As long predicted, Trichet has cut his overnight rate. I expected this, but i didn’t expect that by the time he did it, it would be almost irrelevant. With all the other liquidity infusions in the euro-zone, this means little for now.
The UK is going to essentially nationalize its banks.
I thought Obama kicked McCain’s ass last night. I have not thought that Obama could win, but now i am not so sure. I hope he does. I think he will probably be a disaster, but kicking the GOP in the ass until they bleed is the only hope for their ultimate redemption. I hope Obama is the Carter to an ultimate Reagan.
It is expected that the EU central bank head, Trichet, will today BOOST its key short rate. Trichet is correctly pointing out that massive inflation is on the horizon. Look for further crushing of the dollar, a nominal rally in precious metals, and of course, a spike in nominal oil prices.
I still say that, eventually, Trichet will be forced to competitively devalue the euro. Today’s probable action will make the ultimate reaction all the more theatrical.
Ok, I’m off in ten minutes to gallivant with the Houston diplomatic corps, but I have to deliver a brief eulogy for Bear Stearns.
Bear Stearns died today. Helicopter Ben called up Jamie Dimon today and told him the printing presses were red hot, and he had an entire train loaded with greenbacks, and Ben asked Jamie politely if would accept several billion dollars in return for the favor of propping up the corpse for a while.
All deaths are sad, tragic, and scary, but this one is really the stuff of nightmares. When I worked on Wall Street, Bear Stearns was still Ace Greenberg’s company. Ace expected his employees to reuse rubber bands and paper clips. If a trader at Bear hit a home run, he could expect to be fired. “You might have struck out, you dumb fuck, why in goddamn hell didn’t you lay down the bunt like I told you???!!!!”
Well, goodie for Helicopter Ben. He’s got all the troops out tonight bracing themselves against all the dominos that are teetering in sympathy with Bear. I guess that’s good, but I wonder how Ben sleeps at night?
What is Trichet going to do when the first eurozone bank goes down? Will he unlock even a single centime to bail them out? Well, if he does, you know for sure that someone is holding a gun to his head.
I have never been much of a trader, but then, i have never been one to buy and hold precious metals, either. I guess now everything you thought you knew is wrong.
Trichet has so far resisted mightily the pressure on him to cut rates. He eventually is going to succumb. When he does, something dramatic is going to happen.
The dollar will rally. US equities will rally along with the dollar. The prices of the metals may fall initially, but then they should go to the moon. I don’t see any room for US debt to rally, but in this crazy planet maybe it will.
So, grasshoppers, wait patiently, and then strike!
Yes, I know, I have leaped ahead somewhat in my parts. Deal with it. Apologies to Bono.