Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

The Noose Tightens

Bernanke complained in a speech in Atlanta today, that those nasty old banks he just bailed-out are refusing to lend which is hurting the housing market. Only Ben could miss the irony: in the nineties, banks were nearly forced to lend to all and sundry and the carrot was that they'd be complying with the wishes of Congress & the Executive. Laws were passed to compel lending and rates were attractive enough that profits were assured. Alan the G demonstrated several times that there was the "Greenspan Put" to mitigate risk so it didn't matter if the borrower had no money or hope of getting any, as long as our masters were seen as benefactors. The banks were complicit in the fraud and there was plenty of blame to throw around. Sir Alan then and Ben now, manipulated rates to accommodate one whim after another and now they are to the point that bank profits are miniscule and taking on a 30 year commitment at these rates will be poison when their cost of money rises, as it will. Public opinion, awakened to the fleecing no longer supports saving risk takers with tax money so any mortgages written now will lose substantial value just as any 3% bond would in a 5% (or higher) market. But our Ben is getting cranky. He tried to game the system in favor of housing and that failed. On September 13 he changed target to stocks and they are down since by more than 8%. So, now here he is blaming the rain on the wet streets. As we have said, probably too many times, this will not end until the Keynesian insanity ends. Government manipulation of the economy does not work and never will. Ben is getting an education.