Section 2 - Economic Pillar (cont.)
B) Commulism Impact Factors
The following insights are provided to dig into a few key granular areas or factors which will impact CCMP policy going forward and identify some integrated, actionable trigger points. Call them the Bernanke, Oil, Gold and Rate Cut Assessment “Commulism Impact Factors”:
Bernanke Strategy:
Worth noting is that Fed Chairman Bernanke “appears” to already understand the Commulism threat, evidence his clever but masked approach (reason) to lowering interest rates. While he has recently been lambasted in the media and investment communities for not having the big picture as respects recent policy actions and statements, he does indeed seemingly “get it” in a much different and correct way - It’s not the credit crisis, it’s Commulism.
A perfect proxy for the collective media and investment communities “Bernanke bashing” is outspoken Jim Cramer of CNBC Mad Money. Love him as an intelligent entertainer but he’s completely FUBAR’d (excuse my military) this most important call. Then again, no one’s perfect. He does however redeem himself on a different matter later in this section.
So Mr. Bernanke, Cramer may “boo ‘ya”, but this Analyst is here to “applaud ‘ya”.
When one considers the usual need to cut rates is to predictably stem a forecasted recession 6-12 months on the horizon (given it takes that long for a rate cut to have substantive economic impact), one must argue with the logic to do them now, that is as respects the issue of recession only. That said, there is no real “traditionally inherent” need to (now) reduce interest rates in an economic environment encompassing a record low dollar, record high oil prices and GDP growth (despite many economist recession-eers) still positive, and (mild) recession if occurring, already at the doorstep, not 6-12 months away. In reducing rates to stem recession, then a case of being a day late and dollar short.
Late Publishing Note – Given the service sector data released Feb. 5, 2008, a (very) mild recession is now likely (underway)..
In fact, Mr. Bernanke stated before Congressional Committee on Jan. 17, 2008 that he saw a slowing (not recession) during the first half of 2008 and an economic pick-up in second half. He’s not panicked like others.
Why is he not panicked and why is he lowering rates? Because he is beyond the Pollyanna tempest in a teapot recession cries. Instead, he’s focused on addressing the big “long term” economic threat picture (Commulism). The byproduct in doing just so happens to be avoiding what most others fear – possible near term recession, while too providing a platform to both challenge Commulism and create sustainable growth for the U.S. economy.
So either Mr. Bernanke is the world’s smartest idiot as Jim Cramer would argue, or he’s the brilliantly courageous pioneer in understanding and engaging the new global battlefield of geo-financial/economic warfare. Again note, “brilliant” as respects uniquely understanding the real threat being Commulism, not recession, yet certainly not “perfect” in all the interim steps to address the aggregate threat, as evident later in this section on the economic stimulus package.
Mr. Cramer et al, this Analyst takes a contrarian view to your own and argues for the brilliant pioneer branding for Mr. Bernanke as supported below.
Mr. Bernanke doesn’t fear what the Analyst will coin “Responsible Recessions”. In other words, he fears not a “healthy recession”, to the point that he astutely realizes that nothing goes up forever and there always needs to be the expected pause that refreshes. Or perhaps better characterized as an argument for no pain, no gain.
What he does however rightfully fear, is what the Analyst will also coin as an “Irresponsible Recession”, one which would be healthy and minimal but for the fact it was injected or triggered with a performance enhancing dose of misplaced hysteria, thereby artificially exacerbating the situation, to actually create an economic downturn where one was not imminent or expected and/or actually making an expected downturn much worse.
In times of “irresponsible recessions” and related market chaos and meltdown situations, as the one he’s fending off now, Mr. Bernanke must put his grander plan on temporary hold and grudgingly step in, not to treat the economy but rather to cure the panic. In fact, he becomes the antidote to the market’s periodic unplanned “irrational irresponsibility”.
