And now, for something completely different: The birth of the "BPT." The Bubble Prevention Team. If anyone had (valid) doubts that the "Plunge Protection Team" either existed at all, or was noticeable in certain markets, welcome to the new reality of a revamped Fed. This time, for real, whether we like it, or not. The New York Times reports that:

"The plan of Treasury Secretary Paulson to overhaul the financial system includes a crucial proposal: it would officially transform the Federal Reserve into a "market stability regulator" rather than merely a banker's bank. This aspect of the Treasury is a natural step in a historical trend. The Fed is no longer just a regulatory agency presiding over a narrow group of businesses called banks. Rather, its mission increasingly is to maintain macro confidence - confidence that the entire financial system is functioning well as part of the whole economy." 

"In recent years, central banks have not always managed macro confidence magnificently. The Fed failed to identify the twin bubbles of the last decade — in the stock market and in real estate — and we have to hope that the Fed and its global counterparts will do better in the future. Central banks are the only active practitioners of the art of stabilizing macro confidence, and they are all we have to rely on." continues the article.

The question becomes whether or not the Fed will now be inclined to identify and/or act upon a commodity bubble that has largely been in the making due to its own doings. The other question is how it might act in curbing such a bubble. We do not have the answers to these questions as yet, but it does not seem far-fetched to extrapolate that currency market intervention and/or commodity futures market changes in rules could make their way onto the scene.

At this juncture, the Fed might remain on a vigil and possibly let others do the work. Namely, the  G-7 wizards. FX Street.com - a favorite currency strategy site - opines that: "G7 finance ministers and central bank governors will gather at the International Monetary Fund / World Bank Spring meeting on 12-13 April, only two months after they gathered in Tokyo. That meeting's conclusion was that despite the ongoing market turmoil, the outlook for the global economy was robust. Regarding the currency markets, the central message was that China had to do more to increase the flexibility of CNY and to allow for a further appreciation of its currency. Attention is now centered on the recent sharp exchange rate movements that are regarded as undesirable for economic growth. Can the G7 finance ministers and central bank governors stabilise FX markets and what are the most likely outcomes of the forthcoming meeting?" and then adds:

"The G7 countries can decide to intervene in foreign exchange markets. If the exchange rate levels do not reflect economic fundamentals or if recent market movements have been so extreme that they have to be dampened, the G7 countries may take concerted action, implying that they will actively intervene in foreign exchange markets to support/weaken one or several currencies. The last time this happened was in 2000 to aid a very weak EUR. In 1985, 1987 and 1995 G7 countries also joined forces.

FXStreet concludes:

"However, the G7 countries do not always have to intervene physically. Verbal intervention can also be quite useful. The countries can express their views individually, but it has a stronger effect when the G7 backs a joint statement. After the meeting, a statement is presented and a single paragraph normally deals with exchange rates. The rhetoric of recent years' comments has not been particularly sharp or harsh, and focus has primarily been on China's reluctance to allow the CNY to appreciate fast enough."