The stock market’s first reaction

The charade that is represented by world governments is becoming more strained by the day. Ben Bernanke’s decision to do nothing was ridiculous. Not in the sense that he can affect outcomes in any way shape or form, but in the sense that he can prolong the agony that the economy must endure. 

The stock market’s first reaction to today’s non-event was to sell off hard. But after the word got around that this was just a delay (and a short one at that)stocks caught a bid. Basically, the plan by Bernanke to leak his intentions worked.

I think there are two reasons that Bernanke chose not to announce policy changes at Jackson Hole:

I) He wants it to look to the world (and a few Republican politicians) as if the Fed’s actions are being done only after deep deliberation and discussion. That is why the next meeting has been changed to a two-day format.

There will be a two-day circus of Fed Governors looking very serious. But that is just for the TV audience.This is Ben’s show. He has the votes. He is steering the ship. The decisions have already been made. Ben’s going to do something on 9/21.

II) Ben had to put off announcing more monetary oomph today because there is something that has to happen first. There has to be something that comes out of the EU before Bernanke makes his next move.

The facts are that there are no meaningful options left for Ben Bernanke or the European central planners.

Oh, there will be more Fed actions, although they will do nothing except perhaps hold the stock market up a bit longer and drive Gold to $2,000.

At this point, it is all a charade designed to fool as many people for as long as possible. It will end in a collapse worse that will make people wish they could return to the 1930s instead of what they will experience. By that time, the smart politicians (oxymoron?) will be fueling up their jets to leave for safer places. Perhaps some will escape to Quaddafi’s compound.