Tuesday, July 08, 2008

Fed chair reiterates the “too big to fail policy”

Fed chair reiterates the “too big to fail policy” and avoids the big interest rate decisions till next year ,or “as long as emergency conditions prevail” .Again the current economic dilemma’s has been created more by continued poor policy judgment and much less by the forces of supply and demand.

The very congress that seems so out of touch on the sub prime mess continues to look to act on more regulation of the financial sector and throw in enough tax increases to go around consequences be damned ….humm sounds like the Carter Era to me and remember investment banks may be too big to fail but your portfolio isn’t .

As this current correction runs its coarse dust off your white suit and look to slowly add back the same sectors; energy, Ag and metals, with particular attention to natural gas and drillers. Like the 1990’s the sectors that led the market higher will lead the market when it comes out of a tail spin unless there is some major change in policy direction.

Given the inherent political opportunities with “global warming” and the current government penchant for raising taxes and over regulation “global warming” offers politicians a goldmine of unlimited chances to tax and regulate the human condition recognizing that all living activity results in the explosion of CO2 gases. This blogger however hopeful that sanity may prevail is rather dubious that any leadership will be exhibited from Washington.

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