resisting, but the jury is static out as to whether he can pocket the coercion. What is at part is not solitary the promise trouble of an excessively accommodating Fed distinct above; Mr. Bernanke's function as the Chairman of an organization by name nonparasitic of political forces is mortal put to the testing.

So, for the Bulls, the probe is, is Ben a Friend or a Rat? Only occurrence will william tell.

Warren R. Graham

Copyright 2007