Mohamed El-Erian has a new book coming up this month. The veteran manager is well-known in the alternative investment community as the celebrated ex-president and chief executive of Harvard Management Company (HMC), the entity that manages Harvard’s endowment. He joined Pacific Investment Management Company (Pimco) in December. His book called “When Markets Collide” puts the current credit crisis in a global macro-economic context, looking at market issues but also monetary policies. The book, according to an interview, in the latest issue of Barron’s reveals that EL-Erian is not very favorable to the Federal Reserve Board’s recent actions. Well, he hardly is the only one. We haven’t read his book yet. But the interview provides an interesting aspect of his criticism, and that is the Fed’s radical decision in March to open the discount window to investment banks.
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The inflation hawks have been waiting for this for a while. For the first time, Federal Reserve Bank chairman, Ben Bernanke, addressed in a speech today [June 3] in Barcelona, Spain, a question that’s in everybody’s mind and bundled in one: Inflation and the Dollar.

Bernanke has no choice. After rescuing the banking sector and fighting the peril of a recession, the main concern now is the pain at the pump, which is almost $4 a gallon today versus $1.45 five years ago.
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After all the gloomy talk over the past three months with pundits, economists and top bankers predicting a bad, bad remake of the Great Depression or even worse, it’s time to reflect and look at the facts. No, it’s not all over yet. We’re still alive.

Some of us at HedgeWorld have been saying for months that the Titanic is not sinking yet. But we didn’t have a blog then to voice out our optimism. Of course, others on our team will not be so cheerful. This posting only reflects its author’s opinion. And that is: Cheer up! We may be heading for a disaster. But the economic picture in the US is not all that bad. Yes, of course, it may be a different story in four months. But one must live for today. And if really the US economy is like the Titanic sinking into frozen water, I’d say, right now, time for a Margarita. Because the sun is still shining on the deck.
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