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Wednesday, February 24, 2010

Bernanke: Zero Rates Are "NEEDED"

Tis is not good news folks. Market reaction is totally irrational and will lead to disaster as it did in 2007. We are living through the same bubble mechanics. People celebrating zero rates because they read in some trading book that when rates go lower stocks rise. Everything is not that simple and nothing especially castles in the sky do not last forever. Bernanke is saying economy is bad and we need to keep the rate low. That is bad news, one which the markets should have tanked on. The market is acting like a headless chicken running around. And the biggest concern of Bernanke is that the banks have tens of billions they need to roll over the next two years. And if they cannot do these rolls at low rates, it will become apparent that they are insolvent. Bernanke wants to avoid this. Why else is the treasury renewing its SFA program??? I thought banks were making billions, no??? Or was it all a matter of lies and illusions as has been the case with the banks and the Fed for a while now.

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