Fed: Not Even A Modified X
September 21, 2011 2 Comments
Well, it happened again in the market today: 1. Big “Event” coming (Fed 2-day meeting and policy announcement). 2. The market hangs in there, afraid to be too short going into the Event. 3. The Event occurs (Operation Twist is announced). 4. Market isn’t impressed, the shorts come back out to play, and the market craters.
This all corresponds exactly to the pattern I identified a while back. When oh when will the powers-that-be just take my advice and go for a Maneuver X already? Or even a Modified X would be fine. Stupid Yanqui cierbos.
The Fed is out of things to do but needs to look like they’re doing something. I wonder if this is more of a problem with why the Fed (and also Congress and the President) is expected to look like they’re doing something than with the actual problem of the Fed’s doing things (and Congress’s and the President’s doing things) whose effects are neutral to negative.
I don’t know that they’re out of things they could do (ask Scott Sumner, who often persuades me), but you’re right of course that everyone in power operates from a must-be-seen-doing-something perspective.
Well, I’m a lone voice in the wilderness trying to change that dynamic, by extolling the virtues of Doing Nothing.
Face it, we’ve tried Something and it just doesn’t work. Doing stuff is not helping. Let’s not do stuff and see what happens.
This just isn’t socially acceptable to the intelligentsia however. I need to find a way to make not doing stuff socially acceptable. You’d think this would be an easy case to make but for some reason it’s an uphill battle!