Machine large bubbles?
The modern fed quite has a history of blowing bubbles and doing so, even when it seems to be aware of what they do.
Remember 1999 dotcom bubble and the stock market bubble in 2000?
In 1998, President of the Greenspan Fed had already warned of "irrational exuberance" on the stock market for a year or two before. But the market has continued to increase in extreme overvalued levels of historical price/earnings ratios and similar summits.
However, in the summer 1998, had to finally a correction, down more than 17% exuberance is cooled off the coast of the stock market.
Unfortunately, Asian countries had problems with their currency which hammered their problems économies.Les spread to America latine.Puis giant a hedge fund long Term Capital Management collapsed due to the large Paris on Asian currencies, causing problems also for large banks which had financed it.And the US Federal Reserve seemed to panic.Quickly, he launched two spectacular rate cuts within two weeks of the other Federal Reserve .Explication was that he did not believe the economies could handle problems if facing another stock decline in their economic problems and the United States could scope to the United States.
The result was that "irrational exuberance" resumed on the expectations that the u.s. Federal Reserve would provide additional economic stimulus via the lower interest rate.
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Even if the world's economies and the stock markets had recovered, the Fed does not reverse until June 1999-rate cuts and by then it was too late.
We know the results.The stock market had fortified until further in his balloon, then broke out and the severe 2000-2002 bear market was upon us.
Then, apparently did not realize the economy was about to enter a recession, the Fed has continued to increase the rate of interest in May 2000 and did not start cutting rates in an attempt to prevent a recession at January 3, 2001 .c ' is once again behind the courbe.à this time, the recession was upon us.
To make the economy of the recession of 2001, hampered by the terrorist organization 911 attacks, the interest rate cut fed a total of 13 times, not stopping until June 2003, well after the recovery of the economy and the 2002-2007 bull market was underway.
While the extended easy money policy has real estate bubble formation.When it broke, the recession resulting from 2007-2009 has been the worst since the great depression and the market bears 2007-2009 has been the worst since the 1930s.
And here we are, with the US Federal Reserve in another binding.
2007-2009 Recession ended last June.The stock climbed up into a new market from its low in March of last year's impressive Bull.
The Federal Reserve kept its policy of easy money in force, and yet the economic recovery blocked once than other programs of Government stimulus expired in the spring.
Reserve US Federal would probably now be able to reduce the rate of interest for re-stimulate the economy, but unfortunately has its rate of the Fed already zero, where it has been since December 2008.
So it's only remaining tool for re-stimulate the economy is to provide another series of so-called quantitative facilitate, whereby it purchases of government bonds in reducing interest rates in the long term, which are already at record low levels even lower.
Economists have concerns about how well that would help the economy .the economic problems at this stage do not appear to be the level of the rate of interest, but the lack of jobs, the dismal consumer confidence and the reluctance of banks to make loans.
However, only the anticipation of a further quantitative easing and even more low rates of long-term interest started already potentially pump until the next bubble, as investors have moved to find greater rates of retour.Argent has been flowing at a spectacular in bonds rotten high performance, basic rate risk curve and gold .and the stock market has increased by 12% from its low August when started to talk about another series of easing quantitative. Meanwhile, the dollar has been trashed on expectations the Federal Reserve American will be more money to fund a new series of quantitatif.La flexibilities "print" the dollar threat a "currency war" with other nations concerned about the adverse dollar low on their economies.
Is another difficult to spot the Fed.Exacerber new bubbles to be once again the problems on the road and garbage dollar or allow the economy to adapt with another recession deflated price assets to the level that would be self-sustaining.
This is one - self .Souffler another bubble and worry about the consequences on the road.
In his speech Friday morning the Bernanke Fed Chairman will stop everything on the quantitative easing to announce a new policy, said only that reserve US Federal plans to do more, but "take into account the costs and potential risks."
Uncertainty remains therefore a market that has probably already taken into account in an important new round of stimulus.
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