Burn-anke?

So how about that?

Apparently, the Asian stock markets are reacting favorably and indirectly to Bush's informal pledge to ensure that home-owners in America would not have to default on their mortgage payments for much longer.

Crudely speaking, will this lead to a better tomorrow for all the mortgage institutions, private equity firms and investment banks who find themselves in a whole lot of shit?

At Wyoming, where Bernanke did his best to assuage the current market situation, not many seem impressed. I can see why there is a general consensus and calling for a cut in the federal funds rate but even that eventually comes down to a (sometimes personal) choice between the lesser of the two evils. Vote for Kerry or Bush (okay, maybe there's no comparison now)? Bail out the credit-dependent family members or control inflation?

Amongst numerous American economists, Martin Feldstein and Susan Wachter seem the most concerned about the oncoming downturn in the US (read: global) economy. And it's common knowledge that today, when Bernanke repeatedly claims that the Fed will "act as needed", it boils down to whether enough people have faith in him and his band of merry men. Yet Otmar Issing, a former chief economist at the European Central Bank, continues to feel that the "The world economy is still very robust and growth is much more evenly spread than it was a few years ago." So should we believe him and think that this is only a minor blip of periodic fluctuations and decreasing steadiness? One of these days when i have nothing to do, i intend on gathering data and compiling a correlation and regression study on the trends of a few major Asian indices and the Dow. Even now, it's obvious what the trend would be.

The statistics have never looked promising in the US. Commercial paper, a short-term financing tool, declined by $244.1 billion, or 11 percent, in the three weeks to Aug. 29, the most in at least seven years, Fed data show. Three-month Treasury bill yields had their biggest drop since 2001 in August as investors sought safety in government debt. Most feel that the simplest way of putting it is that consumer spending will decline significantly because consumers won't be able to borrow as much against the value of their homes which would also be experiencing a periodic decline in their values.

To borrow an intriguing idea by an anonymous person on the Internet, perhaps it is getting clearer that the US economy is completely addicted to "cheap" money and must have virtually unlimited access to it in order to function.The fact that the Federal Reserve would be ready and willing to cut interest rates with unemployment at 4.6% and the economy growing at more than 4.0% in the latest quarter speaks volumes about the nature of this addiction.