Fed's new man boldly prepared to go where saint feared to tread

ONE OF THE frequent failings of Asian investment gurus is that soon after they reach their exalted status they stop looking at Asia and concentrate mostly on the doings of the US Federal Reserve Board.

'Fed watchers' is what these sorts of people are called. Ask them what they think of the Thai stock market and they will tell you that the next Federal Open Market Committee meeting will be held in two days' time, at which point US interest rates could go up or could go down or could go round and round.

This, they will say, means that the future lies ahead of us and, although it all depends on market fluctuations and unforeseen factors, the house view leans towards cautious optimism on Thai share prices.

Perhaps I do them an injustice but I was a minor Asian investment strategist myself for many years and I cannot protest complete innocence. All I can say is that I had plenty of company. Let me revert to a spot of Fed watching today as we are at a point where it may have some significance to us with our peg to the US dollar.

A new Fed chief, Ben Bernanke, has just been picked to succeed Saint Alan Greenspan. Mr Bernanke has definite views on how he should do his job, including setting a target rate of inflation for monetary policy, a stricture that Saint Alan always shunned.

Mr Bernanke believes that we no longer need to worry about depressions in the economic cycle. They were a danger when monetary policy was chained to the gold standard and the US government could not simply flood money into the system.

But it can do so these days, he says, which means that the printing presses can be cranked up to full speed if depression threatens and easy money will then get the US out of its fix.