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Tuesday, June 06, 2006

The Federal Open Mouth Committee (FOMC)

Click on the post for an interesting article by Mr. Haggerty in Trading Markets on the perils of a Federal Reserve that just cannot keep their mouth---or more precisely "Mouths" shut.

Traditionally, with Alan Greenspan, one could not hardly figure out what he was saying because even the simplest of sentences had such complicated construction mostly of the "on the other hand" type, that one could not really put a bulls eye on any one fact of substance to hang your hat on.

With the new Fed chief, and his more direct and inconsistent style---or maybe more precisely his lack of control of other members of the Fed, there has been a giant whipsaw of the stock market as different signals are sent.

This brings back memories of 1987 and the Treasure Secretary who railed agains the German treasury just prior to the stock market crash.

What is the moral of all this? If Bernarke cannot keep his mouth still---look out investors.

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