BEST OF DOUG NOLAND

June 8, 2005

The global marketplace for financial assets – especially bonds and interest-rates - has become circus-like, recalling the fateful exuberance so prominent during the climax of the technology Bubble. And while Richard Fisher may be no Henry Blodget, the new President of the Dallas Fed embodies the current audacious and imprudent environment. Whether it is playing a simple game of basketball, trading securities, or managing monetary policy, blissful complacency welcomes a lack of focus and attendant blunders that will seem almost incomprehensible at that point when the expected positive outcome is seen to have needlessly slipped away. Hopefully, the Fed is not as complacent today as they were in early 1999 - with 4.75% Fed funds and ultra-easy "money" providing ample fuel for the building tech blow-off….

And perhaps the Fed is ready to declare quick victory, pack their briefcases and cheekily celebrate after nine effortless little baby-step innings. Yet little do they appreciate that it is a best-of-seven series, and their wily opponent has been happy to spot them game one. The current interest rate, liquidity, speculation, economic and global backdrops are conducive to only greater Monetary Disorder and unwieldy imbalances - both at home and abroad. Would $70 crude, spiking commodities prices and a long, hot summer housing mania catch the Fed’s attention?