Populism vs. Bernanke, Round Two 30 comments
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It seems just yesterday that Ben Bernanke was rehearsing for the role of the Alzheimer's patient antagonist in Joel Schumacher's latest mad scientist-becomes-insane global dictator B-grade movie, before the House Committee on Oversight and Government Reform, after firing back with a catatonic "I don't recall" after catatonic "I don't recall" when asked to remember even one of the events in what historians will likely one day consider among the most critical 24 hours for modern capitalism. Many thought that this spectacle was merely a way for politicians to score populist points in a McCarthyesque witch hunt sequel of the villain de jour play. It seems they were wrong.
A letter submitted yesterday by members of Congress is now demanding an in-depth investigation into whether the "Federal Reserve has overstepped its authority and abused its power under current law (where it already wields considerable regulatory strength and broad authority)" especially now that the President, under the guidance of certain individuals of his financial advisory committee, is hellbent on "concentrating extensive new power in the hands of one regulatory entity with little to no direct accountability to the public."
In a fashion comparable to the fate of HR1207, which started off as a small snowball (in hell, of all places) and has the potential to become an avalanche, so does this petition deserve the support of all the same cosponsors of the Audit The Fed bill. Zero Hedge applauds the initial efforts by the following members of Congress: Garrett, Carney, Grayson, Kaptur, Price, W. Jones, Duncan, Paul, McCotter, Blackburn, Burgess, Adrian, Smith, Bachmann, Gohmert, Burton, McHenry, and Posey; we are certain that hundreds more will eventually stand behind this petition. The Fed's time as an unaudited and unaccountable institution is at an end - it is now just a matter of time.
The President now faces a major choice: Do the right thing, avoid the several conniving voices that whisper sweet manipulative nothings in his ear, and expose the Fed for the nebulous and crony mechanism it has become in the hands of a select few, or do nothing and let his successor be forever remembered in history for doing this one critical and righteous act.
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This article has 30 comments:
The truth? Truth seems hard to find these days in the banking world, but I believe it is truthful to say that any complete melt-downs we've avoided to this point can be credited in no small part to the actions and soothing public demeanor that Bernanke has provided. Since those awful last months of 2008 and first months of 2009, it seemed only one thing was predictable: that Bernanke's words had a calming effect on the markets.
Having said that, when more powers are being considered for the Fed, I expect even bernanke would appreciate some audit process. Still it's not like he acts alone. I'm less concerned about reining in Big Ben (the Fed) than ensuring more oversight exists for Big Banks!
Reminds me of a line from Casablanca:
" Round up the usual suspects. "
I suppose information exists regarding what institutions borrow from the Fed overnight, in what amounts, and how frequently. If so, it would be interesting to extrapolate from that to what use those funds are being put. I'm not a conspiracy theory guy, but I just beliee that transparency is a good things. If something needs to be kept a secret, can it really be good? Accuntability is a step in the right directon.
1. the fed is holding trash assets
2. the fed is a crony of the banks which own it
3. the fed is insolvent but for their ability to ignore the performance of their assets
On the one hand the truth is the truth on the other do we really want to open that Pandora's box or are we better off praying that it will not be opened until we are dead? How much of a global financial crisis would the revelation of an insolvent Fed cause?
You slugs always do the same thing. come out of nowhere with a post that could have been written only in some kind of bizzaro fairy tale. If you had a few hundred posts I believe you perhaps. I also have no doubt that each and every post tyler makes someone from industry is watching to put some propaganda on line.
Let's see, what does greenspan currently make with his hedge fund, and what does he get for speaking fees. So please do not tell me he has no interest in giving the industry exactly what they want.
This man's record is an utter disaster. he has given industry any and everything they could want, and he was too stupid to now that goldman was manipulating it (with the computer) when he didn't.
Each and every statement and prediction he has made about the crisis has been wrong, he thinks it is a liquidity crisis (not a solvency crisis) which just happens to suit the financial interests of wall street. My advice is to go check out some of Peter shiffs vidoes on Youtube. there are a number of lovely video montages that will remind you just how big a fool he is, and how wrong he has been all along.
It also shows you do not know your histriy because he was specifically warned abut the housing bubble, what would happen and he ignored it. I posted the bloomberg article somewhere on this site.
I hope you are getting paid to spill your drivel, because if you believe it I feel sorry for you.
On Jul 10 04:40 PM vester wrote:
> It's not like Bernanke has share options or the expectation of a
> huge bonus to drive his actions. So on the original testimony, I
> don't really care who was telling the truth - although I'm more inclined
> to believe Big Ben.
>
> The truth? Truth seems hard to find these days in the banking world,
> but I believe it is truthful to say that any complete melt-downs
> we've avoided to this point can be credited in no small part to the
> actions and soothing public demeanor that Bernanke has provided.
> Since those awful last months of 2008 and first months of 2009, it
> seemed only one thing was predictable: that Bernanke's words had
> a calming effect on the markets.
>
> Having said that, when more powers are being considered for the Fed,
> I expect even bernanke would appreciate some audit process. Still
> it's not like he acts alone. I'm less concerned about reining in
> Big Ben (the Fed) than ensuring more oversight exists for Big Banks!
On Jul 10 06:36 PM Philip Gvinter wrote:
> So here's the giant elephant sitting in the "let's audit the fed"
> room. What happens when we find out that :
>
> 1. the fed is holding trash assets
> 2. the fed is a crony of the banks which own it
> 3. the fed is insolvent but for their ability to ignore the performance
> of their assets
>
> On the one hand the truth is the truth on the other do we really
> want to open that Pandora's box or are we better off praying that
> it will not be opened until we are dead? How much of a global financial
> crisis would the revelation of an insolvent Fed cause?
I truly fear that the level of corruption we are experiencing is beginning to rival the levels the USSR experienced in the 1980s. The same abandonment of principles is happening here as happened towards the end of the communist regime there.
Once the core principle of our financial system, the efficient allocation of resources to businesses and individuals looking to increase production, has been abandoned and replaced with useless paper instruments that do not invest in underlying economic activity the end becomes inevitable. We have moved away from investing in actual assets and into trading paper instruments which have no purpose but speculative gambling. Any financial product backed by swaps and sold to the general public or any swap that is not a genuine hedge should not be sold.
On Jul 10 07:22 PM dcb wrote:
> No, we nationalize and get to a real solution instead of one that
> suits wall streets interests and wastes money and time. while our
> economy goes to hell and bankers get their bonus!!
On Jul 10 05:22 PM ken3602 wrote:
> Problem with Bush was simple. His brain was simply not capable of
> processing/understanding complex issues. On the other hand, our current
> President Obama seems to fully understand core issues of many complicated
> problems we are facing. The only problem with him is that he is too
> smart (and even seems enjoying) in playing political games. This
> gifted ability to strategically place his next moves to win each
> game is unfortunately not necessarily the thing we need to solve
> this massive economic failure we are facing at this moment. His several
> smart moves could end up creating another catastrophe in a near future.
> I just hope he can foresee that doing the right things (and losing
> couple of games) will increase a possibility of bringing this country
> back on right track even if it could harm his political power of
> this day.
Look. Ben's most compelling argument is that essentially the cost of borrowing will 'go through the roof.' And if interest rates go through the roof then unemployment will skyrocket and the vicious cycle will undermine the American economy and essentially the global economy in most places. And it is a fine reason to slam a lid on this bill.
And being born in 1967 makes me a 40-something w/o children yet. And it means I'm not a baby boomer or a Gen X/Yer. In retrospect I am happy to be sandwiched in between the generation that perpetrated this economic mess on America and the brainwashed generation that - with the assistance of said baby boomer - helped to perpetrate this bull**** change story on America. The latter - the Useful Idiots are quite the bunch aren't they. To paraphrase a great line from Animal House - a movie I had to sneak into as a minor - ultra-skinny, ignorant-to-facts & pretending-you're-from... is no way to live your life.
How does any of this pertain to the article? Well as I plan my exit strategy from the grips of Rham & Co I truly do not wish anymore misery on my homeland. And the sooner we deal with the inevitable rise in interest rates the sooner the children and grandchildren of Generation X & Y can't stop making the grotesque payments on the US debt.
And if that means that Ben must show to the world how bad we (really you - I've been frugal by choice for some time now) screwed it all up then so be it. And if it means that the hollow and farce claims to "the greatness of the baby boomer" fall like - well pardon the pun - a house of cards the so be it. And if it means unemployment at 20% for the next decade then so be it.
Or will we make a choice so selfish that we pass this problem on to our kids that aren't even born yet? For that we should rot in hell. No?
On Jul 10 07:34 PM Philip Gvinter wrote:
> I hope that you are right but the chances of systemic collapse vs.
> harmless nationalization seem fairly high. Also how well have our
> elected officials really done in representing the national interest?
> I mean congress is elected and are public servants right?
>
> I truly fear that the level of corruption we are experiencing is
> beginning to rival the levels the USSR experienced in the 1980s.
> The same abandonment of principles is happening here as happened
> towards the end of the communist regime there.
>
> Once the core principle of our financial system, the efficient allocation
> of resources to businesses and individuals looking to increase production,
> has been abandoned and replaced with useless paper instruments that
> do not invest in underlying economic activity the end becomes inevitable.
> We have moved away from investing in actual assets and into trading
> paper instruments which have no purpose but speculative gambling.
> Any financial product backed by swaps and sold to the general public
> or any swap that is not a genuine hedge should not be sold.
To save the fed
1. Fire Bernanke replace with a banker that makes limited public appearances and says little as possible with lots of hedges. Economist are trained to do that.
2. Announce a plan to eventually unwind the quantative easing and expansion of the fed balance sheet. But do not say when.
3. Let the Treasury fight the political fights.
Where there is no wood the fire goes out.
"Certainly no nation ever before abandoned to the avarice and jugglings of private individuals to regulate according to their own interests, the quantum of circulating medium for the nation -- to inflate, by deluges of paper, the nominal prices of property, and then to buy up that property at 1s. in the pound, having first withdrawn the floating medium which might endanger a competition in purchase. Yet this is what has been done, and will be done, unless stayed by the protecting hand of the legislature. The evil has been produced by the error of their sanction of this ruinous machinery of banks; and justice, wisdom, duty, all require that they should interpose and arrest it before the schemes of plunder and spoilation desolate the country."
Thomas Jefferson, 1819
> I just hope he can foresee that doing the right things (and losing
> couple of games) will increase a possibility of bringing this country
> back on right track even if it could harm his political power of
> this day.
Keep dreaming. Since day 1, Pres. Obama has kept his eye on the ball: pleasing his voting coalition so that he can secure re-election. He threw the UAW a bone in "saving" Chrysler and GM. He pushed for a "stimulus" package that became a give-away to special interests. He pushed for a carbon trading scheme that will increase costs to consumers yet provide a boon to Goldman Sachs when the carbon credits market begins trading. He is acting as the consummate politician.
My view, it's Congress should be audited. Scolded. Castrated maybe. Buncha fools elect a buncha richbich, richbich make law to tilt the economy in favor of richbich, Fed is left holding bag & taking blame.
There is a racing certainty that the president will either reappoint Bernanke or someone worse. By someone worse, I mean someone who will continue the policy of government growth and abuse.
Houston, we have a problem.
On Jul 10 06:36 PM Philip Gvinter wrote:
> So here's the giant elephant sitting in the "let's audit the fed"
> room. What happens when we find out that :
>
> 1. the fed is holding trash assets
> 2. the fed is a crony of the banks which own it
> 3. the fed is insolvent but for their ability to ignore the performance
> of their assets
>
> On the one hand the truth is the truth on the other do we really
> want to open that Pandora's box or are we better off praying that
> it will not be opened until we are dead? How much of a global financial
> crisis would the revelation of an insolvent Fed cause?
Uncle Ben suggests it was a Hobson's choice. Basically, the results will either save or excoriate him.
Tens of millions have lost their jobs.
There are no tears to be shed if the entire Fed is just shut down and Congress appoints an agency for regulating money supply.
The check clearing core of the Fed can be kept intact and put under the control of a new bank clearing agency.
Bank monitoring and compliance can be placed in a new agency reportable to Congress - which had better do a damn site better at oversight.
Each of these components will be transparent. No more lies. No more deception. If millions are put out of work and businesses bankrupted to "fight inflation," there will at least be public debate and accountability.
If the banks no longer own a private central bank accountable to no one - but with absolutely highest priority for bailing out by the peasants and useless eaters - why should the public care. The Fed has caused two depressions. They are a terrible idea and if European bankers threaten to kill anyone who tries to abolish the Fed, well we have battlefield tactical nuclear weapons.
Why does Congress always cower?
In the Good Shepherd, Joe Pesci recounts how different ethnic groups all have something, from the church and family to music or a homeland.
He asks WASP Wilson what do you have?
"We have the United States of America. You are all visitors."
It is time for Skull and Bones and their good ol' boy network to grow up and walk that talk.
I know, S & B was really a front for the Anglo elites to continue to manipulate us. But Hollywood movies always have to brainwash us with false thought and myths.
But the Fed should go. Its employees put out on the street just like Lehman's were.
The banks should do their job - provide money - and forget about ruling us. They have failed at that.
You sure are ignorant. The fed has two official mandates: control inflation, and maintain price stability. Monetary policy is a tool, not a goal.
As for the unofficial mandates, well, what else would you expect w/ trillions of dollars of OPM at your disposal and no accountability? No wonder our dollar has lost 96% of its value since the creation of the fed in 1913.
BTW, the fed is an illicit entity according to our Constitution and should not only be audited, but should be abolished altogether.
Wilson, before he died, acknowledged that he had done his country a huge disservice by creating the fed. I agree, but that was a bit late to have regrets, no?
As to results, the monetary policy of the fed interferes with free market forces and has been the direct cause of every single boom and bust cycle since it was created including the great depression, and its latest spawn now in the new millenium.
Good luck and good trading
Dave
Helicopter Ben and the Maestro have been getting good advice for 10 years from professional economists with a lot more humility at the BIS. They've been warning about this meltdown with uncanny accuracy regarding the causes and issues. This is a good read on William White, The Man Nobody Wanted to Hear, who was paid to provide expert advice to Central Bankers, but was snubbed by Ben & Maestro.
www.spiegel.de/interna...
This reads like a cross between a Tabbei article and a Dilbert cartoon.
Unfortunately, the Founding Fathers (except maybe Jefferson) did not have a firm handle on financial instruments of mass destruction. I wish they had brought up the problems with corporate lobbyists in a democracy as well.
Hello I am vester - just a small time invester up here in Canada. I have no reason to defend Bernanke except to say that I truly believe he's the biggest reason my portfolio looks a bit better these days. I read lots but don't post many comments.
As for defending Wall street, maybe you missed my point: they need new rules to keep them honest. Future speaking fees aside, I think it is a crime to lump Bernanke in with the execs at the big banks. He works with them, but I'll bet isn't real chummy with most of them.
> god i hate politics.
> My view, it's Congress should be audited. Scolded. Castrated maybe.
> Buncha fools elect a buncha richbich, richbich make law to tilt the
> economy in favor of richbich, Fed is left holding bag & taking
> blame.
With all due respect, it was the Fed under Alan Greenspan that left interest rates so low after 2001 such that the real estate bubble got going. It's also the Fed under Ben Bernanke that's printing ungodly amounts of dollars in order to "shore up" a banking system that should've been allowed to pay the price for its po\or decisions. Oh, and it's also the Fed who is unwilling to disclose the assets that it's taken on as collateral in exchange for its countless "facilities." I think the Fed has plenty of reason for taking the blame.
If anyone needs a full audit and full disclosure it would be the Federal Reserve. They might have endebted the US citizen multiple times more than AIG has with their bond purchases and backstops. Should we wait 10 years to find out or see things as they are today. If we choose to see the truth we may be saved in the long run but I assure you, the Federal Reserve has made enough bad choices it can honestly argue, that it will hurt the public to disclose how much bad assets they hold or guarantee today.
Should we protect their need to cover up accounting fact only to let them continue to make bad decisions for us without any legal constraints only because if we do exposing their financial fraud will crash the market today? This is a truely tough choice, but one that is obvious to any rational person. The truth may hurt, but in the end it's the only thing that can save those of us still living in reality.