What are the Chances?

Steven Pearlstein at the WAPO has some advice for Big Ben and Wall Street on the Wall Street debacle (debacle being the kindest word to attribute to this meltdown.)

It would have been better for everyone if the Wall Street herd hadn't tried to box in the Fed by creating these unrealistic expectations. It would have been better if the markets were focused instead on the unsolved problems in the financial sector, the falling dollar, rising oil prices and the continued deterioration of the housing market. But that's not the way it worked out.

So now, if the Bernanke Fed wants to retain its credibility and independence -- if it wants to have the flexibility to cushion the coming downturn without stoking inflation or creating a new set of bubbles -- then there is only one thing to do today:

Look Wall Street in the eye and just say no.

Now I say “What are the chances” because as the saying goes: you always leave with the one who brought you to the dance. And Wall Street helped bring Mr. Bernanke to this soiree!