The Treasury Secretary put on a grand show over the weekend in an attempt to avoid a Bastille Day route of the financials

The Treasury Secretary put on a grand show over the weekend in an attempt to avoid a Bastille Day route of the financials and in typical fashion as we have seen time and time again Federal reassurances often have the opposite effect not reassuring traders at all. The Secretary outlined the possibilities of a Fanny and Freddie bailout reiterating what this blogger finds all to obvious with the “implied guarantee” nature of the relationship that the two agencies have with the federal government. Some market participants however seemed quite surprised by seeing it all outlined on national TV.

Tuesday the grand show will continue when the FED Chairs testifying before congress and there is nothing more entertaining than a bunch of congressmen and women with little to no understanding of the banking system and the economy in general grandstanding and looking to pass the buck in an election year .Makes for very good daytime TV but I am afraid it is hardly a substitute for sound fiscal policy.

Other issues such as the more permanent nature of the inflation picture coupled with anemic US growth rate it is thought leave the FED little wiggle room. It does seem to this blogger that given the disconnection of the FED funds rate with more general consumer loan rates that the FED has more wiggle room that one might think .A small increase in the FED funds rate seems fairly insignificant to overall economic growth yet it might just do the trick boosting the dollar higher and reassuring markets that this FED really means business on inflation.