Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Federal Reserve Strikes Gold! A Genius to Save the US Economy

Interest-Rates / Credit Crisis 2008 Jul 13, 2008 - 02:07 PM GMT

By: Money_Morning

Interest-Rates

Best Financial Markets Analysis ArticleKeith Fitz-Gerald writes: Every market cycle has its genius. Even a market cycle as wild and volatile as this one has been.

And the latest genius might be just what the U.S. Federal Reserve needs to restore order around here: She might even be able to bring credibility back to the global financial markets.


Elizabeth Duke goes by "Patsy."Elizabeth Duke goes by "Patsy." And while the nickname may be soft, the person behind the moniker isn't soft. In fact, we believe that Patsy Duke - a career commercial banker - is the only Federal Reserve insider that understands how the global money markets actually work.

As such, she might just be the next central bank chairman.

We say that because, unlike current Fed Chairman Ben S. Bernanke and the rest of the Beltway Boys - all of them academic theoreticians, data experts, or policy wonks - Duke has real commercial banking experience .

A Real "Find" at the Federal Reserve

Over the last 32 years, Duke worked her way up from the teller's window, where she started, to an executive vice president's post at Wachovia Corp. ( WB ). Along the way, she also became the first woman to chair the American Bankers Association - no small feat, considering how much of an "Old Boy" industry banking has always been.

Duke actually understands the consequences - what will happen - when you hand out $37.5 billion in taxpayer-subsidized freebies a week like the Federal Reserve is doing right now. And as the only commercial banker on the Fed's governing board, she's literally the only one with a firm grasp on the key regulatory issues the central bank should be addressing.

We realize that whenever someone hears the word "regulatory," there's an almost-unstoppable urge to yawn, followed by the desire to surf the Web for last night's West Coast baseball scores.

But don't be so quick to forget that the seeds of the current global financial crisis were sown by the almost-complete breakdown of mortgage-lending standards and banking-industry oversight - some of which can be laid right at the feet of the arrogant theoreticians who thought they knew better and who viewed the borrowing public (read that to mean consumers like you and me) as merely a bunch of numbers.

In the interest of realism, let me say right now that for Patsy Duke to be given the Federal Reserve's scepter , she's clearly got a long line of hurdles to clear. But we're hoping that she does.

As Money Morning readers know very well, I believe that Team Bernanke fishtailed badly as it tried to get up to speed on the subprime mortgage mess, turning what could have been a very clean race into the Global Garbage Grand Prix. And the central bank's weak-dollar policies have the potential to hurt the U.S. economy for years to come.

The Financial Backdrop Facing the Fed

From a global perspective, fears of an ever-worsening contagion finally seem to be subsiding even if a weak housing market, a badly outdated regulatory system, and increasingly illiquid funds and still more write downs suggest the risk of a sharp economic pullback or even a recession are still extant. But those are the very types of insidious financial nightmares we're hoping Duke's influence and experience will help prevent.

None of this eradicates the inflationary pressures we're all feeling right now.

But the chances are very good that Duke is the first Federal Reserve governor who understands, on a personal level, just how hard it is to make ends meet when the economy slows down, inflation takes hold, and investors get pinched.

Of course, none of this really matters unless the markets turn around. But when it comes to the Fed, the distinction of having a single, real-world executive included in its ranks will help it restore confidence, and perhaps even fix the financial markets before they get any worse.

News and Related Story Links:

By Keith Fitz-Gerald
Investment Director

Money Morning/The Money Map Report

©2008 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in