"FED inflou tremenda alta, quis criar efeito de riqueza. Aí acabou munição. Só nos resta digerir".
In perhaps the most shocking of mea culpa seen in modern financial history, former Dallas Fed head Richard Fisher unleashed some seriously uncomfortable truthiness during a 5-minute confessional interview on CNBC. While talking heads attempt to blame China for recent US market volatility, Fisher explains "It is not China," it is The Fed that is at fault: "What The Fed did, and I was part of it, was front-loaded an enormous rally market rally in order to create a wealth effect... and an uncomfortable digestive period is likely now." Simply put he concludes, there can't be much more accomodation, "The Fed is a giant weapon that has no ammunition left."
Fisher appears to be undertaking a major "cover-your-ass" episode, proclaiming that he was against QE3 which is what has forced "valuations to be very richly priced." In my tenure at The Fed, every market participant was demanding we do more... "It was The Fed, The Fed, The Fed... in my opinion they got lazy.. and it is time to go back to fundamental analysis... and not just expect the tide to lift all boats... and as [The Fed] tide recedes we are going to see who is wearing a bathing suit and who is not".
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É HISTÓRICO: FED CONFESSOU FRAUDE, MANIPULA MERCADO.
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É HISTÓRICO: FED CONFESSOU FRAUDE, MANIPULA MERCADO.
In a dynamite interview, Richard Fisher, former president and CEO of the Federal Reserve Bank of Dallas, gave what may be the biggest confession of recent financial history: the Federal Reserve knowingly engineered the US stock market recovery and created a huge asset bubble that is certain to collapse. While that is no news to readers here whose eyes are wide open, a “market put” has been denied by the Fed and by many market experts. That the market was a bubble created by the Fed has been denied, too; but Fisher clearly and strongly admits the Fed created a bubble that will have to deflate now that the Federal Reserve’s stimulus is back off. As one of the members of the Federal Reserve’s FOMC (the Federal Open Market Committee, which sets US monetary policy).Richard Fisher participated in and voted on all of the Fed’s policies of zero interest and quantitative easing, so he has insider knowledge of all the discussions behind the scenes at the Fed.
Here are the significant quotes from Richard Fisher on CNBC’s video:
- What the Fed did — and I was part of that group — is we front-loaded a tremendous market rally, starting in 2009.
- It’s what I call “reverse Whimpy factor” — give me two hamburgers today for one tomorrow.
- I’m not surprised that almost every index you can look at … was down significantly.
- Basically, we had a tremendous rally, and I think there’s a great digestive period that is likely to take place now, and it may continue.
- We front-loaded at Federal Reserve an enormous rally to accomplish a wealth effect.
- I wouldn’t blame [what is happening] on China. We’re always looking for excuses.
- It’s going to take awhile to digest this. I wasn’t surprised at last year. And I wouldn’t be surprised at a rather fallow performance this year as well.
- All of the managers I talk to — a lot of people are building cash positions…. Those [investors] that are taking a longer term view are being extremely cautious here, are raising their cash levels, are nervous about the valuations that are in the market.
- The values are very richly priced here, so I could see significant downside. I also could see just flat market for quite some time.
- Asked if saw a big unwind from the Fed’s 6.5-year policy and what it would look like on the way down, Fisher responded,
- I was warning my colleagues, “Don’t go wobbly if we have a 10-20% correction at some point…. Everybody you talk to … has been warning that these markets are heavily priced.
You have to be careful here and frank about what drove the markets…. It was, the Fed, the Fed, the Fed, the European Central Bank, the Japanese Central bank … all quantitatively driven by central bank activity. That’s no the way markets should be working…. They were juiced up by central banks, including the Federal Reserve…. So, I think you have to acknowledge reality. And acknowledging reality is what many in the mainstream media refused to do. Now that the US stock market appears to be crashing, is this confession by Richard Fisher to cover his own hind end, by saying, “I warned the guys about this, and I voted against QE3 because I knew it went too far?” Is he just the first rat to flee the sinking ship, or is he just the most honest of Fed officials who is now not on the board and so feels freer to talk? http://thegreatrecession.info/blog/fed-official-confesses-fed-rigged-stock-market-collapse-certain/
