22 Luminaries (And Dick Bove) Sign Open Letter To Fed Demanding End Of QE2

Tyler Durden's picture

As if the rest of the world telling Ben Bernanke he has finally flipped, was not enough, here comes the opposition from within, after 23 public figures, among which economists, financiers, hedge fund managers and Dick Bove (not sure what he is) have sent an open letter to the Bernank demanding QE2 be immediately pulled. With the imminent market collapse that would follow such an action we are not surprised to see Jim Chanos among the list of signatories, although that long-biased Paul Singer of Elliott Associates would endorse such a contrary to his interests letter, is interesting to say the least.

From the WSJ:

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued.  We do not believe such a plan is necessary or advisable under current circumstances.  The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

We subscribe to your statement in the Washington Post on November 4 that “the Federal Reserve cannot solve all the economy’s problems on its own.”  In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.

Cliff Asness
AQR Capital

Michael J. Boskin
Stanford University
Former Chairman, President’s Council of Economic Advisors (George H.W. Bush Administration)

Richard X. Bove
Rochdale Securities

Charles W. Calomiris
Columbia University Graduate School of Business

Jim Chanos
Kynikos Associates

John F. Cogan
Stanford University
Former Associate Director, U.S. Office of Management and Budget (Reagan Administration)

Niall Ferguson
Harvard University
Author, The Ascent of Money: A Financial History of the World

Nicole Gelinas
Manhattan Institute & e21
Author, After the Fall: Saving Capitalism from Wall Street—and Washington

James Grant
Grant’s Interest Rate Observer

Kevin A. Hassett
American Enterprise Institute
Former Senior Economist, Board of Governors of the Federal Reserve

Roger Hertog
The Hertog Foundation

Gregory Hess
Claremont McKenna College

Douglas Holtz-Eakin
Former Director, Congressional Budget Office

Seth Klarman
Baupost Group

William Kristol
Editor, The Weekly Standard

David Malpass
GroPac
Former Deputy Assistant Treasury Secretary (Reagan Administration)

Ronald I. McKinnon
Stanford University

Dan Senor
Council on Foreign Relations
Co-Author, Start-Up Nation: The Story of Israel’s Economic Miracle

Amity Shales
Council on Foreign Relations
Author, The Forgotten Man: A New History of the Great Depression

Paul E. Singer
Elliott Associates

John B. Taylor
Stanford University
Former Undersecretary of Treasury for International Affairs (George W. Bush Administration)

Peter J. Wallison
American Enterprise Institute
Former Treasury and White House Counsel (Reagan Administration)

Geoffrey Wood
Cass Business School at City University London

Follows the Fed's boilerplate response:

“As the Chairman has said, the Federal Reserve has
Congressionally-mandated objectives to help promote both increased
employment and price stability. In light of persistently weak job
creation and declining inflation, the Federal Open Market Committee’s
recent actions reflect those mandates.  The Federal Reserve will
regularly review its program in light of incoming information and is
prepared to make adjustments as necessary.  The Federal Reserve is
committed to both parts of its dual mandate and will take all measures
to keep inflation low and stable as well as promote growth
in employment.  In particular, the Fed has made all necessary
preparations and is confident that it has the tools to unwind these
policies at the appropriate time. The Chairman has also noted that the
Federal Reserve does not believe it can solve the economy’s problems on
its own.
 That will take time and the combined efforts of many parties,
including the central bank, Congress, the administration, regulators,
and the private sector.”

Apparently the Fed still does not realize that it is not its job to "solve the economy's problems" in any capacity, but merely to focus on curbing inflation: an action which the Fed is openly pursuing the inverse of as per its latest interpretation of its mandate. And yes, ultimately the fault lies with Congress and the broad definition of the Fed's power, which is the first thing that should be fixed going forward (or backward as the case may be).

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EscapeKey's picture

10yr T-note 2.86 0.07

Ain't gonna happen.

DollarDive's picture


Cost of livin' gets so high,
Rich and poor they start to cry:
Now the weak must get strong;
They say, "Oh, what a tribulation!"
Them belly full, but we hungry;
A hungry mob is a angry mob.
A rain a-fall, but the dirt it tough;
A pot a-yook, but d' yood* no 'nough.

We're gonna chuck to Jah music - chuckin';
We're chuckin' to Jah music - we're chuckin'.

----------------

Bob Marley

One Drop's picture

There once was a fiat named Dollar
Her "soundness" shall raise a great holler
She's fallen so far, donuts now trade at par
I think I'll just put her, not call her

(After some inspired yank on the euro here last week....)

Superdrol's picture

So this means Goldman Sachs needs some help in their short positions ?

richard fitzwell's picture

I actually thought Bove might have been a Fed created Cyborg of some sort.  This puts a dent in that theory.

idea_hamster's picture

Not at all -- we all know that eventually the machines get smart and can no longer be controlled by their arrogant, short-sighted inventors. I actually think it fits well. 

Somewhere at 33 Maiden, someone keeps pressing the remote kill switch on his Bove control panel, but he's slowly realizing that Bove got smart and disabled it.

Also, I can see Bove gouging out his own eye with an X-Acto knife in order to continue his mission -- that's about what he wants Bernenke and the US to do.

Red Neck Repugnicant's picture

No.  He's just another hypocritical fucking Republican like the rest of them. 

Dick Bove's quote about Ben Bernanke in January 2010:

This party [Democrat] is now seeking to remove the Chairman of the Federal Reserve the only man in the country left in Washington who has any credibility in the financial markets.

Fucking god damn hypocrite! 

Anyone have any letters written and signed by these hypocritical fuckheads when $700 billion was mailed to Wall Street in Octoberr 2008?  Any letters questioning why Goldman was paid par for their $13 billion AIG exposure?  

Anyone?  Any letters at all from any of these guys?

This is a political letter.  Not an ethical or monetary one.

Fucking hypocrites!  All of them.  And, of course, what side of the fucking isle do they sit?

If they truly were looking out for America's best interests, they would have written a hundred letters before today.  

MsCreant's picture

Pssst! Redneck. Yeah you. Boy did you fall out of character on that one. Hit a nerve eh?  I called and wrote letters, emailed and faxed too so I hold the same grudge. Some of those characters on there individually publicly disagreed with the bailouts, though, to be fair.

Calvin Jones and the 13th Apostle's picture

The better question is why did the Wall Streeters put their name to this letter.  Do they really want to be lumped in with Amity Shales and Bill "William the Bloody" Kristol?  Kristol has never been right about anything.  Ever.

Red Neck Repugnicant's picture

Two reasons:

1.  They know Bernanke won't reverse course immediately after he announces QE2.  QE2 is a done deal, Wall Street doesn't need QE3, and they know it will be nearly impossible politically to get away with another round of easing. So, truly, the criticism of QE2 is just rhetoric. If they truly didn't want QE2, they would have written the letter before it was announced.  Writing this letter today is pure politics.  Nothing else.    

2.  The theft already happened.  Their coffers are full.  Wall Street is saved.  The only problem left in America is that the country is fucked - that's all.  And that doesn't matter to Wall Street.  They got their money and now it's time to wear the patriot hat - you know, the one the makes them look like they care about the overall well being of America.  

The best sort of robbery is from your neighbor's back yard.  First you steal from him.  Then you walk over and help him look for the robber, while bitching about the ineffectiveness of the Neighborhood Watch program.  Very clever. Very deceptive. And very effective.   

Tortfeasor's picture

Pray tell who was in charge of Congress in 2008?

Open your eyes and quit being a sucker.  Both D and R are responsible for this fraudster.  If the morons on your side had any guts, they would've kicked him out in '08 instead of reappointing him and giving him MORE power through the Frodd Act.

Get over your hate.  Join us in the bleachers as the crash'em-up derby comes to its close.

Red Neck Repugnicant's picture

I agree - both parties are to blame.  I'm not a democrat.  I simply focus on the republicans because the hypocrisy is deeper and richer. 

By the way, Congress was told if they didn't vote for TARP, the Earth would wobble of its axis - just like they were told in 2003 that we would have mushroom clouds in our backyard if we didn't take down Saddam.

There is an obvious pattern at work: 

The Republicans are masters at apocalyse-type rhetoric to get their what they want, whether it's TARP or war.  And the Democrats are too gutless to question the validity of these end-of-the-world scenarios.  They vote in agreement, and then ask questions later.  It's fucking pathetic.    

Accidental Farmer's picture

Putting "Council on Foreign Relations" under your name in a nasty gram to the fed is such a joke. It's the equivalent of "Fellow Treasonous Douche Bag" They almost had me until I saw that.

 

SheepDog-One's picture

So? What, someone has to agree with everything someone does at all times? Do you like your wife for years? What if you suddenly found I was banging her for hours each nite...would ya still? Redneck repulicunt, youre everything thats wrong with america, you and your fuktarded brain.

flaunt's picture

Let them continue... We'll never get rid of the central bank if they aren't allowed to completely blow up the currency.

 

SWRichmond's picture

Whether we "let them" continue or not, I'm convinced they will continue.  I truly wish they wouldn't, and I am working to try to stop them, but I have placed my bets that they will. 

 

BTW:

22 Luminaries (And Dick Bove) Sign Open Letter To Fed Demanding End Of QE2

I love this title.

unum mountaineer's picture

let the itchy bum begin!

Arius's picture

 

next step a letter to the Bernank in support of QE2 from Krugman at al...let the games begin...

another less sophisticated version of republican vs democrat game...

SheepDog-One's picture

Well we already know Krugman and the rest of those assclowns in the media support the criminal lunatic Bernanke, that letter of support would be no news.

Cursive's picture

May I add my name to this?  Why not just another End the Fed petition, but just starting with "well respected" academicians.

HelluvaEngineer's picture

Can someone explain to me why futures are being pumped while PMs are getting hammered, besides obvious coordinated manipulation?  Or, perhaps I should say - has everyone decided that the market now goes up with the dollar?

Oh regional Indian's picture

HeEng,

Why do you need more answers than that? coordinated manipulation is the only game in town now.

ORI

http://aadivaahan.wordpress.com

Cdad's picture

Sweet flash crash on the SPY just now.  Check it.

$116.71.

The answer to your question is you buying PM's is subversive to the FED.  And you are a serf.  So you are supposed to shut up and buy the SPY.

Got it?

HelluvaEngineer's picture

I can't see it on TOS.  SPY looks absolutely chaotic after hours on their charts.  I do see the silly looking pin low on gold at 1356.5 though!

Cdad's picture

You can't see it on SPY?  Serious?

Look for the 599,000 volume spike on the one minute chart.  You cannot miss it...unless you want to.

It continues to be amazing to me that the criminal syndicate known as Wall Street thinks we will buy back into a market that is so obviously manipulated and broken by HFTs.  And still more amazing is that the criminal syndicate known as Wall Street is currently the Bag Holder.

 

HelluvaEngineer's picture

Sorry, all I see is a flash up to 121.62 around that time.  Isn't it funny that with all the computers in the market, we can't seem to get an accurate quote on anything?

Cdad's picture

The LOD on SPY is $116.71.  I have no idea what you are looking at.  It happend at 8:30 EST and just as data was released.  It was a typical HFT operation...spiking down within one second, filling huge orders, and marking back up...thus exhausting the short term sell signal...and giving them potential upside...provided buying follows the operation.

It is theft.  It is everywhere in this market.  Our market is broken.  Period.

 

SWRichmond's picture

Like most people, I am not a trader and do not have access to a trading platform.  I have instead chosen the simple route: withdraw my capital from the system until the system becomes more-than-reasonably trustworthy again.  I am not alone.

Manbarepig's picture

Cdad - I see it as well.  Running a few trading systems and I can confirm on each one.

Cdad's picture

Every single open market day, this theft goes on.  That transaction happens by trading through some off shore venue...where there may be no bid.

Over and over, the computer crimes go unpunished by an incompetent SEC.

 

Quinvarius's picture

These guys are talking their books with no regard to the outcome.  If we don't get enough money into the banks to counter the toxic garbage on their books, this is all going to go very badly.  I don't like QE either.  But at least I can think logically beyond 2 steps.  Every one of those jokers should consider the banks they work for will not exist if we choose their way.  The time to complain was when the leverage was being added and during RE inspired bubble.  It is too late to complain about the medicine.  There are two ways out for the economy.  One is a quick bullet and the other is a long stay in the intensive care unit with a whole lot of IVs.

Bendromeda Strain's picture

Bullshit - you want to raise up a generation you don't recognize? Let them experience the "thrill" of a hyperinflationary collapse. Oh sure, it's a lot sexier than the depression we are entering, but it also damages a society in more ways initially unseen. Eff the banks, RICO & resolve their asses if they rode dirty.

skipjack's picture

Total horseshit.  We need banks; we don't need THESE TBTF banks.

 

Until the unsustainable debt is defaulted and the fraudsters prosecuted and jailed, there can be no recovery.

 

It's just that simple.

Cdad's picture

Exactly.

Faith in these institutions will not be reestablished as banks are simply bricks and mortar held together by trust.

Perp walks!

SWRichmond's picture

We need banks; we don't need THESE TBTF banks.

It's amazing how many people conflate the need for banks with the need to maintain TBTF banks.  You are exactly right: we need banks, just not these banks.

VisualCSharp's picture

Don't think of it in terms of the institution itself (the banks). Instead, people should be saying "we need bankers, just not THESE bankers." The men behind the institution are the evil and corrupt ones, not the institution itself.

badnews...buyspus's picture

Quin - so what is QE2? the bullet to the head? How can you complain about the RE bubble when we are getting about 10 new bubbles from QE2. These TBTF banks need to be put down - with no downside they have no risk control and will continue to rape and pillage. If you like big government and big corporation (same thing really) you must be happy. The Fed is a typical gen Y'er, they want it now and will brush the negative crap under the rug for some future sucker (their kids).

Al Gorerhythm's picture

The Ben Bernank is targeting the value of savings with a mandated inflation policy?

Yes

Are you shitting me?

No.

Who gave The Fed The Mandate?

Congress.

Does The Congress think that savings should lose their purchasing power?

Yes. They voted for The Mandate.

Is it written in the constitution that The Fed should have The Mandate?

No.

Are you shitting me?

No. The Congress decreed that the Fed should exist and gave it The Mandate.

Did all members of The Congress  vote for The Fed to exist?

No. Only four members voted for The Fed to exist.

Are you shitting me?

No. The Fed was created by stealth, in the middle of the night.

But that is a topic for another video.

 

10044's picture

Yeah but the 5000 at CFR, trilat, and bilderberg are telling ben to QE, so they win, the 22 lose. Very simple. QE to infinity

John McCloy's picture

Your correct. Ben knows exactly what his job is and that is to bouy the assets of the elites and widen the wealth gap. Only when their nests and contingency plans are in place will he begin the inevitable attempt at a controlled demolition. That should be about the time this becomes the bubble to end all.

Red Neck Repugnicant's picture

These guys don't know what they're talking about. 

David99's picture

Helicopter Ben is left with no choice but to continue with QE2,3,4,5 and so on. His prestidge is at stake and he knows that his all Ponzi Scheme will get exposed without QE. Either FED will be abolished or will get audited.

Snidley Whipsnae's picture

At this point Ben knows his 'prestige' is toast, just like Greenspan's 'prestige' is toast.

Ben will continue with QEs because he has no alternative. If he stops QE his banking buddies are toast and the US economy stops for a while. If his banking buddies, or politicians, get a whiff of Ben considering stopping QE, Ben will go down in a mysterious 'accident' and be replaced by a more malable replacement (although I can't think of anyone more malable at the moment).

Ben and Alan can only hope that revisionist historians can save their reputations at some future time. Low probability event, imo.

To say that the first few days of QE2 have been disappointing to the US/Fed/Treasury/banksters is an understatement.

 

Insiderman's picture

Why is Amity Shlaes spelled "Shales?"

bugs_'s picture

CEASE AND DESIST

GlassHammer's picture

The FED can't solve the economy's problems on its own but it won't take outside advice.

That sounds like something my previous boss would do.

If the FED is like my last boss then the next step will be a meeting with the 22 luminaries. The goal of that meeting is to get the group to collectively agree the letter was wrong.