The More The Fed Fiddles… Professional Edition

The Case Shiller Index of US housing prices for November has essentially turned flat over the past two readings. As usual, it is understating the real weakness in the market. Meanwhile the Fed announced that it will tinker with how it sets interest rates. Recent history has shown, the more the Fed tinkers, the worse the unanticipated, unintended consequences are. Bernanke is the Dr. Frankenstein of high finance. He just can’t resist experimentation. We end up with a monster.

The decline in tax receipts in January is accelerating. Meanwhile economists are basing all their forecasts on the idea that a recovery has begun. The Fed seems to buy into that notion, and it will probably reiterate that in tomorrow’s statement. Whatever they say, however, the market is likely to respond positively. Bennie has set up the props and greased the skids for the absorption of the big wad of Treasuries settling on Monday. He may be a raving lunatic, but as long as one of his grand experiments isn’t going haywire at that moment, he can still manipulate the market in the direction he wants from time to time.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both analytical and sales capacities. Prior to starting the Wall Street Examiner I worked as a commercial real estate appraiser in Florida for 15 years. I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. My perspective is not of the Ivory Tower. It is from having my boots on the ground and in the trenches of the industries that I analyze and write about today. 


  1 comment for “The More The Fed Fiddles… Professional Edition

  1. Monica
    January 26, 2010 at 5:26 pm

    Great report!

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