Notes From Underground

Wednesday brings the FOMC announcement on interest rates. Can the FED really ease more at this juncture? It seems that the financial world has come to believe that Draghi’s comments from last week were intended to prod the Bernanke-led FED to promote a greater monetary response to a drastically imploding debt crisis in Europe. I don’t believe that Chairman Bernanke will be pushed into further monetary action–outside of some kind of extended language–for the FED wants to keep the onus where it belongs … the POLITICAL POLICY ARENA. If Bernanke were to get aggressive at this juncture, the controllers of fiscal policy would get an election pass and the REPUBLIC WOULD BE ILL SERVED. The pundits are all opining that the FED’S non-action will result in a dramatic sell off of RISK. I think that is a wrong read as a passive statement will put pressure on Congress and the White House to actually take the lead and find some compromise to the FISCAL CLIFF SYNDROME.

(more…)