Bernanke's back

The media world and hedge fund/defenders should get off Ben Bernanke and the Fed's back in general. The action on Friday was the appropriate first response to a liquidity crisis in the front end of the curve. If you want to blame anyone at the Fed, go find Alan Greenspan for leaving rates too low for too long, creating the asset bubbles and credit risk ignorance that put the market in this situation.

The next two weeks are traditionally the slowest of the year, with Europe out for the entire month of August and the US wanting to get in the last two weeks of vacation before Labor Day. It remains to be seen how many people came back to the market. There has been strong volume in the equity markets. In the fixed income markets, volumes remain weak. Going forward, once the crisis/volatility settles down, expect market efficiency to return (it could be awhile). That means the bad will be punished and the good rewarded and all will be well, until the next bubble. Remember the musical chairs analogy; smart people recognize the bubbles coming and play it safe knowing the music stops. Arrogant people think they are smarter than everyone and the market in general and get overly burned during these corrective actions. I suppose as long as capitalism is with us, there will be these cycles.