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Navarro: Big Ben

Sunday, 02 September 2007

Peter Navarro: The Big Ben Bush Bailout

Total Picture Radio Quote of the Week from Peter Navarro:

Peter Navarro

"It’s abundantly clear now that Fed Chairman Bernanke will expand the role of the Federal Reserve far beyond its charter to the become the lender of last resort to all of those poor saps and greedy speculators who loaded up on cheap adjustable mortgage rates to buy houses they either couldn’t really afford or which they wanted to flip for a fast buck. It’s equally clear that President Bush will be doing everything he can to support the Bernanke move so as not to exit his presidency with a housing sector in collapse and an approval rating with a minus sign."

"In the short run, the markets will eat this up. Longer term, the US just seems to be digging a bigger hole for itself. Cutting interest rates and increasing credit availability is just one more way of saying let the printing presses role and one big heavy foot on a dollar already suffering from chronic weakness. At some point US centric investors are going to wake up and figure out that their dollar-denominated portfolios which seem to be going up really aren’t after currency effects are taken into account. Of course the larger problem with the Ben Bush Bailout is inflation."

"I’ve written extensively in this space as to why in today’s global economy, BOTH food and energy need to be factored into to the inflation equation and not simply treated as “not in the core.” Energy prices are not in permanent price shock mode and based on the price of wheat these days and rising food demand in places like India and China, food may suffer the same fate. My bottom line is the Ben Bush Bailout is not a move worthy of a country which claims to be based on free market capitalism. It is a move which simply digs the US deeper into its hole of a declining economy and world power." - Peter Navarro