Everyone is lauding the appointment of Bernanke as America's First Banker. Great. Econo-Girl is happy for you, dude.
Part of the joy is market uncomfortability at Greenspan's murmurs about overpriced assets. The first time he did this, all the talking heads spit and sputtered about an old outdated man who wasn't hip to the new economy. Of course Greenspan was correct in the end. How many annoyingly uninformed people wish they had listened to him now?
But at the time, it was the equivalent of mentioning that the Emperor had no clothes. You would have thought that Greenspan poked them with hot pig iron.
Again, quite recently, Greenspan issued a warning about 'froth' in some parts of the housing market. Again, all the people making money quickly protested, although this time they were nicer.
The hopes of Wall Street are that the new guy will stop interfering with prescient remarks. Stop stating the obvious, you Fed Chief, you! Don't point out the way of common sense. Don't refute the lies we tell to make money.
Econo-Girl is reminded when she got her last mortgage. The mortgage broker said, "Take an interest-only mortgage. The rates won't get that high." "How is that?" asked intrepid little Econo-Girl. "Because THEY won't let it happen," was the reply. "Who's THEY?" Econo-Girl asked. Of course the poor man had no idea. He went to a meeting at his company and some egghead getting a percentage said so. THEY. Who's THEY?
So the markets are hoping the U.S. is getting a less commentative Fed Chief. That is impossible. Since the markets do NOT ACT RATIONALLY, but instead heave and ho like an orangutan looking for his Ritalin, and over-react to anything, it is necessary for any Fed Chief to fill in the blanks on what is motivating them. And if a few sage words will work to highlight an oncoming train, then Greenspan, and now Bernanke, will indeed say something to the markets.
Even if it is afield of the topic of money supply and short term interest rates.