Four years ago, in the midst of intense panic, the stock market made its low. On March 9, 2009, the S&P 500 hit an intra-day low of 666, the ominous number that was being interpreted as the most devilish end of civilization as we know it. It was in that period that Hank Paulson and Ben Bernanke analyzed the situation and saw that the current conditions could once again resurrect damage that would destroy the US's (and thus the world's) financial structure - very similar to the damage seen during the 1929-32 Depression. These very wise and learned men instituted the measures needed to put massive support under that system.
So, here in the US we can give our thanks to Ben Bernanke, and the same applies to the rest of the world as they have begrudgingly taken this policy and implemented it. It is very interesting to see how the rally of the last four years has impacted the world. You can see that in the action of many of the indices. In the chart below, we show the action of the S&P 500, the German DAX, the MSCI ACWI x US, and the MSCI EAFE off the March 2009 bottom.
The US stock market, as measured by the S&P 500, has outperformed these major indices since that 2008 collapse, and by quite a bit compared to some.
So if someone tells you we do not need a Federal Reserve, tell them this story, and how here in 2013 we give thanks to Mr. Bernanke. Also share that in today's still weakened economy, it is MUCH TOO EARLY to start worrying about the next phase of Fed tightening. I am convinced that Bernanke will be able to neuter his stance, and the Fed's balance sheet, as wisely as he has provided the saving liquidity to bring this stock market back from the threshold of a 1929-32 type scenario.
So today, send Mr. Bernanke a little thank you note while you're counting your equity assets.
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