More tough talk from Bernanke

Once again the US Fed Head is talking tough on interest rates. The 'massaging' of perceptions continues, but as Peter Schiff points out-'what is he going to do-raise interest rates 100 bps-big deal'. In addition, Treasury Sec. Paulson is talking once again about a 'strong dollar' and would not rule out intervention. No doubt they are going to do something about the relentless weakening of the USD. But how far they will go is anybodies guess, but the tough talk is unwinding some of the excess speculation. 2 yr bonds are closing in on 3%-currently 2.87%, while 10 yrs are at 4.05. The flatter yield curve and rising interest rates are not going to help the US Financials repair their balance sheets.
Lehman Brothers raises 6 bln in capital (4 bln common equity, 2 bln preferred at 8.75%) and participation is mainly US based-very little foreign buying. Maybe the foreigners (SWFs) have told the US that their money is no good anymore until they do something to stop the decline.

What does that mean-SLOW Growth if growth at all. The FED is once again following the mkt and not leading. ECB President Trichet called out Bernanke. Inflation is a problem and rates need to go up. Until rates rise above the money supply growth figures-talk is cheap.
Question remains-how vigilante, how long before initial move, how will higher rates affect the financials and real economy.