there would already be an unexpected rate hike at this point.
Laugh at your own risk.
By popular demand: explanation of my cryptic cowardly comments: :D
I think there is sufficient evidence to suggest that at any reasonable transfer mechanism of inflation (from oil to PPI then to CPI) that inflation anchor has moved +5% over target at the rate and level oil and many commodities are presently. While this may be good to POT and Saudi Arabia, the real economy runs on fixed set of condition (namely salary) and will not be able to adjust to such a rapid shock.
This is equivalent to in other words, BSC, or shall I say the Bear-Stearns-event-equivalence. The only cure to stop it is the application of unexpected rate increase until the pricing mechanism is firmly under control.
This may very well be suitable, as the majority of investment banks who needed to raise capital have done so in the past 3-4 months.
The fed's responsibility to IB is fulfilled, in that they opened a breathing room for the IB to obtain funding. As far as to those who provided the funding (please don't use the words BAGHOLDERS, it's not proper), the Fed never issued guidance as for example, how much someone should pay to invest in the stocks of LEH, or MER, or Citi. That is, Ben told me, the key defense in court, should anybody take him to that, when they say "But YOU SAID you GOT OUR BACK".
Now that issue is behind us, and another firmly in front of us, namely the incorrect application of slosh to deposit into commodity investments, the pressure is clear as to what this Fed Chairman would do (or any Fed chairman previous to him would hav done), which is a surprise rate hike.
The right enemy
5 years ago