Ignore the Hole

All eyes seem focused today on what our friend the Ben is going to say at Jackson Hole, Wyoming. Well, all signs are that it ain't going to be QE3 just yet, though I would not rule out some symbolic economic trick to try to support the markets.

The bigger question in my mind is why this is getting all the attention when our friends in Greece are on the verge of losing their battle. Seriously, they have tapped into their Emergency Liquidity Assistance (ELA) for the first time and this is not a good sign, not good at all:

http://www.telegraph.co.uk/finance/financialcrisis/8723588/Greece-forced-to-tap-emergency-fund.html

And Finland's refusal to support more aid to Greece without collateral seems to be a roadblock the EU has yet to figure its way around. Greece is not the biggest domino in this game but it may be the first with the only question being whether it is big enough to knock over the next one in line, which I will leave you to define for yourself. Indeed there are probably two separate rows of dominoes into which a Greece default will fall; first is the banks and second is other sovereigns. I suspect there is nothing Ben is going to say in the Hole that can come close to eclipsing what we are seeing in Greece.

Update: Okay, ignore what I said above about Bernanke. He came out this morning and said exactly what I thought he should say (though not necessarily what I thought he would say). No QE3 or other stimulus from the Fed presently, economy slow but moving along, and it is up to Congress and Obama to fix this mess as there is little the Fed can do. Now I think he should have been saying this a year ago when he launched QE2, but better late than never. Mind you, if Greece defaults and banks start to fail, I see a quick reversal with QE3 in our future, but for now so far so good.

Surprisingly to me, the market has taken the lack of news (which was expected) quite well. Perhaps some folks agree that there is nothing for the Fed to do and doing nothing is better than wasting resources doing stuff that does not work. Still, the market being up on nothing from helicopter Ben is a bit surprising to me. I mean, after all, you have the worsening situation in the EU (which did impact EU markets heavily today), the reduction in consumer confidence (which was expected but not quite so low), the reduction in second quarter GDP (again expected but not so low), etc., but the market is up nicely. Go figure.

Disclosures: None