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Brett Arends' ROI
Aug. 31, 2010, 12:01 a.m. EDT · Recommend (18) · Post:
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Summer's almost over -- get ready
First Take "?
Intel hopes wireless deal works this time around
By Brett Arends
BOSTON (MarketWatch) -- When are investors going to stop getting suckered by Ben Bernanke?
The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 10,042, +32.46, +0.32%) jumped nearly 200 points Friday after the Federal Reserve chairman's pep talk on the economy. Worldwide markets followed suit. And long-term interest rates rose on his sunnier outlook.
Yes, the Fed chairman seemed to rule out a double dip. And yes, he said he stands ready to pump more money into the system if it should falter.
But so what?
Reuters Federal Reserve Chairman Ben Bernanke (R) speaks with Federal Reserve Vice Chairman Donald Kohn.
On forecasts, the Fed chairman is about as useful as a New England weatherman.
As for the talk of more quantitative easing: A close reading of Bernanke's word's make you wonder if he even understands the crisis at all.
Let's look at the forecasts first. "I expect the economy to continue to expand in the second half of this year, albeit at a relatively modest pace," Bernanke said at Jackson Hole.
Good news? Some people clearly thought so.
But this is the man who four years ago predicted a "a leveling out or a modest softening" in home prices. (He also said households were in "reasonably good" financial shape, because their booming house prices were offsetting their rising debts).
Just over three years ago he said the subprime crisis "seems likely to be contained", adding that he saw "some tentative signs of stabilization" in house prices.
As late as April, 2008, with the great implosion just months away, he forecast "a return to growth in the second half of this year and next year." You remember that return to growth we had in the fall of 2008, don't you?
Last Friday he admitted the Fed had been as surprised as everyone else by the sharp downturn in the U.S. trade balance in the second quarter. So what's new?
When the time comes to write Ben Bernanke's biography, I already have a great title. How about "Behind The Curve"?
I don't want to be unfair. He issued caveats along the way. But so he did again last week. Nothing's changed. And maybe Ben Bernanke's economic forecasts aren't any worse than anyone else's. But that's hardly the point, is it? And even if they're no worse, are they any better?
And this isn't even the biggest concern arising from Friday's speech.
Brett Arends is an award-winning financial columnist with many years experience writing about markets, economics and personal finance in Europe and the U.S. He has received an individual award from the Society of American Business Editors and Writers for his financial writing, and was part of the Boston Herald team that won two others. He was educated at Cambridge and Oxford Universities, and has worked as an analyst at McKinsey & Co. He is a Chartered Financial Consultant (ChFC) and Accredited Asset Management Specialist (AAMS). His latest book, "Storm Proof Your Money,"? has just been published by John Wiley & Co.
With its core business showing some signs of slower growth, Intel has to make its latest acquisitions work this time around.
12:20 p.m. Aug. 30, 2010 | Comments: 4
- MrVincent | 11:40 p.m. Aug. 30, 2010
"Don't get fooled by Ben Bernanke http://on.mktw.net/cMmdRd" 11:21 p.m. EDT, Aug. 30, 2010 from MKTWArends
"Summer's almost over -- get ready http://on.mktw.net/btZdAy" 11:45 p.m. EDT, Aug. 23, 2010 from MKTWArends
"Are bookstores doomed? http://on.mktw.net/cVev9S" 11:06 p.m. EDT, Aug. 16, 2010 from MKTWArends
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