Bernanke's best bet is to say nothing

Federal Reserve Chairman Ben Bernanke will be at the Fed's annual retreat and he is expected to talk about the agency's plans to try to make the credit markets more stable. His best bet would be to say nothing and that the Fed will take events as they come.

According to MarketWatch: "Bernanke will walk a fine line during his speech on Friday to open the Fed conference on housing and the economy. He'll want to appear in touch with the market turmoil while at the same time maintaining Fed flexibility and independence, according to Fed watchers."

The Chairman's problem is that he does not know any better than most market analysts what will happen next. The subprime debacle caught ratings agencies and hedge funds by surprise. And, the people at those institutions had a huge financial stake in understanding the situation and handling it correctly. Even they got it wrong.

There would be a temptation to say, yes, we will cut rates. We will save the day. But, there may be no day to be saved. Today, President Bush will come out with his plan to help the subprime market. If the program is well constructed, it may be enough.

And, Bernanke can enjoy his trip to the mountains.

Douglas A. McIntyre is a partner at 24/7 Wall St.