By Mike Whitney
09/20/07 “ICH” — — Wall Street loves cheap money. That’s why traders were celebrating on Tuesday when Fed chief Ben Bernanke announced that he’d drop interest rates from 5.25% to 4.75%. The stock market immediately zoomed upward adding 336 points before the bell rang. The next day the giddiness continued. By mid-morning the Dow was up another 110 points and headed for the stratosphere. Everyone on Wall Street loves Bernanke. He brings them candy and sweets and lets the American worker pay the bill.
We’re disappointed in the new Fed Chief. We thought he would be different than Greenspan. We were taken in by his scholarly appearance and his modest demeanor. We thought we sensed the heart of a real patriot—a man of character and conviction. We were wrong. In his first crisis, Bernanke caved in and gave away the store. He rewarded his fat-cat friends at the hedge funds and investment banks while paving the way for more inflation for the rest of us. Presently, gold is soaring at $736 per ounce, oil is at $82 per barrel, and the euro just climbed to a new high of $1.40. Food and energy prices are bound to skyrocket. Bernanke has crushed the dollar for a “last fling” on Wall Street. It’s madness.
Bernanke invoked the “Greenspan put”, which means that he used his power to protect his friends from the losses they should have incurred from their bad bets. Now, the big market players know that he can be counted on to bail them out whenever they make poor investment choices. He’s also lived up to his nickname, “Helicopter Ben”; ready to deal with every new calamity by tossing trillions of freshly-minted US greenbacks into the jet-stream over the NYSE so elated traders can jack-up their PEs and fatten their bottom line . We think Bernanke should abandon the helicopter altogether and personally deliver pallet-loads of $100 bills to Wall Street’s doorstep on a Fed-owned fork-lift, just like Bush does with contractors in Iraq. That way the fund managers and blue suits can keep stoking the market with cheap cash without wasting time at the Fed’s Discount Window.