The Kong of Monetarist Monkeys Proves Lousy at Liars Poker ~ The Risk Averse Alert

Thursday, November 06, 2008

The Kong of Monetarist Monkeys Proves Lousy at Liars Poker

The Bank of EnglandWell, it took all of one day for the Bank of England to confirm yesterday's analysis.

In my 20/20 Hindsight Meets $20 Million Foresight I indicated, "A 'dynamic' move ... has the effect of lending greater analytical certainty to past and present market action, as well as confirm the unfolding trend."

The BoE's unexpected 1.5% rate cut has done just that.

The London Telegraph says, "By any historical measure ... the action by the Monetary Policy Committee of the Bank of England was as dramatic as it was welcome." I do not recall... Was the Emperor pleased to learn he was wearing no clothes?

There's no denying America's monetarist monkeys got their reward today for degrading the integrity of the U.S. Treasury, allowing it to become the OTC derivatives guarantor serving the nation whose philosophical trash (Adam Smith) is most directly responsible for turning the United States from once being a leading industrial powerhouse into a debt-laden scrap heap with a penchant for casinos.

More critical, though, in consideration of the hand the BoE revealed today are the passions of those Americans who by margins of over 100-1 flooded the Congress with their objections to the so-called "Emergency Economic Stabilization Act of 2008." The BoE apparently sees the wisdom of subduing these passions now that the party of FDR has gained control of Washington.

Act I of a power play ... featuring chaos leading to blackmail ... has definitively set the stage for years to come. The BoE's concession looks to be but the closing scene deceptively presenting the villain as benevolent friend. Oddly enough, it was an Englishman who was fond of quoting Stalin, saying, "In wartime truth is so precious that she should always be attended to by a bodyguard of lies."

Jolly good show...

Wasting no time to kick off Act II, Kong's faithful chimp, Senator Chris Dodd (D-CT), got on board with the push for a regulatory architecture fitting the 21st century. You would think the son of Nuremberg Trial prosecutor, Thomas J. Dodd, might possess a more enlightened grasp of the U.S. Constitution's intention to protect human dignity, given the Congress' power "to establish ... uniform Laws on the subject of Bankruptcies throughout the United States." This sure seems a remedy well-suited for resolving a most precarious situation wherein, according to Senator Dodd, "[just] six weeks ago our economy teetered on the precipice of collapse."

What is an outside observer to conclude, then, of this ongoing attempt to sustain the unsustainable? Some fantasies die hard when power hangs in the balance. Clearly, those whom the gods would destroy, they first make mad...

In Picturing the [Stock Market's] Bottoming Process (published 10.30.08) look to the early February '08 period. All the technical evidence indicates that's probably where we're at...

Fast Money
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