Comments on: Bernanke is responsible for the market meltdown http://www.creditwritedowns.com/2008/06/bernanke-is-responsible-for-market.html Sat, 21 Nov 2009 08:48:41 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: Why Real Estate Market Is Nowhere Near a Bottom: Caroline Baum - Credit Writedowns http://www.creditwritedowns.com/2008/06/bernanke-is-responsible-for-market.html/comment-page-1#comment-4211 Why Real Estate Market Is Nowhere Near a Bottom: Caroline Baum - Credit Writedowns Sat, 07 Mar 2009 06:02:57 +0000 http://www.creditwritedowns.com/2008/06/bernanke-is-responsible-for-the-market-meltdown.html#comment-4211 [...] posts on Caroline BaumBernanke is responsible for the market meltdownIs the Fed going to raise rates?Caroline Baum: Dollar Policy for DummiesCaroline Baum: Greenspan, [...] [...] posts on Caroline BaumBernanke is responsible for the market meltdownIs the Fed going to raise rates?Caroline Baum: Dollar Policy for DummiesCaroline Baum: Greenspan, [...]

]]> By: Edward Harrison http://www.creditwritedowns.com/2008/06/bernanke-is-responsible-for-market.html/comment-page-1#comment-61 Edward Harrison Fri, 27 Jun 2008 16:10:00 +0000 http://www.creditwritedowns.com/2008/06/bernanke-is-responsible-for-the-market-meltdown.html#comment-61 One other thing: I have invested heavily in commodities and oil over the past 10 years. I have also been a consultant to some participants in these markets. Almost every company I visited has told me that there was a huge gap in investment in capital and people after the 1980s collapse of commodities.<br/><br/>The fundamentals for commodities comes not only from increasing demand but also from 20-odd years of under investment. Even if we think we can invest in the resources, where are the people with the expertise to lead the next 25 years? A whole age cohort is missing. One other thing: I have invested heavily in commodities and oil over the past 10 years. I have also been a consultant to some participants in these markets. Almost every company I visited has told me that there was a huge gap in investment in capital and people after the 1980s collapse of commodities.

The fundamentals for commodities comes not only from increasing demand but also from 20-odd years of under investment. Even if we think we can invest in the resources, where are the people with the expertise to lead the next 25 years? A whole age cohort is missing.

]]> By: Edward Harrison http://www.creditwritedowns.com/2008/06/bernanke-is-responsible-for-market.html/comment-page-1#comment-60 Edward Harrison Fri, 27 Jun 2008 15:56:00 +0000 http://www.creditwritedowns.com/2008/06/bernanke-is-responsible-for-the-market-meltdown.html#comment-60 Food and oil have been rising faster. It's not going to be a one for one correlation. There are other factors like supply and demand at play. But, there is a commodities buvbble, particularly in oil.<br/><br/>My thesis is it's partly about global liquidity. The Fed is printing money and that money is finding itself to the hottest investment sector as it had before: emerging markets in the mid-1990s, tech stocks in the late 1990s and housing and leveraged buyouts earlier this decade. Now, its oil and commodities.<br/><br/>This doesn't mean there aren't fundamental factors underlying these moves. It means they have been immensely exaggerated by Fed policy as they were in these other bubbles earlier. Food and oil have been rising faster. It’s not going to be a one for one correlation. There are other factors like supply and demand at play. But, there is a commodities buvbble, particularly in oil.

My thesis is it’s partly about global liquidity. The Fed is printing money and that money is finding itself to the hottest investment sector as it had before: emerging markets in the mid-1990s, tech stocks in the late 1990s and housing and leveraged buyouts earlier this decade. Now, its oil and commodities.

This doesn’t mean there aren’t fundamental factors underlying these moves. It means they have been immensely exaggerated by Fed policy as they were in these other bubbles earlier.

]]> By: Mark Wadsworth http://www.creditwritedowns.com/2008/06/bernanke-is-responsible-for-market.html/comment-page-1#comment-59 Mark Wadsworth Fri, 27 Jun 2008 15:49:00 +0000 http://www.creditwritedowns.com/2008/06/bernanke-is-responsible-for-the-market-meltdown.html#comment-59 Agreed, Ben Bernanke is a smug so-and-so, but the link between low Fed rates and food/oil price inflation is fairly tenuous, bearing in mind that oil/food prices are rising much faster than everything else.<br/><br/>I firmly believe that oil/food is a bubble (have there been terrible harvests recently?) and yes, that is in part stoked by easy credit, but it's the house price bubble that was the biggest act of recklessness. Agreed, Ben Bernanke is a smug so-and-so, but the link between low Fed rates and food/oil price inflation is fairly tenuous, bearing in mind that oil/food prices are rising much faster than everything else.

I firmly believe that oil/food is a bubble (have there been terrible harvests recently?) and yes, that is in part stoked by easy credit, but it’s the house price bubble that was the biggest act of recklessness.

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