Since August, there have been numerous times when Bernanke was told he didn’t know what he was doing. Then he would do something never done before and immediately he would be lauded for his precise, tactical, and creative monetary policy. Surprise Discount Rate cuts and Surprise Fed Funds cuts are not really creative or new. But when you throw in the TAF and the TSLF and then currency swaps and the coordination with other Central banks and the repos and all the other things they’ve been experimenting with, you’d certainly have to agree he is creative. As for effective, like his boss says, I think we’ll have to leave that up to historians to decide.

Yesterday’s TSLF announcement was once again timed perfectly during the premarket futures action to provide massive effect. Somehow I just cannot believe the 8:30 am release was just a coincidence when you consider the same time was used for all his big ploys to screw short sellers and create a dramatic show of how he can spike stock markets for short periods of time. So to the extent he gets respect for being a great defender of the stock market, I think that is undeniable.

I am still waiting for a rally to begin without Ben. Since August, it’s been all about the government creating trading opportunities, not investors creating investing opportunities. Yesterday was no exception. Each selloff is coming from real selling, each rally is coming from the Fed, rumors about bailouts like Ambac, and short covering rallies. A lot is being made about the constant selling on strength but more important to me is the fact that the bulls are not initiating much other than real selling whenever they get the chance.

Yesterday was very creative and I won’t even get into the size or the coordination or the timing or the crap collateral or the 28-day duration. I’ll just concede that it was creative. And it was effective for spiking the stock market as a trading opportunity. I doubt it will solve the problems in the mortgage backed area. It made it less bad, but I don’t think it was a solution to make it better. As I have repeatedly written, I have faith in markets to deal with these situations - not governments. The market reaction was almost as if the muni market was fixed. Or the Commercial Paper market was fixed. Or the consumer was fixed. Or the dollar was fixed. Or inflation disappeared.  Or the housing resets all disappeared. Or the housing market is now appreciating……It was creative, but as for evidence that anything was really accomplished yesterday, I think historians will tell us a few decades from now.

I’ve been asked by a German trader whether the haircuts will generate a mark-to-market writedown situation for those securities being offered as collateral for the TSLF. I have asked the authority on the subject and am waiting for a response.