Well, maybe not quite, but it certainly feels that way.
Today, Ben Bernanke pledged to keep the benchmark interest rate at a record low for an “extended period.” (Source: Bloomberg)
His commentary was, as usual, about as insightful as the look my 6-year old weimaraner gives me when I proofread my blog out loud to him. Considering that Bernanke is the same guy who described the subprime crisis as “contained” in mid-2007, it’s amazing anyone even prints the crap he says anymore.
Interest rates are going to stay low indefinitely because we are in a deflationary trap we cannot get out of. Consumer prices are going nowhere. Asset prices (homes, stocks, commodities) are still WAY off their all-time highs set a few years back.
The Fed is pushing on a string – it doesn’t matter what they do. That’s why the market yawned after the announcement…pathetically, the S&P couldn’t rally more than a few points before slumping back down.
Source: Google Finance
The Fed can extend credit all it wants, but it doesn’t matter, because there is no appetite for it. The American Consumer is choking on debt. American businesses are running scared. You can lead a horse to water, but you can’t make it drink – and this horse can’t stomach anymore credit.
The transformation is complete – no longer are we merely turning Japanese – we ARE Japanese.
Further reading:
- Why small business lending remains dry 3 years after the credit crisis began
- Why we think this stock market downturn is the start of something larger.
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