Strange As It Sounds...

Strange as it sounds, I miss Alan Greenspan.

This certainly isn’t your Greenspan-run Federal Reserve Board. It is the Ben Bernanke era and a strange one it is for the markets. First, let’s be fair to Chairman Bernanke. He didn’t create the mess we are in right now. He just inherited it.

Greenspan is part owner and architect of this credit mess we are facing today in our country. Greenspan was the one a few years back that actually encouraged the use of adjustable rate mortgages. Keep in mind that it is adjustable rate mortgages that really put the sub-prime in sub-prime loans. I would argue that they are the main reason that most homes are going into foreclosure. When the adjustable rate changes and the homeowner cannot afford the payment, foreclosure is typically the undesirable ending.

Let me tell you something that I did like about Greenspan. He kept things a game. He spoke a language that some called “Greenspeak” or “Greenspanology.”

He spoke in code. Analysts would attempt to determine what he really said by interpreting his eloquent and sometimes vague language. He came across very confident.

Thinking back, that is what I liked about Alan Greenspan. Ben Bernanke is a totally different Fed Chairman. His words seem to send the markets into the tank. His speech to Congress today continued to strengthen this crisis of confidence that we have in the markets.

Now, I am the last person that wants the Federal Reserve Board to manipulate and play with markets. However, we need the Federal Reserve Board to act now. We need Chairman Bernanke to aggressively lower those interest rates. If not, we could have an even bigger mess on our hands as this continues.

So for those of you who are invested in the stock market and taking a bath in your 401(k) plans, this is what you look for. If the Fed acts fast and cuts rates, then there is a glimmer of hope that things might be OK for the economy. If the Fed continues to sit on their hands and just monitor the situation, then things could get very ugly for our markets.

Right now, capital preservation is the name of the game!

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