To yours truly, the most interesting part of the Bernanke testimony was his comment about how the Bear Stearns (BSC) deal had to be done before the Asian markets opened. If nothing else, he pretty much confirmed what we already knew: The dog (as in the market) is wagging the tail (as in the economy,) so the Fed fears the market more than the economy.
Which comes first: the markets or the economy? The Fed, no doubt, wasn’t about to take the time to find out.
What we do know is that the market, in part, is about the perception of the economy.
So, should the Fed fear the market or stick to its knitting of focusing on the economy? Or, given the new world order, are they one in the same?
You tell me.