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Frontrunning: January 28
- Meltzer: The Fed's anti-inflation exit strategy will fail (WSJ)
- It's time for Bernanke to move on (MarketWatch)
- Bernanke is unfit to be reconfirmed: "If nothing else, Mr. Bernanke has proved to be a consummate bureaucrat,
spending most of his time in recent months lobbying for major
expansions in the Fed's regulatory powers, which, if granted, would
take it far beyond the purposes for which it was created in 1913." (Washington Times) - Goldman viewed as favored by regulators, Fed says (Bloomberg)
- Quantitative easing: we are all central bankers now (Jesse)
- Here comes the new temporary debt thatch roof: Democrats to raise debt limit $1.9 trillion to $14.3 trillion (The Hill)
- Darling to hold secret talks with bankers in Davos (Guardian)
- "Huge" UK bank sales may surpass Thacher's privatization (Bloomberg)
- Initial jobless claims at 470,000 more than expected (Bloomberg)
- Blankfein avoids apology as London risks suicide (Bloomberg)
- Beware Greeks taking bribes: corruption thwarts Papanderou's efforts to solve crises (Bloomberg)
- Banks see ways past pay limits (WSJ)
- The bankruptcy routine (The Deal)
»
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Bloomberg headline is "Durable-Goods in U.S. Gain More than Forecast Excluding Transport".
No agenda there much?
> Goldman viewed as favored by regulators, Fed says (Bloomberg)
Don't bury the lede!
> Another reason that Vicente said the New York Fed wanted details of the payments withheld: The banks got 100 cents on the dollar for real-estate linked assets, called collateralized debt obligations, that had declined in value.
> “Counterparties received par -- which is politically sensitive -- but necessary given the economics of the deals,” Vicente wrote. “That’s something you just can’t explain in a press release because it involves understanding of why the deals don’t have isolated risks (for example, I believe one counterparty had shorted AIG risk in order to balance their AIG exposure on the CDS deals, so tearing up the trades left them exposed with no hedge, etc.)”
GOT PAR?
PAR BITCHES!
etc.
Geithner’s faulty apologia
But AIG had already been downgraded, that’s why the government stepped in with a bailout. At that point the firm’s liabilities were taxpayer backed, so it strains credulity to say that extinguishing certain CDS it had written would cause systemic fallout in and of itself. Essentially what was happening here was unused insurance contracts were being extinguished. (Imagine a pro-rata refund from your insurer for a homeowner’s policy it wants to cancel…)
And there was precedent for this kind of negotiation. Eric Dinallo, former Commissioner of the NYS Dept. of Insurance and current candidate for Eliot Spitzer’s old job, had previously negotiated haircuts on CDS written by the monoline bond insurers. They were never forced into a taxpayer bailout. Did anyone at the Fed pick up the phone to consult Dinallo? Why not?
At the hearing, Geithner said he took “great pride” in his judgment to pay out 100¢ on the dollar to AIG counterparties because, he claims, it saved us from economic catastrophe.
http://blogs.reuters.com/rolfe-winkler/2010/01/28/geithners-faulty-apolo...
Senate vote on Bernanke set for Thursday
http://www.washingtonpost.com/wp-dyn/content/article/2010/01/28/AR201001...
For those who follow the politics closer than I, why isn't more Republicans voting against him?
Beats me.
http://economix.blogs.nytimes.com/2010/01/25/economists-reactions-to-ber...
Thanks for the link. Maybe they feel like us voters - vote for the least worse. I would like them to vote against him, for various reasons, but I do fear the alternative.
Talked to my senator who is a cosponsor of S. 604, has voted against every extension of the debt ceiling, the TARP bailouts, etc. He told me Bernanke is awful but we could get someone worse so he'd rather deal with the Devil he knows. Said he'd rather turn the screws via the audit on the person who caused the mess.
I suspect that is the case with many. I think many are afraid the next alternative would be Summers. I think your senator is overly hopeful thinking they will ever audit the Fed though. As I understand it, if passed, they have a six month time table before the audit. Not sure what triggers the window. Six months is plenty of time to cook the books. But I'm a pretty cynical person when it comes to the Fed, congress, and the government in general.
Thanks for the info, and good for you to be in touch with him. I do too but the feedback is slim and none.
The Fed's anti-inflation strategy will fail but its pro-inflation strategy will succeed. The endgame is obviously to inflate away the debt mountain. There's no other viable exit strategy.
Jesse picks up on the fact that we now have a command economy. Good. I told you--if you want to figure out what happens next study Marx and his congeners, and Minsky.
Talk of an exit strategy is itself a strategy.
There is no goddamned exit strategy, because there is no recovery, because there is no capital. Only the magical productivity fairy could rescue us from this.
The purpose for such "talk" is to provide cover for the blatant market manipulation that goes on day after day after day.
Not to seem presumptive or patronizing, but Sir, there is an exit strategy. It's to stampede all free capital into treasuries and go bust, replace the dollar with the Amero, replace your civil rights with New Improved Civil Rights V2.0,
reform America as a ten superstate UN administrative zone resembling an african dictatorship , and use a variety of conflicts, pestilences, plaques, wars, and famines to reduce earth's population by 1/4 in the next 10 years.
Humankind got fat and has to go on a 'member cell' diet and America has outlived it's conceptual usefullness to the wicked.
-MobBarley
Bobby Chapman says the societal sophisticates at JP Morgan are getting tired of the uneducated frat boy antics of the Goldman league and are going to apply a little tourniquet of their own to the problem of them giving bankers a bad name.
Funny that because I could swear Goldman and JP Morgan are sides of the same coin, but I could be mistaken.
Could it be that the goldman crew fears not the riled masses and popular discontent, but rather..hired guns dispatched by the Morgan crew?
High noon on wall street...
silence.
the clinking of horse spurs the only sound
whadalooalooo
-MobBarley
So...do we see a big ramp job tomorrow, or will the January Indicator forecast another down year for the SPX?