Bernanke Blew It Big-Time: He Should Have Raised Rates Three Years Ago
Bernanke blew it big-time, letting the “recovery” run seven years without any significant increase in rates.
It is now painfully obvious that Ben Bernanke blew it big-time by not raising rates three years ago when the economy and markets enjoyed tailwinds. The former Federal Reserve chairperson, who has claimed the mantle of savior of the global economy, foolishly kept rates at zero until tailwinds turned to headwinds, at which point he handed Janet Yellen the unenviable task of raising rates as the headwinds are strengthening.
Ben Bernanke is not the savior who rescued the global economy; he is the clueless fool who plunged a poisoned knife in its back. After weathering the spot of bother in Euroland in 2011-2012, the global economy had multiple tailwinds in 2013–tailwinds that enabled Bernanke and the Fed to raise rates in a series of measured steps.
Tailwind #1: the Fed’s binge-buying of assets (QE3) was still ramping up in 2013:
Tailwind #2: the yield curve spread had bounced off its 2012 low:
Tailwind #3: market speculative positions and sentiment were solidly positive:
Tailwind #4: China’s economy and appreciation of the yuan had not yet weakened:
In April 2013, the market’s “recovery” had already been running for four years. By mid-2013, the S&P 500 had soared from 667 in March 2009 to 1,600, exceeding its previous all-time highs around 1,574–a gain of 930 points or 140% off the 2009 lows.
What else did The Bernank want in mid-2013–an infinite line of credit with the Central Bank of Mars? He had literally every tailwind a central banker could want to support higher interest rates–especially rates that could have clicked higher by tiny .25% increments.
…click on the above link to read the rest of the article…
