I have one more “nail to put in Bernanke´s coffin”. I´ve already told the story of how he “chickened out” simply by not doing what back in 1999 he advised Japan to do to try and get out of its “hole” (see “Japanese Monetary Policy…” on the Suggested Reading list). For many years, even before becoming associated with the Fed, first as governor and later as its Chairman, he went on and on about the importance of “communication”, or how the Fed shouldn´t “surprise” markets (see “What happens when Greenspan is gone” on the Suggested Reading list).
It appears he has “forgotten” everything. The successive QE program is weekly effective only, so open to “attacks” from many sides. And makes for bad communication about the Fed´s intentions as this FT article reminds us:
When the rate-setting Federal Open Market Committee meets on April 27, it is unlikely to limit its options by ruling out asset purchases beyond the second $600bn “quantitative easing” programme – or “QE2” – that is due to finish by the end of the second quarter. Fed officials, however, know that announcing more asset purchases at the last minute would disrupt markets. Silence on a follow-up “QE3” at next week’s meeting would therefore signal that their current intention is to complete the $600bn QE2 programme and then stop.
The original monetary induced crisis is not being resolved and the derivative fiscal crisis is “ballooning”. So no surprise that the S&P has downgraded the US outlook from stable to negative.