Mr. Bernanke has been around much longer than most people know, but he's stuck to his guns on the RIGHT fiscal policy even when his BOSS (Mr. Chairman hissownself - Greenspan) was an adversary in approach theory.
Mr. Bernanke was right more often than he was wrong, and he's right today.
Bush is just announcing the FHA backing of re-fi potential for sub-prime bankrupts to obtain a fixed-rate / guaranteed (27%?) gummint (INFLATIONARY) loan. This is known as "throwing it on the wall, hoping some of it will stick", but it works to some degree. The Lenders will fail by the numbers if something isn't done, so the Fed & the FHA are going to pump money (faux currency, printed freshly) from both the TOP of the pipe (Fed Funds rate to Banks) and from the BOTTOM of the pipe (borrowers who otherwise would simply go bankrupt & not pay a dime). If the errors of Greenspan's approaches aren't inflated to lower the floodwaters at the Banks, the Feds MUST and WILL close each Bank as the Asset/Liability ratios fail to meet minimums (Long the law of Banking). If the Lenders are allowed to continue functioning at huge losses, the DEPOSITOR's money is flushed away, then the End Times begin in just a couple of days as the withdrawal-panic takes its course in the streets.
Now, Ben's known as "Helicopter Ben", primarily due to his speech at the link below (2002, when he wasn't DA BOSS yet, DA BOSS was, and DA BOSS didn't agree with Ben). Bernanke taught economics, focusing on the 1929 Depression and what the Government did WRONG to double its length and depth (as Friedman SCREAMED about and was roundly ignored for at the time). Mr. Greenspan believed in NO inflation, Mr. Bernanke (rightly) believes in SOME inflation in order to protect against its monster-Sister - DEFLATION (AKA: The End Of The World As We Know It.)
http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm
Now, in case you aren't yet interested in becoming a student of the guy who's going to pull your strings for the next couple of decades, READ WHY HE IS REACTING SO FIERCELY (and long before TEOTWAWKI happens):
http://www.forbes.com/markets/2007/08/09/bnp-paribas-subprime-markets-equity-cx_ll_0809markets06.html
That's been "news" almost a month, yet few realized the global nature of the DEFLATIONARY events forthcoming from the formerly-known-as-silly Sub-Prime Investment (AKA Hedge Funds) portfolios and the Institutions silently holding them.
Now, who IS this little outfit (BNP PARIBAS), you ask. Just a little start-up Bank in France, right? http://en.wikipedia.org/wiki/BNP_Paribas
The French OIL-FOR-FOOD Bank? Hey, WAIT A MINUTE... Largest EURO BANK? Whuhhhh? Uh oh... (It's only three of its big investment funds, though - all's fine here, folks, move along.)
Hang on, learn as possible, 'cuz you're sure going to have to find a way through what next visits the rest by surprise.
DEFLATION has already hit the RE Market hard, but the first round isn't yet over. It's a 10-or-more-round fight and the winner will be the guy who entered the ring with the biggest bag-o-cash and keeps his gloves firmly around its openings.
But then, the PMA (Positive Mental Attitude) crowd tells me I'm a negativist in times such as these. The past cycles of the same sort brought similar complaints from the "Smile Your Way Out" bunch, but each cycle brings a new crowd of people who doubt the facts of each cycle's end-times. The folks from the last cycle are at JOBS and can't debate during working hours (such as now, since I'm at work doing RESEARCH to see if I can see the next train run over this bunch of PMA believers...). WORK LIKE YOU'RE BROKE even when you aren't and you probably won't BE as broke as often as those who think "wealth" is when they can buy something else 'cuz their credit cards aren't ALL maxed out.
"As of Wednesday, the bank is not letting anyone into or out of the funds, though it maintained this was a temporary move until liquidity returned to the market. "
Heh heh - betcha there were a few PMA types still holding on waiting for that fund to recover when they realized they were FLAT BUSTED by surprise.
Believe as you will, the facts won't care
I won't be smiling when MY reserves are trapped in the closed Banks, but by then it won't matter what you have/don't have - the currency in your pocket/mattress will be of no worth for a while anyway.
SMILE ANYWAY - it's a beautiful day and you get to breathe and everything. Smile at work if at all possible. In your ample spare time, learn all you can about Bernanke, as he's going to do EXACTLY what he knows so well must be done unless someone takes him out of the Fed Chair. That ain't likely, I assure you.
Don't forget, though - it's BUSH's fault - he made the French do it 'cuz the French love him dearly.
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