fed

Bernanke's Intrigue?

By Numerian
bernankesintrigue.jpg

Does Ben Bernanke even know what he is doing? I've certainly wondered about that point, and it is increasingly a topic of conversation among stock market analysts who have come to understand that all the major US stock market indexes are pushing relentlessly upward because of the Bernanke put.

There hasn't been a significant correction in the stock market since early September, when the S&P 500 left the 1040 range to its present very lofty height of 1330. This rally has set a number of records, including days when the stock market moves less than 1%, and number of stocks above their 200 day moving average. While some analysts credit this advance to improving economic conditions, most observers point to the Fed's deliberate policy to keep the stock market "higher than it would otherwise be", fueling it with hundreds of billions of dollars from the quantitative easing program.

The QE2 Binge - Inflation on the Horizon

Submitted by on

By Numerian

bernanke.jpg
Don’t these men know the nasty history of central banks which monetize government deficits as the Fed is now doing?

The QE2 left New York harbor yesterday, on its voyage to ports all around the globe. Captain Ben Bernanke has promised to shower the inhabitants of such diverse locales as Brazil, India, and China with up to $600 billion of free money. Following his departure, central banks in these countries announced that they did not want the money and will enact regulations to forbid the QE2 to land in their country. (Image)

Such is the bizarre state of monetary policy in the United States that the second round of Quantitative Easing by the Fed is already being feared and rejected by economists and financial analysts around the world before it is even implemented. It may be that the market has come to realize that QE1 did not perform as promised. Job creation remained anemic, economic growth declined, commodity inflation accelerated, and bubbles popped up in a variety of markets.


Pumping up the Market

Banking as the Scourge of Capitalism

Submitted by on

By Numerian

Banksy

"The Federal Reserve is doing whatever it can – and some of this is against their charter – to revive the failed system of TBTF banks, securitization, and debt binges which will inevitably lead to another massive bubble, leaving the public on the hook for future bailouts." Numerian

Joe Nocera, financial columnist for The New York Times, had an interesting conclusion to his recent article on Bank of America:

I admit it: I want to see the banks feel some pain. Most people do, I think. Banks did terrible things during the subprime bubble, and they still haven’t paid any real price. I find myself rooting for judges to rule against banks in foreclosure cases. I would love to see these big investors put the serious hurt on Bank of America, which will encourage other investors to pile on. I know this colors my thinking. I can’t help it.

Yet I also know the flip side. If the foreclosure lawyers start winning a lot of cases, if judges halt foreclosures on a widespread basis, if investors start to extract billions upon billions of dollars from the banks — and if banks become seriously weakened as a result — we’ll be right back where we were two years ago. The banks will need to be saved for the good of the economy. The taxpayers will have to come to the rescue. That’s an appalling prospect too.

Banks: We can’t live with them, and we can’t live without them. It stinks, doesn’t it?

This brief flourish of disgust for the banking industry received a lot of attention, almost all of it favorable. Millions of Americans want to see “serious hurt” put upon the banks, especially the big banks that are in the Too Big To Fail category. Why do we hate the banks so?

Financial Reform Declared D.O.A.

Submitted by on

Financial Reform Legislation is D.O.A. according to Simon Johnson, an expert and watchdog on the Financial crisis. He is not alone in assessing the health of the patient.

At the end of the day, essentially nothing in the entire legislation will reduce the potential for massive system risk as we head into the next credit cycle.

That's right. What managed to get passed is now being stripped in conference, as we warned about and updated on here.

Now lobbyists are after the very weak version of the Volcker Rule:

To secure the support needed for their bill, Senate negotiators are leaning toward creating a series of exemptions to the Volcker Rule that would allow banks to continue to operate these businesses as investment funds that hold only client money, according to several Congressional aides, industry officials and lawyers.

The Fed's Funky Formula - Public and Congress Don't Compute

Submitted by on

Senator Bernie Sanders to Fed. Reserve Chair Bernanke - Show Me the Money!. This is a must watch clip and note the condescending attitude, the expression of disdain, from Federal Reserve Chairman Ben Bernanke on Sanders basic question of who is getting $2.2 trillion dollars in short terms loans from the Fed.

Banks Who Don't Need Bail Out Money are the Ones Getting It

Submitted by on

The Chosen Ones. I flipped on the local news late last night and saw a local bank CEO announce they have received millions of money from the bail out even though they don't need it. Images and drawings trying to explain how giving taxpayer money to some of the most consumer unfriendly banks would help the taxpayer abounded from the infomercial newscast. Arrows and redirects flooded a white board where one could have written corporate public relations B.S. clip in it's place. Paulson is helping the worse bank in Oregon, notorious for old growth timber clear cutting. The CEO said he would probably use the money for acquisitions, consolidation.

Plan 9 From Outer Space is Plan B

Submitted by on

plan 9 from outer space
Now that the bail out and throwing money to Wall Street for bad debt isn't doing much, today we had a coordinated rate cut from central banks across the globe.

More money is proposed so Americans can go shopping instead of producing and AIG gets another $38 Billion.

Considering the magnitude of imminent Economic Armageddon, in last night's debate what do we get?  Spend, Spin, Platitudes and our favorite distraction, tax cuts. I often think we would be better with static and noise emanating from the idiot box than this absurd, vague drivel or deflection through attack to avoid the specifics on what will they do.