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Bernanke wrong about subprime

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Rates are up, decisively: mortgages are 6.375 percent, taken by the 10-year T-note blowout from five weeks in the four-sixties to 4.77 percent, very much at risk for further increases. The end of the standoff between the recession-coming and all-OK camps was a three-act play, beginning with an exchange between former Fed Chair Alan Greenspan and Bill Gross, PIMCO's bond impresario. Gross confessed that he had been wrong as a recession camper, and Greenspan described the three-year interest-rate outlook: "higher." Act II was a whispering affair, a conference of central bankers devoted to new-age financial-market risks. The net result of kabuki speeches: central bankers everywhere are aware that there is an ocean of cash sloshing around the world, creating mini-bubbles and suppressing reasonable assessment of risk in markets. These pinstripers cannot determine any better than the rest of us whether the cash is the result of the world getting rich on multilateral trade, or nouveau financi...