Take Notes Mr. Bernanke
July 13, 2008
Ran..no, Randall, wait. Now wait...now listen...now listen to me. I, I beg of ya not to do this thing. If Potter gets a hold of this Building and Loan, there'll never be another decent house built in this town. He's already got charge of the bank. He's got the ... Joe, you had one of those Potter houses, didn't you? Well, have you forgotten? Have you forgotten what he charged you for that broken-down shack? Here, Ed. You know, you remember last year ... Can't you understand what's happening here? Don't you see what's happening? Potter isn't selling. Potter's buying! And why? Because we're panicky and he's not. That's why. ... Now, we can get through this thing all right. We've, we've got to stick together, though. We've got to have faith in each other...
George Bailey at his finest! His speech was just enough to hold off a full fledged run on the bank. We'll see on Monday what Fed Chairman Ben Bernanke can do. On the plus side, Mr., actually Dr. Bernanke is way smarter than George Baily could ever hope to be, but on the other hand, I think that George Baily actually believed what he was saying. I'm not saying Ben Bernanke doesn't, but I think he's been under tremendous pressure lately trying to deal with a mess that was years in the making. His remarks in recent weeks about the U.S. being vigilant in keeping inflation under control, and the dollar strong just don't seem to line up with the government's behavior over the last several years. There were many people in our current administration screaming to let the dollar fall as the magic way increase exports and prosperity. Well it fell, and you got a predictable temporary increase in exports of some items, but I guess we're still waiting for the prosperity. What you also did however predictably get was inflation, and a loss in confidence in U.S. financial assets, which is probably the biggest driver of the flood of money flowing into commodities these days.
Anyway, IndyMac, a large bank in CA closed its doors on Friday 2 hours after the markets closed (I'm sure just a coincidence). It seems to me that Ben Bernanke or someone is going to have to pull off a George Bailey home run speech before Monday morning, or things could get ugly.
-- Greg