IS IT JUST ME?

Couple of things on tv today that just made me shake my head in wonderment. You had to be up early (7:00 a.m.) to catch the well-publicized appearance of James Bullard, the President of the St Louis Fed and a member of the open market committee. The appearance was significant inamuch as Mr. Bullard has apparently come to the conclusion that the greatest threat on the horizon is that the U.S. will begin to resemble Japan circa 1990 with a deflating economy that must be attacked by even more aggressive in its monetary easing. With this view Mr. Bullard seems to be joining Bill Dudley of the New York Fed (to the extent that Bill ever had a view on anything...nice guy though) and what will undoubtably be the view of the new appointments when they come on board.

With interest rates effectively at zero, one wonders what Brother James is getting at but I suppose the Fed could once again go out and buy any piece of paper that isn't nailed down and inflate the hell out of its balance sheet and in so doing supplying piles of liquidity to the marketplace. So I watched this and I said to myself,

"Self, isn't there about $2 trillion sitiing on the balance sheet of U.S. Corporations? And don't the talking heads tell us every day that there are piles of money sitting on the sidelines just waiting for the right opportunity to get into the stock market, so buy ahead of those piles? And isn't there zip demand for C & I loans out there?"

Self: "You're right."

Me: So what the hell is more liquidity going to do?"

Self: "Beats the hell outta me."

Me: "Think there might be another reason the economy is in the crapper."

Self: "Could be."

Me: "Wasn't that the case in Japan?"

Self: "Yep."

Me: "You are kidding! You mean increasedl iquidity does not automatically equal economic expansion?"

Self: "May I suggest that when there is little confidence in what is going on, any increase in liquidity tends to end up under a mattress...as happened in Japan."

Occasionally, Self thinks pretty good.

A couple of hours later, The Leader showed up somewhere in Michigan at a GM plant to hail the success of his car company and the release of their new "Green" vehicle, the Volt. The Volt will cost 41 Large, run for 40 miles on a battery made by Koreans (in the midwest we often drive 50 miles round trip for dinner) and uses premium fuel for the rest of the time. The Prius costs about half that. Indeed the car is such a joke that not even the New York Times could prevent a review of the political decision that went into its production on, of all places, its op-ed page. It is a 60 billion dollar clown act but it saved union jobs. The Leader likes it. So I said to myself, "Self is this what you were talking about?"

Self: "Yep. When you run into stupidity like this and the arrogance to portay it as something other than a pure political handout you may run into a confidence problem."

Is it just me...and self?

Next week, Basel III and he Euros. Don't miss it...Have a great weekend.