Archive for the ‘Ben Bernanke’ Category
Bernanke: I Have a Squirt Gun! Honest!
August 28th, 2010 | 
Author:
How does anyone take this guy seriously?
A year ago, in my remarks to this conference, I reviewed the response of the global policy community to the financial crisis.1
Yeah, a financial crisis you created by willfully ignoring everything that was going on around you for the last two decades, including massive fraud in housing, massive collusive dealing in the financial system, off-balance sheet exposures that exceeded GDP in a number of firms you allegedly regulated and complex schemes intended to cover all of this up – facts that you were well-aware of.
Never mind the fact that the entire premise on which your thesis has rested has been the ever-expanding level of credit in the economy at a rate exceeding GDP growth. You’re not alone in this of course; such a record extends back to the inception of the Fed Z1, but that doesn’t change the fact that your theories and practice have been bereft of mathematical reality.
This list of concerns makes clear that a return to strong and stable economic growth will require appropriate and effective responses from economic policymakers across a wide spectrum, as well as from leaders in the private sector.
Let’s see, as we going to find anything like “lock up the crooks and claw back their expensive toys in the Hamptons” among that list? Of course not. Nor will we see “contract leverage and systemic debt to a sustainable level”. Yet both are required.
At best, though, fiscal impetus and the inventory cycle can drive recovery only temporarily. For a sustained expansion to take hold, growth in private final demand–notably, consumer spending and business fixed investment–must ultimately take the lead. On the whole, in the United States, that critical handoff appears to be under way.
No it isn’t. The consumer hasn’t de-levered and neither has anyone else. Not to a sufficient degree anyway. Oh sure, consumer credit has been contracting now for many months, and continues to – getting continually bent over the table with 29% interest rates will do that to you – if you don’t go bankrupt first.
And don’t start with that “increase in savings” bullcrap – you’re well-aware, as am I, that the government defines “savings” as “income less consumption”, which means that debt paydown or default is defined as “savings.” Like hell – that which is saved has to remain yours once saved – if you pay off debt you’ve saved nothing.
Corporate “rebounds” have all been fueled by cost-of-labor decreases. To put it in terms everyone can understand, that’s what happens when your boss gets in your face and says “work harder, get paid less, or get fired – pick!“ Average Americans understand this, but you either don’t or refuse to speak the truth about it.
Household finances and attitudes also bear heavily on the housing market, which has generally remained depressed. In particular, home sales dropped sharply following the recent expiration of the homebuyers’ tax credit. Going forward, improved affordability–the result of lower house prices and record-low mortgage rates–should boost the demand for housing. However, the overhang of foreclosed-upon and vacant housing and the difficulties of many households in obtaining mortgage financing are likely to continue to weigh on the pace of residential investment for some time yet.
There is no such thing as “residential investment.” Housing is a consumer durable good and is in fact consumed!
Never mind that governments add to that “consumption” with confiscatory tax systems on real estate. What’s the real rate of return on a $500,000 house that has a $14,000 a year tax bill, as is the case in many of our major cities and their suburbs? If the house goes up in price at the rate of your claimed inflation (2%) then the entirety of the so-called “increase in value” is absorbed by the property tax bill and more, and we haven’t begun to sock back a capital fund for things like a new water heater, roof and furnace – all of which are in fact consumed with time.
Consequently, investment in equipment and software will almost certainly increase more slowly over the remainder of this year, though it should continue to advance at a solid pace.
Intel doesn’t think so.
In contrast, outside of a few areas such as drilling and mining, business investment in structures has continued to contract, although the rate of contraction appears to be slowing.
You don’t get out much do you? There are more strip malls than we’ll need for the next 20 years. Indeed, there is more commercial property in the general than we will need for the next 20 years. This was also fueled by fraud – particularly among your buddies in the banking system that put everything they could get their hands on into some sort of dodgy security like a CDO, then self-dealt themselves to riches, while leaving the rest of us to ruin.
Once again government is “helping” by making tax uncertainty the order of the day, which means that business is having and increasingly hard time figuring out what the liability side of the balance sheet will look like a couple of years hence. And that’s a problem, because while everyone seems to lie about the assets, especially banks, liabilities are always good to the penny and have to be covered.
Bank-dependent smaller firms, by contrast, have faced significantly greater problems obtaining credit, according to surveys and anecdotes. The Federal Reserve, together with other regulators, has been engaged in significant efforts to improve the credit environment for small businesses.
Most small business loans have been in fact collateralized by the owner’s home. That owner’s home is now underwater, and the owner likely has blown the (falsely believed) equity expansion on Hummer, vacation condo (also seriously underwater) or boat. He therefore has no collateral to put up for a loan, and the bank is entirely correct in saying “No”, given that 9 out of 10 businesses fail within the first five years.
There is no solution to this problem with “lending”, other than “don’t borrow.” And that, in fact, is the right answer – run a business that doesn’t require lending – that is, leverage – to be viable. This means that only productive enterprises get started, instead of ponzi-based things like building $400,000 craptastic McMansions at grossly-inflated prices.
Firms are reluctant to add permanent employees, citing slow growth of sales and elevated economic and regulatory uncertainty.
Why would I hire people into falling demand, a confiscatory government environment and the ever-present threat of your buddies at Humongous Bank Inc. shoving a stallion up my backside? I’ll pass, and logical businessmen and women nationally are doing exactly that.
Despite the weaker data seen recently, the preconditions for a pickup in growth in 2011 appear to remain in place. Monetary policy remains very accommodative, and financial conditions have become more supportive of growth, in part because a concerted effort by policymakers in Europe has reduced fears related to sovereign debts and the banking system there
You’re smoking crack dude. 12% of GDP in deficits here and you call this “accommodative”? I call it “idiotic” and “that which can’t go on forever won’t.” We’re arguing when (it goes boom), not if.
Maintaining price stability is also a central concern of policy. Recently, inflation has declined to a level that is slightly below that which FOMC participants view as most conducive to a healthy economy in the long run.
Inflation should be zero. That way I can choose to save and invest without having your cronies try to force me into dodgy deals. But of course that’s what you do on the FOMC, right – try to coerce people into getting involved in dodgy investments which are guaranteed to eventually blow up, as are all Ponzi Schemes. You managed to pull it off twice in ten years – congratulations. I hope you don’t mind if the public decides to erect the middle finger in your direction, having learned by hard experience what listening to you will do their financial (and emotional!) stability.
In support of the stock view, the cessation of the Federal Reserve’s purchases of agency securities at the end of the first quarter of this year seems to have had only negligible effects on longer-term rates and spreads.
Really?
Looks to me like when you quit jacking around with your nutty programs rates on the long end declined – that is, when you were jacking around rates were generally rising!
But I thought “Quantitative Easing” was supposed to suppress rates? At least this is what you sold to Congress and the American People. How “suppressed” were they Ben? NOT! Never mind that this is just government debt – how about credit cards? Were those rates “suppressed” by your little game? Oh I know, the little guy doesn’t matter, right?
A first option for providing additional monetary accommodation, if necessary, is to expand the Federal Reserve’s holdings of longer-term securities. As I noted earlier, the evidence suggests that the Fed’s earlier program of purchases was effective in bringing down term premiums and lowering the costs of borrowing in a number of private credit markets.
It was? Well spreads, yes. But let me ask this: Were mortgage rates higher or lower while you performed “QE” than they are now? Oh, they were higher, right?
Oh sure, banks were able to issue debt into the market at very low rates. But why? Was it really “QE” or was it really the government backstop – some of it explicit – that was attached to that debt? Ditto for “Build America Bonds”.
As for private credit, well, that’s a different matter. Show me the reduction in actual interest rates while you were tampering with the market in places that mattered to average Americans. You can’t – because in fact rates went the wrong way!
A lot of that had to do with what I argue was your intended purpose behind “QE” – to provide a “risk-free” arb opportunity for certain “special people”, while the rest of America twisted in the wind. Funny how the banks all seemed to know which coupons you would buy in advance, and how certain asset managers had the prescience to know what you buy before you came in and lifted every offer, all the way up. Nice for them, but of absolutely no benefit to the average American.
However, uncertainty about the quantitative effect of securities purchases increases the difficulty of calibrating and communicating policy responses.
How about the truth: The effect was exactly the opposite of what you claimed it would be!
Another concern associated with additional securities purchases is that substantial further expansions of the balance sheet could reduce public confidence in the Fed’s ability to execute a smooth exit from its accommodative policies at the appropriate time. Even if unjustified, such a reduction in confidence might lead to an undesired increase in inflation expectations.
A: It’s not unjustified.
B: You know damn well this Ponzi can’t go on forever, and proof of that is found in your refusal to identify the conditions under which you will exit – and how.
A second policy option for the FOMC would be to ease financial conditions through its communication, for example, by modifying its post-meeting statement.
Lying has worked so well up until now in producing lasting prosperity. You should do more of it.
A third option for further monetary policy easing is to lower the rate of interest that the Fed pays banks on the reserves they hold with the Federal Reserve System.
Right – 25 basis points is so much that it’s a huge incentive. “I have a squirt gun and I’m not afraid to get you wet!“ Pull the other one Bernanke.
A rather different type of policy option, which has been proposed by a number of economists, would have the Committee increase its medium-term inflation goals above levels consistent with price stability. I see no support for this option on the FOMC.
That’s probably because pitchforks and torches are a universal language, and nobody on the FOMC (except perhaps you) is really all that interested in finding out if there really is a breaking point in American Society beyond which The Wizard of Oz is revealed to be a tiny little man with an even-smaller johnson that has been jacking the town around for years, at which point the citizens of Oz simply decide to eat him.
Oh wait – they were “more civilized” in the novel. Yeah, well, that was a children’s story. This is the real world, and the people do have a limit of tolerance for abuse. When they’re unable to find redress through the law and are homeless, jobless and starving, they have nothing left to lose. That’s not something I or anyone else who’s sane wants to see.
First, the FOMC will strongly resist deviations from price stability in the downward direction. Falling into deflation is not a significant risk for the United States at this time, but that is true in part because the public understands that the Federal Reserve will be vigilant and proactive in addressing significant further disinflation.
Deflation on a moderate scale is only bad if you’re in debt. Never mind that we’ve got it and have had it for more than 20 years in certain areas. Who among the citizens is upset with deflation in technology, for instance?
Anyone remember the price of a color television 30 years ago? How about a computer in 1981? A calculator? A cell phone – oh wait, there was no such thing. All of these things and more have undergone massive and continual deflation since their introduction. We love it as consumers, because, well, we consume these things. When our computer wears out we buy a new one that is both faster and cheaper. Same with our cellphone. Same with our color TV.
Exactly how is this bad? It’s not – unless you went massively into debt to buy the thing, at which point you got serious problems, as the debt has to be paid off for a product that is worth a tiny fraction of what you paid for it!
Finally, we need to distinguish between genuine deflation and attempted support of a price level that was achieved by fraudulent economic and monetary policy – that is, it was through fraudulent inducement that the original INFLATION of those prices occurred.
Deflation through greater productivity per unit of labor cost is a good, not bad thing. It means you can buy more capability with less work. This is a net societal positive.
The latter is an adjustment that is necessary to restore balance. The question there is not whether we should have “deflation”, it is whether those who caused the inflation of the price level through these fraudulent manipulations in the market should be held to account for their activity and imprisoned while the economy is allowed to contract back to a sustainable level of price on a macro basis, such that playing ponzi finance is no longer necessary to do basic economic things like buy a home or automobile.
My answer to that question is “yes”, but I’m just one of 330 million.
Posted in Banks, Ben Bernanke, Corruption, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, Fraud, Government, Money | 
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The Purpose Behind Engineered Economic Collapse
“From now on, depressions will be scientifically created.” — Congressman Charles A. Lindbergh Sr. , 1913
Everyone loves money. Even people like myself who abhor the abuse of money and commerce, who understand the fraudulent nature of the system we live in, still work hard and save so that we might attain a sense of stability within that system. Many people see money as a focal point to their existence. But is it really money that they are after, or is it something else entirely? In truth, money represents ‘security’ in the minds of the masses. Money affords us the ability to survive, and the more of it we have, the safer we all feel. Because we subconsciously associate the extension of our very life with the variable health of the economic structure in which we live, we tend to become unwitting devotees to its continued existence, even if it is corrupt and condemned to failure. We gullibly deny the system or the currency that supports it is doomed to the contrary of all evidence because, even though it has beaten us bloody, we have never known anything else.
In light of this entrenched way of perceiving things, especially in the U.S., it is difficult enough to convince some people that the economy is in fact not providing the security they desire, but is actually destroying their future completely. To explain to them that this is deliberate, that the economy is designed to self-destruct, that is another prospect altogether.
Many people hit a proverbial wall on this issue because they simply cannot fathom that certain groups of men (globalists and central bankers) view money and economy in completely different terms than they do. The average American lives within a tiny box when it comes to the mechanics and motivations of finance. They think that their monetary desires and drives are exactly the same as a globalist’s. But, what they don’t realize is that the box they think in was BUILT by globalists. This is why the actions of big banks and the decisions of our mostly corporate establishment run government seem so insane in the face of common sense. We try to rationalize their behavior as “idiocy”, but the reality is that their goals are highly deliberate and so far outside what we have been taught to expect that some of us lack a point of reference. If you cannot see the endgame, you will not understand the steps taken to reach it until it is too late.
In the past we have covered numerous instances in which global bankers have admitted to fraud on a massive scale, fraud which is now crushing our already fragile economy. We have covered the private Federal Reserve and how it knowingly facilitated the creation of the housing bubble, as well as how it is now inflating a Treasury bubble which is soon to implode. We have covered Goldman Sachs and its efforts to promote and sell toxic derivatives all over the world while at the same time betting against those derivatives on the open market. We have covered the manipulation of gold and silver markets by companies like JP Morgan, which have recently been exposed by whistleblowers and GATA investigations. And, most importantly, we have executed in-depth analysis on the growing weakness of the U.S. dollar in preparation for severe currency devaluation. These revelations raise questions, which is natural, but they also illicit misconceptions and reckless knee-jerk reactions, especially when broaching the fact that the illegal strategies of international banks are part of a greater agenda.
Below, we will examine some of the most common narrow minded responses to the issue of engineered economic collapse, as well as why people think the way they do when the “semi-sacred” subject of money is involved…
1. The economy is too complex to be controlled by just a handful of people…
This response often comes from people who make presumptions on economics, rather than actually educating themselves on how the system works. From the outside looking in, the world of finance appears chaotic; a mixture of mathematical and legal standards swirling in a void of mass psychology. Many Americans are either frightened off by the seemingly complicated field of study, or they find it rather boring and not worth their time. This, however, does not stop them from assuming that they know how money works.
The problem is that just because a person participates in his economy daily, it does not mean he has any understanding of how it operates. Many watch television on a daily basis, but few have any idea how the picture actually gets onto the screen, or how to fix a television once it is broken. Sadly, our egocentric culture has led a substantial portion of the public to imagine that they are experts on EVERYTHING, and thus, true researchers in the fields of economics and globalism get reactions like the one above constantly.
At bottom, once all the quasi-technical biz-babble used by mainstream talking heads is removed from the equation, economics is rather simple. Supply and Demand will always be at the center of any and every economy, regardless of the political atmosphere it exists in. These two fundamental factors can be manipulated to a point, by the creation of artificial supply, or the conjuring of false demand. This is achieved in many ways by global bankers, but primarily through domination of the issuance of currency, the ability to change interest rates at will, as well as the ability to inject or remove incredible sums of money from any market.
A perfect example is the suppression of silver prices by JP Morgan:
http://www.zerohedge.com/article/whistleblower-exposes-jp-morgans-silver-manipulation-scheme
Gold and silver represent competing currencies to the fiat dollars created by the Federal Reserve, and suppressing the value of these commodities helps to ensure that the public will never see them as a viable alternative to paper assets. JP Morgan, who along with other international banks has the ability to throw around massive quantities of capital wherever they please, suppresses the value of physical silver by issuing paper securities for silver that doesn’t actually exist (creating an artificially high supply), and naked short selling silver markets to drive them lower (creating the false impression of low demand).
Another good example of economic manipulation is the private Federal Reserve’s strategy during the 90’s under Alan Greenspan to artificially lower interest rates, allowing banks to issue credit at historical levels for over a decade. Linked below is an article from Ron Paul’s ‘Texas Straight Talk’ dated March, 2007, before the housing market even began its full swan-dive. In it, he discusses the Federal Reserve’s direct role in the creation of the housing bubble:
http://www.house.gov/paul/tst/tst2007/tst031907.htm
Men like Ron Paul, Peter Schiff, Gerald Celente, Jim Rogers, and many others were able to predict long before hand that the Federal Reserve’s actions were creating an explosive mortgage and credit bubble, yet, we are supposed to believe that the Federal Reserve had “no idea” that their actions would result in a debt implosion?
Catherine Austen Fitts, former Assistant Secretary of Housing and Commissioner of the U.S. Department of Housing and Urban Development under the first Bush Administration stated conversely that the mortgage bubble was absolutely not an accident, and that she had witnessed outright and deliberate fraud on the part of the U.S. government and the Federal Reserve Bank in creating the bubble. The fact that disturbed her most, however, was her discovery that only a small handful of international banks were responsible for the perpetuation of toxic mortgage debt, not just in America, but around the world:
http://solari.com/blog/?p=2058
Goldman Sachs (one of the primary globalist banks involved in the igniting of the debt crisis) was caught red-handed selling toxic derivatives to investors and governments all over the planet while at the same time betting against those derivatives on the market. Goldman even bet against mortgage securities the bank itself created!
This is sort of similar to a car maker selling vehicles without brake lines, then placing bets that their clients will crash and burn. Essentially, it is blatant and sociopathic fraud! Goldman’s actions directly contributed to credit collapses in numerous countries, including Greece, and here in the U.S.
The idea that global banks can turn the economy on and off like a light switch may be a stretch, but the vast majority of evidence shows that they do have the ability to shift the direction of markets to a point, as well as the ability to spur the growth of bubbles that eventually lead to recessions, depressions, and beyond. In fact, if one examines the U.S. economy from the inception of the Federal Reserve in 1913, they would find that the past century has been nothing but a series of engineered equity bubbles designed to slowly hobble, but not completely cripple, our financial system and our currency, at least, until recently. Like a steam locomotive on a collision course with a bottomless canyon, globalist banks can slow or speed up the pace of our descent, but the final destination never changes.
Now that we have established that market collapses can be created by a small handful of bankers and done knowingly, lets move on to the next most common sheeple-like talking point.
2. Yes, international banks triggered the meltdown, but the “greed of Capitalism” is truly to blame (i.e. Its all the Republican Party’s fault)…
First off, if you’re parroting the fiscal debate points of two dimensional socialist gatekeepers like Michael Moore, then you’re already hopelessly lost in the mind warping hedge maze of the false left/right paradigm. You should stay as far away as possible from adult conversions on economics, especially if you plan on associating the “greed” of capitalism and corporatism with the Republican Party alone.
News Flash! Barack Obama received far more in corporate campaign donations (including donations from BP and Exxon) than McCain did. Both Bush Jr. and Obama increased government spending to record levels meaning Neo-Conservatives are in no way “conservative” (as a true Republican is supposed to be). Obama has consistently surrounded himself with banksters and corporate lobbyists, including various hobgoblins from the bowels of Goldman Sachs. BOTH major parties are owned and operated by global banks. This is a cold hard undeniable truth of our political system. There is no way around it. Learn it, accept it as reality, and stop trying to blame one side or the other for problems that both sides created! If you cannot do this, your view of our cultural state of affairs will always be horribly skewed and your insights on our social problems will be utterly worthless.
While wannabe socialists desperately clamor to point fingers at the free market ideology as the cause of all our ills, the fact is that none of us have ever lived in a truly free market system. Since the inception of the Federal Reserve in 1913, all markets and even our own currency have become more and more vulnerable to manipulation by the banking elite. We have lived our entire lives in a rigged market, not a free market. To blame the very concept of Capitalism for our current dire circumstances is not only naïve, it is dangerous. Globalists would like nothing better than to promote the illusion that “too much freedom” led us to this disaster, and that severe controls must be put into place to ensure that it “never happens again”.
3. Global banks would never engineer the collapse of the U.S. economy or the Dollar. It makes them too much money…
This often heard song and dance ties in with the number two comment above. Again, the assumption is that the globalists only do what they do out of an “uncontrollable greed for money”. This perpetuates a couple fallacies. First, it encourages the false belief that the end concern for the Elite is the accumulation of riches. Central bankers have the ability to PRINT all the money they want from thin air! Remember, the Federal Reserve has never been subjected to a full audit, meaning they could easily create billions if not trillions without any oversight whatsoever. Greed for money, to them, is surely an absurd notion. What they do want, more than anything else, is social power. They want control over every living human being without question. All other concerns are secondary.
The next fallacy underlying the above argument is the conjecture that the U.S. economy is somehow indispensable to global banks. This is simply not so. Where we see the economy as an extension of our culture and ourselves, the Elites see financial systems as mere tools in the pursuit of a greater goal: World Government. Imagine you are building a house. Once your saw has fulfilled its intended role of cutting the wood, do you cling to it, or do you throw it aside and pick up a hammer? This is how globalists look at financial systems. They are perfectly willing to cast off the U.S. economy like a snake shedding skin if it brings them closer to attaining their ultimate aim.
The same goes for the Dollar. The Greenback may be the premier world reserve currency now, but that can and likely will change very quickly over the next couple years. The Dollar is a device that has outlived its usefulness as far as global bankers are concerned. The IMF has on several occasions made it clear that they eventually intend for the SDR (Special Drawing Rights) to replace the Dollar as the world reserve currency, and they have openly admitted that it will one day be established as a global currency. IMF press releases make this development sound far off and away, but SDR accumulations by countries around the world have risen dramatically in the past year. This along with other factors we will cover (namely China’s preparations to dump their U.S. T-bond holdings) show that IMF actions indicate they are preparing for a collapse of the Dollar now!
4. China would never dump U.S. Treasuries because it would hurt them as much as it hurts us…
The theory that China is somehow fused to the U.S. in a kind of symbiotic seesaw relationship that can never be broken is so ingrained among mainstream American financial analysts it simply will not die, regardless of how much contradictory evidence you show them. It really is like a mental disease which causes MSM pundits to go into involuntary Tourettic convulsions every time you mention the words “Treasury bond dump”. America and China are not conjoined twins, and one can survive without the other. We have covered the China issue over and over again, and I will not rehash all that evidence here. To lay it out simply: China has re-engineered its economy towards consumption and importation rather than relying on exports. The IMF has talked about this on many occasions with apparent excitement:
http://www.imf.org/external/np/tr/2010/tr072910c.htm
China has also finalized the ASEAN trading bloc which has combined export markets at least equal to that of the U.S. Meaning, China already has another place to send its exports besides America.
Most importantly, China must increase their currency’s value if their new consumer based system is to survive. Allowing the Yuan to rise sharply in value will revitalize the buying power of the Chinese populace making greater consumption possible. Indeed, China MUST dump their Treasury holdings and pump up the Yuan if they are to hold their economy together. And, the Federal Reserve has given China every reason to turn its back on Treasuries through never ending liquidity injections. This is not to say that a U.S. collapse will not affect them, it would negatively affect the entire world. However, China has positioned itself to survive, and perhaps even thrive with their economic expansions into Africa, and their new financial agreements with Germany.
Finally, the Chinese have been very forthcoming over the past week about plans to drop Treasuries. China has dumped over 7.7% of their U.S. T-Bond holdings since January, including the biggest T-bond dump on record this month. They have openly admitted to a plan to diversify away from the Dollar:
http://www.bloomberg.com/news/2010-08-17/china-cuts-long-term-treasury-holdings-by-most-ever-as-u-s-yields-decline.html
I’m always fascinated by those economists who vehemently deny China will ever turn away from the U.S. Dollar while they are doing so right in plain view. Are MSM analysts simply crazy? I don’t know, but it would explain a lot…
5. Sure, bankers took advantage, but it’s really the American people’s fault for getting suckered…
Yes, a sizable portion of the American public can be gut wrenchingly stupid. It hurts my head and my feelings to see people act so idiotic, it really does. The problem with this argument though is that when it is taken too far it becomes an attempt to divert blame away from the criminals and place it on the victims. If you knowingly leave your front door unlocked in a bad neighborhood and you find your home ransacked the next day, then you are partly responsible. But, we cannot forget that the neighborhood is “bad” in the first place because of the criminals, not the people who don’t lock their doors.
Just because global banks can sucker the public doesn’t mean they should, or that they cannot be judged for it. The crime ultimately rests on those men who made the conscious effort to destroy this country, and the blame rests with them as well. I see the attempt to parlay the economic collapse into the lap of the American people very often lately, especially from bankers who now claim that it’s the American public’s fault entirely. Why? Because they will not spend more, they will not take on more debt, they will not take on more risk, and they will not believe hard enough in the recovery that never was. Imagine a serial rapist behind a podium admonishing women for carrying pepper spray. It’s eerily similar…
6. Ok, maybe the banks are causing a collapse, but to say the government is helping them is just crazy conspiracy theory…
Why is it that the Federal Reserve has never been fully audited? Why is it that when Ron Paul tried to pass HR 1207 Federal Reserve Transparency Bill, it was muddled in committees and then eventually derailed? Why is it that banks like Goldman Sachs have been caught, yes caught, setting the stage for an economic implosion in this country, yet no government indictments have been formed to criminally prosecute them? Why are these men still roaming free like locusts to continue pillaging at will? Are we supposed to feel lucky that we get table scraps like Bernie Madoff behind bars while the Federal Reserve commits Ponzi fraud on a scale that dwarfs his?
Our government, both major parties, is owned lock stock and barrel. This is why there are no satisfactory answers for the questions posed above. Elements of the U.S. Government including almost every president since 1912 have not only turned a blind eye to Globalist activities, they have offered their full support to the bankers.
Nixon removed the Dollar from the gold standard in 1971 giving the Fed free reign to print as much fiat as they wished without limitations. In 1980 the Depository Institutions Deregulation and Monetary Control Act was passed placing all banks essentially under the rules of the Federal Reserve. The Glass-Steagall Act which kept investment banks and depository banks separate was repealed under a Republican majority in the Senate, and then finalized by Democratic President Bill Clinton in 1999. 30 years ago, banks that held your home mortgage were for the most part required to keep that mortgage until it was finally paid. But, a series of government decisions spanning that period and influenced by global banks allowed for the “securitization” of mortgages, leading to the creation of “derivatives”, which were then used by corporate mobsters like Goldman Sachs to destroy our financial system. Last, but certainly not least, both the Bush and Obama Administrations pressured Congress into passing highly unpopular bailout legislation which basically rewarded the same banks that created the credit crisis with trillions in taxpayer dollars (yes, the bailouts are now actually in the trillions, not billions). This led to the coining of the term “too big to fail” (or “too big to jail”). Our Government has been nothing but complicit in the banker takeover of this country. To debate otherwise is to invite embarrassment.
I haven’t even scratched the surface of government involvement in the collapse of our economy. Cases like the Savings and Loan crisis of the 1980’s led to serious prosecutions and jail time for more than 1100 criminal bankers, but this only caused the government to respond by changing investigation rules to make it even more difficult to catch the high level fraudsters in the act! Linked below is an interview between Max Keiser and bank regulator Prof. William K Black who outlines our government’s complicity in the breakdown of the country it is mandated to protect:
http://www.youtube.com/watch?v=5Bf5Frx1lZk
Elites destroy cultures to make way for new philosophies; their philosophies. Its not so much “conspiracy theory” as it is a widely admitted methodology. Corporate globalists believe in global government on their terms and they barely try to hide it. If someone thinks this sounds “fantastical” then they haven’t been paying the slightest attention. When one understands how Elites view economy, and realizes their primary motivations, the fact that they purposely triggered a collapse is perfectly logical. Nothing besides all out war inspires more fear and desperation in a society than a financial upheaval. Such elements on a mass scale allow changes in our collective psychology that were never possible before. Most people tend to falter under such an overwhelming threat and turn towards any authority (or fake authority) to save them from harm. Some people scoff at this idea, but it is likely they have never actually been in the wake of a real national catastrophe before. Men, especially those who know little of themselves, can change quickly in the face of calamity. The Elites recognize this, engineer tragedy, then waltz into the aftermath to merrily lord over the rubble.
Will their plan work? I think not, but I’m an optimist (no, really). The pursuit of total control and total power seems rather infantile to me, be it on an impressively psychotic level. Although, if we are made to forget who the real enemy is, then I think they do have a chance at success. That is how they have remained successful to this point. Only now does the average man have such immense knowledge at his fingertips, the knowledge to bring down a line despots and tyrants that have reigned for centuries. If only the average man was not so easily deterred by WMD’s (Weapons of Mass Distraction). The Elites will likely ignite some wars, tempt us into in-fighting, and fabricate enemies like Al Qaeda out of the ether. As the slogan goes, “Order Out Of Chaos”. Whatever happens, our eyes must remain fixed on the root of the problem; the bankers, and nothing else.
Globalists are not invincible, they are not untouchable, they are not even all that brilliant. They are human, and they have made many mistakes. The engineering of an economic meltdown really changes nothing. Hired thugs, useful idiots, corrupt officials, even hyperinflation, all tiny obstacles when considering the world we could have if the Elites were finally made to face the reckoning they deserve. Americans once took on the greatest empire on Earth. We once took a feared king to task. Are a bunch of frothing corporate bankers really so daunting? All that is needed is a principled movement with the will to see justice done, and I believe we have that already.
You can contact Giordano Bruno at: giordano@neithercorp.us
Posted in Alan Greenspan, Banks, Barack Obama, Ben Bernanke, Corruption, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, Fraud, Government, Money |
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Why The (Obvious) Discomfort Ben?
Snippets this time, since I’m vacation….
The economic expansion that began in the middle of last year is proceeding at a moderate pace, supported by stimulative monetary and fiscal policies. Although fiscal policy and inventory restocking will likely be providing less impetus to the recovery than they have in recent quarters, rising demand from households and businesses should help sustain growth. In particular, real consumer spending appears to have expanded at about a 2-1/2 percent annual rate in the first half of this year, with purchases of durable goods increasing especially rapidly. However, the housing market remains weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction.
Uh huh. Note the word appears. In political circles this is known as a “weasel word”, and gives the speaker an out if the claim turns out to be pure nonsense down the road (and it will.)
The most-important part of this paragraph, however, is the fact that it recognizes that the government has stepped in and replaced 11% of final demand with borrowed money.
Inflation has remained low. The price index for personal consumption expenditures appears to have risen at an annual rate of less than 1 percent in the first half of the year. Although overall inflation has fluctuated, partly reflecting changes in energy prices, by a number of measures underlying inflation has trended down over the past two years. The slack in labor and product markets has damped wage and price pressures, and rapid increases in productivity have further reduced producers’ unit labor costs.
Note the direct contradiction with the above paragraph (does Ben really think we’re dumb enough not to notice?)
Specifically, slack labor markets and increased output demands per unit of compensated labor means consumer income, that which should be driving spending, is trending downward.
Never mind the “machinations” of the “inflation” statistics. Since Ben uses the government’s cooked numbers, he can always point to them and say “See! See! They said it was less than one percent!” without ever taking responsibility for relying on knowingly bad data.
One factor underlying the Committee’s somewhat weaker outlook is that financial conditions–though much improved since the depth of the financial crisis–have become less supportive of economic growth in recent months. Notably, concerns about the ability of Greece and a number of other euro-area countries to manage their sizable budget deficits and high levels of public debt spurred a broad-based withdrawal from risk-taking in global financial markets in the spring, resulting in lower stock prices and wider risk spreads in the United States.
Damn those “investors” who got gang-raped twice in the last decade and are refusing to take another one for the “team” – that is, Dimon, Blankfein, myself and, of course, Obama.
Like financial conditions generally, the state of the U.S. banking system has also improved significantly since the worst of the crisis. Loss rates on most types of loans seem to be peaking, and, in the aggregate, bank capital ratios have risen to new highs. However, many banks continue to have a large volume of troubled loans on their books, and bank lending standards remain tight.
“This box contains AAA credits!”
“Why does it smell like dogcrap?“
“It really IS AAA credits! Honest! Here, I’ll pledge it as collateral for this $1 billion loan I want!”
“Go to hell.“
Yeap.
Small businesses, which depend importantly on bank credit, have been particularly hard hit. At the Federal Reserve, we have been working to facilitate the flow of funds to creditworthy small businesses.
God forbid that a business would choose to finance off operating cash flow instead of bank loans! Why that would make them more competitive, reduce their operating expenses and reduce or even eliminate fixed costs like interest, which in turn would make it possible for them to respond to changing economic conditions without going bankrupt. (It would also, incidentally, mean that banks couldn’t suck the life out of said businesses.) Surplus capital = bad, bank loans = good. In the eyes of Ben, anyway (the average small businessman would be advised to do the EXACT OPPOSITE of what Bernanke counsels, I will add.)
In addition to the very low federal funds rate, the FOMC has provided monetary policy stimulus through large-scale purchases of longer-term Treasury debt, federal agency debt, and agency mortgage-backed securities (MBS). A range of evidence suggests that these purchases helped improve conditions in mortgage markets and other private credit markets and put downward pressure on longer-term private borrowing rates and spreads.
The hell it does:
Compared with the period just before the financial crisis, the System’s portfolio of domestic securities has increased from about $800 billion to $2 trillion and has shifted from consisting of 100 percent Treasury securities to having almost two-thirds of its investments in agency-related securities.
Never mind that under Section 14, which is the part of the Federal Reserve Act governing purchases, it is rather inescapable that these agency purchases were unlawful. (Yes, I know about your cite and claim of a CFR position for Section 13 – but that section deals with loans, not purchases. Nice try Ben.)
The FOMC plans to return the System’s portfolio to a more normal size and composition over the longer term, and the Committee has been discussing alternative approaches to accomplish that objective.
The Fed owns ~20% of the portfolios of two bankrupt GSEs, Fannie and Freddie, both of which would have utterly collapsed absent over $100 billion in cash infusions. The embedded losses in those notes still exist. Good luck unloading them – this will be fun to watch.
Within the Federal Reserve, we have already taken steps to strengthen our analysis and supervision of the financial system and systemically important financial firms in ways consistent with the new legislation. In particular, making full use of the Federal Reserve’s broad expertise in economics, financial markets, payment systems, and bank supervision, we have significantly changed our supervisory framework to improve our consolidated supervision of large, complex bank holding companies, and we are enhancing the tools we use to monitor the financial sector and to identify potential systemic risks.
You mean like all the prudent supervisory authority you wielded before the meltdown? And all the whistles that you did not blow for those institutions where you had no formal authority?
Was that stupidity or willful blindness Bernanke?
Mr. Bernanke said the recent large federal budget deficits are appropriate, considering the weak economy. He said additional fiscal support from Washington could help, given weak private spending, but acknowledged concerns that markets might react adversely if the nation’s deficit is not brought under control.
“The best approach, in my view, is to maintain some fiscal support for the economy in the near term, but to combine that with serious attention to addressing what are very significant fiscal issues for the United States in the medium term,” Mr. Bernanke said. “I don’t think it’s either/or. I think you need to really do both. If the debt continues to accumulate and becomes unsustainable … then the only way that can end is through a crisis or some other very bad outcome.”
Remember, it was Bernanke that originally counseled all this “stimulus” and “fiscal measure” in the first place. Now he says “well, if you withdraw it you’re fooked, but if you can’t in the medium term you’re also fooked.”
Again, can you identify from the below graph when, since 2003, the government has been able to “withdraw” any sort of fiscal stimulus, and for extra credit, please identify the number of years that defines “medium term.”
Thanks in advance Ben.
PS: That last sentence is such a bland way of implying outcomes like the collapse of government funding models occasioning an immediate 60% reductions in government spendable funds. That in turn implies the immediate and unavoidable collapse of all transfer payments, including Medicare, Medicaid, Social Security and other welfare programs, and that strongly implies outcomes like riots, looting, burning of cities, zombies in the streets, etc.
Short form of all of the above: He knows.
Posted in Banks, Ben Bernanke, Corruption, Debt, Economic Crisis, Economy, FOMC, Federal Reserve, Financial System, Fraud, Government, Money, Sovereign Debt |
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Why The Greater Depression Still Lies Ahead
By Michael Pento
If policymakers do not understand the real cause of a problem, they will in all likelihood be unable to provide a genuine solution.
Messrs. Barack Obama, Benjamin Bernanke and Timothy Geithner do not understand the real cause of this debt crisis. They are politicians first and economists or students of the market second–if at all. Therefore, it is not wise to count on them to tell us when the Great Recession is over, or to provide a plan to prevent another one in the future.
The cause of the Great Depression in the 1930s, and the Great Recession beginning in 2007, was one and the same: an overleveraged economy. Excessive debt levels are the direct result of the central bank providing artificially low interest rates and of superfluous lending on the part of commercial banks.
The easy money provided by banks eventually brings debt in the economy to an unsustainable level. At that point, the only real and viable solution is for the public and private sectors to undergo a protracted period of deleveraging. The ensuing depression is, in actuality, the healing process at work, which is marked by the selling of assets and the paying down of debt.
Unfortunately, our politicians today are focused on fighting this natural healing process by promoting the accumulation of more debt.
During this latest economic contraction, the Federal Reserve took interest rates to near 0%, and the Obama administration is leveraging up the public sector to record levels in a bid to re-leverage the private sector. The government’s philosophy is tantamount to sticking a frostbitten man in the freezer so he won’t have to suffer the pain associated with the thawing of his extremities.
During the Great Depression, real gross domestic product plummeted 32%. The Great Recession, which we are still struggling through, began in December 2007, according to the National Bureau of Economic Research. In contrast to the 1930s, GDP during this recession shrank only 3.6% from the fourth quarter of 2007 through its low point in the second quarter of 2009. Between the fourth quarter of 2007 and the first quarter of this year (the most recent period for which data is available), GDP contracted a mere 1.1%.
The contraction in GDP during the Great Depression was the direct result of consumers paying down debt and selling off assets. Household debt as a percentage of GDP reached nearly 100% in 1929. To put that number in perspective, household debt did not go back above 50% of GDP until 1985. It was not until the first quarter of 2009 that household debt once again approached the Great Depression level of 100% of GDP.
Between the start of the Great Depression and the end of World War II, household debt fell from 100% to just above 20% of GDP. Getting there was a painful process, but such de-leveraging was the only real cure for an economy swimming in debt. Thanks to government efforts to carry on our debt-fueled consumption binge, during today’s Great Recession household debt has barely contract at all; it fell to 92.5% of GDP in the first quarter of this year.
To make matters even worse, during this current crisis our government’s response has been to dramatically increase its own borrowing. At the start of the Great Depression, gross federal debt was 16% of GDP. It peaked just below 44% when the Depression ended. While the national debt did increase significantly during that period, it was still relatively benign when viewed from a historical perspective.
The U.S. entered the current Great Recession with gross national debt equal to 65% of GDP. It has since exploded to 90% of GDP! Comparing the relatively innocuous level of the 1930s with today’s pile of government debt clearly illustrates the perilous state of the economy.
National debt did rise dramatically during World War II, topping out at 120% of GDP in 1946. But consumer debt plunged concurrently. So while the nation was adding debt to fight and win a global war, households were taking the necessary steps to ensure their balance sheets were well prepared for the aftermath of the battle.
Today, gross national debt and household debt are both at or above 90% of GDP for the first time in our history.
Many observers–unfortunately including most of those in power–have concluded that the government must spend more while consumers rein in their debts. Their strategy is based on the belief that once the economy perks up they can unwind that debt.
There are two problems with this Keynesian theory. One is that government spending doesn’t increase GDP; it only chokes off private-sector growth. The other is that politicians never regard the present as a good time for the government to pay off its debts.
The result is that the country is left with a private sector reducing a massive overhang of debt. As households curb spending, GDP slows, and the ratio of debt to economic output grows even further.
Since we have yet to address the real cause of this recession, we are moving inexorably closer to causing The Greater Depression. If policymakers do not understand that the progenitor of a depression is debt, they will also be unable to provide a genuine solution.
Michael Pento is chief economist at Delta Global Advisors and a contributor to greenfaucet.com.
Posted in Ben Bernanke, Debt, Depression, Economic Crisis, Economy, Federal Reserve, Financial System, Government, Money, Timothy Geithner |
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More Bernanke (And Geithner) Perjury?
By Karl Denninger
July 1 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke and then-New York Fed President Timothy Geithner told senators on April 3, 2008, that the tens of billions of dollars in “assets” the government agreed to purchase in the rescue of Bear Stearns Cos. were “investment-grade.” They
didn’t share everything the Fed knew about the moneylied like a bear-skin rug.
Indeed, they just plain didn’t tell the truth:
The so-called assets included collateralized debt obligations and mortgage-backed bonds with names like HG-Coll Ltd. 2007-1A that were so distressed, more than $40 million already had been reduced to less than investment-grade by the time the central bankers testified.
There’s a further problem: This was arguably illegal.
See, The Fed is not permitted to lend unsecured. At all. To anyone.
The Fed also can’t buy anything without a full faith and credit guarantee (per Sections 13 and 14), even under “unusual or exigent circumstances”, with very few exceptions (all of which relate to short-duration paper such as revenue-anticipation notes from municipalities.)
Credit-default swaps do not qualify under even the most-creative reading of the statute, which is why The Fed set up “Maiden Lanes” (sans cherries) and then “lent money” to them – that was a pure artifice to get around the strictures in The Federal Reserve Act.
But to date, nobody in Congress has been willing to force either Bernanke or Geithner to resign, nor will they place sanctions in The Federal Reserve Act to make future violations a criminal act and thereby prevent future lies and evasions.
Can someone please explain to me what purpose a law has if there is no penalty for violating it, and why the citizens of this nation should obey any of the laws that allegedly bear on them when the “cognescenti” willfully and intentionally evade and violate the laws that allegedly govern their conduct – including, it appears, those that compel honest testimony before Congress.
Posted in Banks, Bear Stearns, Ben Bernanke, Corruption, Economic Crisis, Federal Reserve, Financial System, Fraud, Government, Maiden Lane I, Maiden Lane III, Timothy Geithner |
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“Obviously We Can’t Run Deficits Of 10% of GDP Forever”
By Karl Denninger
So said Bernanke this morning – more than once.
Oh really Ben?
“Achieving long-term fiscal sustainability will be difficult,” Bernanke said today. “But unless we as a nation make a strong commitment to fiscal responsibility, in the longer run, we will have neither financial stability nor healthy economic growth.”
And…
Responding to a question, Bernanke said the recovery appears to have made an “important transition” from relying on government support and inventory rebuilding to private demand.
Uh, where?
Note that the fiscal deficit spending never decreased after 2001 – and that it was simply “stepped up” to more than double the 2003-2007 level when this last crisis hit.
Bernanke says that the primary deficit needs to be reduced to ~2%. Ok, again, how? We never got there from 2002 onward, so what sort of “credible” plan do you think will be presented to do it now?
To get the deficit down to that figure we would have to increase tax collections (not rates) or cut spending in a combined $1.1 trillion.
It’ll never happen until the “someones” who are loaning us money shred Treasury’s credit card, and when that happens the result will be an instantaneous cut-off of the entitlement tit to which a full 30% of the government has become habituated.
Good luck.
Posted in Ben Bernanke, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, GDP, Government |
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