Yeah the VIX is at very low levels, there is little fear in the market and we have had a very good run upwards. Nothing goes up in a straight line .. well except a vertial line. Pull backs are healthy animals. In fact id be happy if this one carried on a bit and brought things back to more reasonable levels
Helicopter Bernanke's biggest fear is hyperinflation. This looks to be a good way to reign things back in again (look at how commodity prices have dropped since Friday) as long as the action remains limited and does not bring the banking house of cards crashing down. But then again they've learned how to walk the tightrope over the last 2 years.
well inflation, not hhyper inflation .. hhis comemnt way back when this all started in late 2007 was that it was either inflation later or end of the world now (my words not his) .. he said they'd worry about inflation when/if it arrived, but better to have somethign to inflate then nothing .. and so far evidence of inflation very weak as nobody spending as consumer still scared ..
but still I don't understand .. the US gov would surely love a nice high stock market, creates wealth (real or not, tis perceived an that what count) .. also makes people believe verythign be OK .. so again my Q, why does the US gov want to send the market weaker ??
OK lower stock markets is perhaps not Bernanke's main objective, but the consequences/effects of a high stock market - high commodity prices and a printed -like hell- dollar that starts to depreciate. IMO the end of the world has been averted, but the "high inflation later" part you mentioned is the bit they're starting to worry about now. I'm sure the US brains trust sat in their dark little room and timed this law suit to a tee to fit in with some scheme of theirs.
Goldman will settle this particular issue, but you can be sure everyone is looking for some way to nail Goldman et al. In the main, it's aimed at supporting the administration's effort at finance reform. Anyone protecting the banks will be killed in the next election.
In my opinion, deflation poses a far bigger risk than inflation. Consumers will not respond to the govt market incentives unless they feel confident in the market recovery and hence the stability of their jobs.Therefore houses, cars, consumer goods etc. will not move in big enough volumes and prices will concomittantly fall. Some of the states in good ol' USA are financially in a worse position than much maligned Greece. Because of this, Americans are concerned about their pensions etc. The SEC action against Goldman creates negativity, sends markets into a tailspin, confidence evaporates and presto, the situation I have sketched above may unfortunately, become a reality. The timing of the SEC announcement therefore to me, also does not make sense, especially since they were aware of these shenanigans since 2008.