Wednesday, October 21, 2009

Is a Fed Governor Hinting at a Stock Market Crash Just Ahead?

Sounds like it to me.

These are truly remarkable words coming from inside the Federal Reserve. Reuters has the details:

U.S. Federal Reserve Governor Kevin Warsh on Tuesday called gains in Asian and U.S. stocks noteworthy and wondered whether those increases signal a return to financial normality after a wrenching crisis or raise the prospects for asset bubbles.

Stock markets in a number of Asian economies have posted hefty gains in recent months, Warsh said while moderating a panel at an Asia economic policy conference hosted by the San Francisco Federal Reserve.

"This is a remarkable move, certainly the U.S. has also seen a remarkable increase in asset values," he said

This is as close to a warning as you are ever going to get from a Fed governor.


  1. Whoa...Robert...slow down. Do you really think a Fed Governor can realiably predict the direction of the stock market? I don't recall any past successes.

    Sounds like he's fighting the last "war." Asset bubbles have become a popular rhetorical tool they are trying to use to slow down growth in the stock market. This goes along with their hint last week that interest rates will have to be raised ("rapidly") as they try to blunt inflationary pressures with rhetoric. Because they are not going to raise rates until employment begins to grow.

    In addition, the FED is not the only central bank to have pumped liquidity into the economy. Central banks all over the world have also inflated the money supply. SOme US companies continue to look cheap to European and Asian investors.

    On the other hand, the FED has little control over long-term rates and 10-year Treasuries seem overpriced relative to the rates they offer. What about a drop in T-Bond prices?

  2. It would seem to me there is going to be a bubble somewhere with all the printing going on. I'm no expert, but it seems the fed has the same mentality as politicians. What they did last time wasn't wrong, they just need to tweak it or do a little more of it.

    Jason -

  3. The FED can predict the stock market because the FED controls market direction through inflation. The DOW has nothing to do with the value of or prospects of the issuing company. The DOW moves inversely to the USD exchange rate.

    The FED bumps rates .5%, and the DOW will head the other way. He's not not predicting the market as much as he is saying that he hears pitch forks being sharpened and smells tar pots boiling and as a survival measure they are considering raising rates.

    What the FED and the DoT are doing, in collusion with the primaries, is little more than destroying public assets, merchant businesses and the economy so that the big primaries can buy these up. The primaries will keep some and sell others to international and state investors.

    The freeways will become toll roads. Golf courses will be built on National Parks and any free access the citizenry had heretofore enjoyed to assets held in the public trust will become pay for access private property.

    The FED and treasury are engaged in a Ponzi Scam on several levels. The aggregation of small businesses in the umbrella of Goldman's is but one. The NYSE has essentially become a front running Parlor for Goldman's.

    The mortgage bubble was intentional. It was rigged so that those holding the other side of the CDS contracts would when.

    Other evidence of the Ponzi was offered back in August when one market watcher noticed that cusips sold at DoT auction were purchased by the FED after passing through a primary's brokerage. The margin stand for a 7 Billion dollar purchase settlement when sold to the FED, two days after the auction was 250 Million bucks.

    It's kind of a variation on a theme play ran by Enron affiliate, Reliant Energy, on California rate payers back in 2001.

    That my friends is a classic PONZI. No doubt about it.

  4. What a joke!

    It's NOT a Stock Market Crash, as I see it, the entire System has already failed, it's all been a big show, til now.

    What is in the wings is that the Faith of the People as to the $ is going. The Faith is the ONLY thing that has kept the $ going.

    We are the ones that have kept the Economy going, anyway.

    We've just had about enough of this nonsense! We don't need them to keep threatening us, or keep making us afraid.

    I hope it Crashes OFFICIALLY real soon.

    We don't need them, the ptb, the govern, we can do very well without them. Better even.

    We can go to other Systems, make up our own Currency, or to Goods and Services - and at a pinch, use Barter, until we stabilize.

    We ARE the Creators, here!

  5. Efinancial- true that the world's central banks have all pumped liquidity into their markets AND the world's central banks all also happen to be controlled by the same families that control the member banks of the Federal Reserve here in the USA.

    So there you have it - an orchestrated destruction of the world's financial system.

  6. I think we are headed for a crash myself, but it is quite a reach to say this fed governor was "hinting" at one by simply observing the US has seen a remarkable rally. It HAS seen a remarkable rally.