Is the Fed chairman responsible for the economic mess

[TheNiche]

I guess had the cut off been today we'd have a better bottom starting point.

Wow, maybe the contest will be "Who is least in the hole?"

LINK

We're only a couple weeks out from an election. Once all the sensationalism is removed and the devastating effects of a Democrat-controlled government have been completely priced in, the cloud of uncertainty will burn off and a lot of money that is currently on the sidelines will re-enter the market. That'll help a lot. And then we've got nearly two months during this contest where I expect stock/equity markets to level off and start recovering.

[crunchtastic]

And then we've got nearly two months during this contest where I expect stock/equity markets to level off and start recovering.

So the devastating effects of a Democrat-controlled government being priced into the market won't be all that devastating, if recovery is only 2 months away.

[memebag]

So the devastating effects of a Democrat-controlled government being priced into the market won't be all that devastating, if recovery is only 2 months away.

I'm betting less time, since the market will also absorb the end of the devastating effect of a Republican president.

[TheNiche]

So the devastating effects of a Democrat-controlled government being priced into the market won't be all that devastating, if recovery is only 2 months away.

Investment pricing is driven by expectations of future earnings and the last 40 days have been pretty devastating, if I may say so...though I'll grant you that political effects haven't exactly been happening in a vacuum.

Someone who believes that politicians are responsible and accountable for the economic impact of their policy proposals during the course of their reign is sadly mistaken. Politicians have market effects before and after they are actually in office, and sometimes without ever actually making it to an elected position.

[crunchtastic]

Someone who believes that politicians are responsible and accountable for the economic impact of their policy proposals during the course of their reign is sadly mistaken. Politicians have market effects before and after they are actually in office, and sometimes without ever actually making it to an elected position.

Of course.....the effect of policy on the market does not follow the election cycle per se.

And I don't recall ever voting Greenspan into office.....

[N Judah]

Unless McCain wins, in that case it's back to blaming ACORN.

But seriously, it's nice seeing what the hedgies were tied up in. I used to wonder.

[RedScare]

Unless McCain wins, then it's back to blaming ACORN.

It doesn't matter who wins. We have the Blacks hopelessly boxed in. If McCain wins, it was the CRA and ACORN. If Obama wins, it is the fear of liberal policies.

Blaming Black people for what's wrong with the country...an American tradition for 147 years.

[TheNiche]

Of course.....the effect of policy on the market does not follow the election cycle per se.

The effect of policy on the broader economy is manifested by output and income. There's a little bit of a precursor effect as companies tweak their manufacturing orders, inventory levels, and capital expenditures to match expectations of the business environment; most of the impact on earnings comes subsequent to policy implementation, however.

The securities markets respond almost immediately--and constantly--to expectations. To the extent that actors within the stock market sense that a dramatic shift of power is more certain to occur, they modify their forward price curves accordingly and immediately.

Previous elections have been more dicey. This one is looking to have a pretty decisive outcome. This is why I believe that the results have already been largely priced-in, whereas they weren't priced-in so much in previous cycles.

And I don't recall ever voting Greenspan into office.....

The guy that appointed him as Fed chairman was elected, however. And whether it was Greenspan or someone like Greenspan, someone of like mind should have been expected to have been appointed by Ronald Reagan. His appointment was not all that unlike the implementation of any other policy.

I'm not really clear what you think that he himself might have done to avert the specific set of circumstances that have been identified as the proximate cause of this financial crisis. The low interest rates following the tech bubble acted to set up the dominoes but were neither in and of themselves destructive or a move that would've been done differently by any other Fed board. I suppose that he could've been a more perfect mouthpiece, but he was not equipped to counter the specific matters of moral hazard or adverse selection that were the proximate cause of the crisis.

[BryanS]

The effect of policy on the broader economy is manifested by output and income. There's a little bit of a precursor effect as companies tweak their manufacturing orders, inventory levels, and capital expenditures to match expectations of the business environment; most of the impact on earnings comes subsequent to policy implementation, however.

The securities markets respond almost immediately--and constantly--to expectations. To the extent that actors within the stock market sense that a dramatic shift of power is more certain to occur, they modify their forward price curves accordingly and immediately.

Previous elections have been more dicey. This one is looking to have a pretty decisive outcome. This is why I believe that the results have already been largely priced-in, whereas they weren't priced-in so much in previous cycles.

The guy that appointed him as Fed chairman was elected, however. And whether it was Greenspan or someone like Greenspan, someone of like mind should have been expected to have been appointed by Ronald Reagan. His appointment was not all that unlike the implementation of any other policy.

I'm not really clear what you think that he himself might have done to avert the specific set of circumstances that have been identified as the proximate cause of this financial crisis. The low interest rates following the tech bubble acted to set up the dominoes but were neither in and of themselves destructive or a move that would've been done differently by any other Fed board. I suppose that he could've been a more perfect mouthpiece, but he was not equipped to counter the specific matters of moral hazard or adverse selection that were the proximate cause of the crisis.

Paul Volcker is no Alan Greenspan and I highly doubt he would have taken us down Greenspan

[TheNiche]

Paul Volcker is no Alan Greenspan and I highly doubt he would have taken us down Greenspan