The media surely did not cover much relating to Chairman Bernanke’s speech in Rhode Island. But in his speech, he really paints the dire state of the US federal, state and local budgets.
You can see the transcript of his speech on the Federal Reserve’s website.
Link: http://www.federalreserve.gov/newsevents/speech/bernanke20101004a.htm
Pay close attention to the following section of the speech:
- The Need for Fiscal Sustainability
Here Bernanke points out the dire fiscal situation of state and local government and how it will affect the economy and the financial markets. Meredith Whitney and Warren Buffet recently also warned the possibility of certain state bailouts.
as this all should be alarming…right now the market is trading on the optimism of more fed money and the fed not letting the market fall..that was evident on sept 1st..the only thing that will turn this market signficantly around in the near term would be if the fed comes out and says they will not go through with qe2 or if qe2 ends up being a much smaller commitment than all is expecting..until then, imo, the new floor to this market has been raised from 1040-1050 area to 1100-1131 area and have a feeling 1200+ is not far off….however, I do agree that we are still teetering on a very tight wire and is why I have been adding slowly to the vxx that I started at 1048 and will add again if we hit 110-1175, then more at 1200-1220…I am certain that the tax issue will also come into play shortly and am still leaning more towards tax cuts for those below 250k..I think they will hold out for this as there is not strong data to support suspending for all…the only way imo, there will be tax cuts for all would be if there is just a republican beating for both houses Nov..until then…buy the dips
ZSun- thanks for posting this link.
ChicagoChris: yes. I am amazed each day the market jumps with knowledge of QE2 and ongoing fed stimulus. At some point the balloon explodes. Then, look out below. Our society has been built on a series of bubbles. As we speak the fed is attempting to inflate another bubble as a means to continue a lifestyle which is beyond our country’s means. At some point we fail. Bernake was surprisingly candid in his presention. Check out ZeroHedge if you have not already done so.
cheers