Fedwatching, from Mark McNabb

September 14, 2007 |

Ben BernankeLarry Williams has pointed out he is concerned about returns on the day prior to the FOMC meeting, which coincides with the former Fed Chair's big appearance on most media. One wonders if his aim is to steal some thunder from his successor, or a deft move by his agent to sell books. Either way, Big G now playing for his place in history as a friend of the common man by saying he tried to help but didn't know the evil private sector would take advantage of his policies — to the point of sounding as if he thinks we should see a 50bp cut.

I don't think a tweaking of rates either way will matter much. To end inflation, it would take Volker's disdain of politics to raise rates 400-500bp and commit economic hara kiri in the Western economies; and, to stimulate it would take 200-300bp of cuts to float the miscreants and that would take a Big G like attraction to the limelight. Little B is more political scientist than politician.

One survey that crossed the wires while I was out in Jackson was the Duke Fuqua survey of 840 CFOs of major US firms. Despite assurances from human resources surveys that hiring will be about the same as last year, 16% of the CFOs say the credit crunch has them reducing hiring growth and 30% reducing capex.





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