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Michael Pento On The Markets Vs. Bernanke
By Michael Pento of Delta Global Advisors
Who should investors listen to; the markets or the Fed? One says we are in for a double dip recession, the other just raised GDP forecasts.
The head of our central bank Benjamin S. Bernanke has a perfect track record for predicting economic outcomes. Unfortunately, his track record is only perfect due to its 100% inaccuracy. The Fed Chairman once assured investors that the subprime housing crisis was contained and would not bring down real estate prices or affect the overall economy.
Then, after being proven completely wrong by the near collapse of the entire global economy, Mr. Bernanke moved to an emergency Federal Funds target rate of 0-25 bps and has held it there for 17 months. And even though the economy has posted three straight quarters of growth, has shown no inkling to provide American savers with a decent return on their money deposited in banks.
Now we find the Federal Reserve once again proving it has an unlimited aptitude for ineptness by actually raising their G.D.P. forecast from a growth range of 2.8%-3.5% to 3.2-3.7%. That's correct; Federal Reserve officials raised their U.S. growth estimates for 2010 and lowered forecasts for unemployment and inflation, according to minutes of the Federal Open Market Committee meeting on April 27-28. They left their 2011 forecast unchanged at 3.4 percent to 4.5 percent. Fed officials' forecast for the average unemployment rate in the last quarter of 2010 fell to 9.1 percent to 9.5 percent versus 9.5 percent to 9.7 percent estimate made in January.
However, contrary to the Fed's predicted trend of improvement in employment numbers and economic data, on Thursday we saw first time claims for unemployment jump by 21,000 to 471,000 in the week ended May 15th. The four-week moving average also climbed to 453,500 last week from 450,500. Additionally, the Index of Leading Economic Indicators during the month of April saw a .1 percent decrease. That dip in the Conference Board's outlook for the next three to six months followed a revised 1.3 percent gain in March and was the first decline for the index in a year.
Meanwhile, sovereign debt contagion threatens to dismantle the Euro currency as Eurozone borrowing costs may become intractable if interest rates continue to rise. China is busy trying to pop their property bubble at the same time the Shanghai Composite Index is down 21% in 2010. Not to be outdone, Australia has collapsed their resource sector by imposing a 40% tax on the earnings of mining companies.
The threat of a metastasizing government debt default crisis similar to the credit crisis of 2008 has sent crude oil prices tumbling from over $85 a barrel to $68 in a matter of weeks. Dr. Copper has plummeted from $3.60 a pound in April to $2.93 as of this writing. But none of that matters to the Fed or gives them pause to reflect on their ebullient outlook.
It doesn't take superhuman predictive powers to have the ability to look at markets. What is it that Mr. Bernanke and company look at other than the rear view mirror when making prognostications about growth, unemployment and inflation? We have given the most incredibly powers to the Federal Reserve; namely, to dictate a target rate for the cost of money. But we have allowed to be appointed at the Fed a group of individuals who not only cannot accurately assess a given series of data but also have chosen to completely ignore markets.
The CRB Index is trading at its lowest level since October of 2009 and is telling investors that the global economy is in the process of slowing. But the Fed is stacked with academics that have never had to earn a living by predicting economic and market directions. Their failure to listen to the message of markets is the key reason they have such a miserable record of making accurate projections. For the betterment of the nation, the next appointment to serve at the Fed should be someone from the trading pit and not from Princeton.
h/t Adam
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If this keeps up, I look forward to sharing stories how we bathed in $100 bills every night..
BS Bernacke. Man of the Year.
I am very curious as to who exactly was behind his selection of Man of the Year. How is it determined?
Rahm Emmanuel picks up the phone....
Supposedly the person or persons who had the greatest impact (good or bad) upon the world in the preceding year....or at least those who read Time.
As far as who, Time always was part of Operation Mockingbird, the CIA program to influence domestic and foreign media that was supposedly shut down. Of course, itwas simply moved off the public "budget" and into the black budget, where it no doubt now resides under a different name. They don't shut down programs this effective simply because they are exposed to the public.
http://en.wikipedia.org/wiki/Operation_Mockingbird
I suspect the members of the Norwegian Nobel Peace Prize committee must have been pimping BB in the "man of the year" contest......
I mean: Obama receiving the Nobel peace prize must be a undeniable clue as to their involvement......
Granted Obama is in good company with the likes of ...Jitzhak Rabin, Shimon Perez, Yasser Arafat, Frederik Willem de Klerk to name a few.
LMAO
Bernanke is a definite winner then. In self-proclaimed academics' eyes, he has been great while he is terrible when analyzed from real world standards.
Well the aforementioned Nobel laureates create wars to cash in on "peace prizes" whereas Ben Shalom B. only needs a financial crises to create a big financial crises which he eventually will turn into an even bigger mess.
Not easy to understand for a layman, but I'm confident the academici will dig up a plausible explanation.
LMAO
http://archive.newsmax.com/archives/ic/2007/3/28/110709.shtml
Wednesday, March 28, 2007 11:03 a.m. EDT
Fed's Bernanke: Subprime Mortgage Problems Contained
Federal Reserve Chairman Ben Bernanke told Congress on Wednesday that growing troubles in the market for risky mortgages thus far doesn't appear to be spreading to the overall economy but the situation bears close watching.
"At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained," Bernanke said in prepared testimony to Congress' Joint Economic Committee.
I bet these jokerz long for the pre-internet days when such quotes would have required weeks or months of pouring over old transcripts or drudging thru the Dewey Decimal cards at the library to uncover.
God save the Internet!
I’m looking forward to Nassim Taleb’s new book – working title “Seduced by Celebrity: How I Let the Pretty Girl with Big Tits Distract Me Into Making Unbelievably Foolish Predictions.”
Meanwhile, all those who followed his “every man, woman and child should be short Treasuries” are left with a smoking black hole where their account balance used to be as TNX teeters on the brink of China Syndrome Mode (where it melts through to the opposite side of the planet and joins the JGB with a 1 handle).
4shzl, dzl. Sometimes I'd like to shove a black swan up his ass.
I'd buy that for a dollar.
That was the easiest trade I made in the past year: long 7-10yr treasuries. Everybody from Taleb to MHFT was on the "short treasury" bandwagon. Crikey, we KNEW here at ZH that the powers that be would sacrifice stocks, commodities etc. well before they would le the treasury market crater. That would have truly been, GAME OVER.
More room to run to the upside in longer dated treasuries. At least for a couple of years, then the whole fuckin thing blows apart and gold will rule.
Amen to that. I went barbell w/ a hedge. Long Gold, Long Treasuries, short gold miners. History's full of dead govvie bears, their timing is never right. In addition, govvies perceived as safety assets tend to be the last thing to go, even in the face of fiscal insolvency.
I know what you say makes a lot of sense. At the same time, the very idea of owning treasuries long scares me shitless, and being in a situation where we're worrying about treasuries scares me shitless too. Currently,I have a jumbo CD at Sealy bank, but it's paying 0%. Maybe I'll try to eat less.
Taleb’s new book – working title “Seduced by Celebrity: How I Let the Pretty Girl with Big Tits Distract Me Into Making Unbelievably Foolish Predictions.”
Naw, I think that was Roubini's book.
Taleb's should be "Fuck I am the most awesome dude in the universe--if you lost money on my advise it's because you're a total tard"
http://www.youtube.com/watch?v=TrXhxmQJSS0
Maybe BB has been wildly successful...GS and others have been doing quite well, just not for the US.
Who gave the Fed permission to transfer wealth from savers to spivs and speculators?
http://cantor.house.gov/
This question should be ground into Americans' heads on a daily basis. Then, we might get somewhere.....
The compromised bureaucratic academia goes from being radomly halftime correct to perfectly inaccurate. They've experienced a sea change in the proficiency of their theory contra reality
Well, the USD still is the last domino...so an argument can be made that Bernanke is doing his job.
Just making sure the $ falls last and hardest!
Of course listen to Ben, their planning on more QE to infinity, so naturally the GDP will be UP!!.
Still want to know what happened to the Two Trillion +, that pissadeared......under Bushie.
...that Rummy brought to light on 09/10/01..
To follow that rabbit hole, you'll need a magmaproof space suit and a 3 year supply of sodium pentathol...
That's exactly right!!! There's a post on ZH right now about Bernanke planning a $5 Trillion QE in early 2011. GDP is going to bust out.....we're doing fantastic...right? Damn Fucktard!
And one other comment I read on here was right on as well. Long Treasuries for sure....don't even think about shorting them...They are secure until Bernanke fails. When will that be? Could be....a long time...years even. You won't make money with Treasuries, but you won't lose and the places to hide are getting fewer and farther between.
I know some of the gold bugs will take offense at that statement, but they work on a false assumption that the government won't just confiscate their gold like they did in 1933.
Don't assume anything. I am spreading my investments for every contingency I can think of, and I'm still worried that I'm gonna miss something and get hammered.
There are two possible explanations for poor forecasting by the Fed.
1. Incompetence.
2. The Fed recognizes that its predictions of the future, in part, determine the future.
I think it's more 2 than 1.
If things get a little worse perhaps we can expect the War Powers Act to be reactivated. Rationing of inflationary goods, wage and price freezes for deflationary goods and services. National Guardsmen could run essential services the states are too broke to pay for.
I don't know the score from The Market vs. The Beard game, but from the Persian League this score just in...
Pb over Au by a score of 14 to nothing in a day game that wass a slaughter. Some look for Pb to continue its streak and advance to play in Europe.
http://www.reuters.com/article/idUSTRE64O25Q20100525
What would you do if you were in Bernanke's position? He of course knows the real story -- he just can't confirm it else the whole collapses. He has to attempt to keep the game going and I am sure they have on shelf a replacement system if it looks like the system is going down.
Lot of people assign evil intentions on Ben Bernanke but in my view he is just trying valiantly to keep this insane system going to prevent complete breakdown in financial systems resulting in law and order problems.
An insane system he has been materially responsible for creating. A shared responsibility of course.
He did not create this system, this system has been used before your grandfather's grandfather's grandfather was even a thought.
The system is constantly being created. Everyone in power right now who is not working to dismantle it, is responsible for its existence.
Well, if one had even an ounce of integrity, honesty, honor, credulity, spine, a pair of, intestinal fortitude, reason, sanity, than I think one would hang oneself. Just my opinion of course, though I do encourage him even though he has none of the above.
I might agree with you if the banks weren't allowed to pilfer every last penny from the taxpayers. He can keep the game afloat without allowing the banksters free reign to line their pockets.
Thus, it's necessary to keep the game going so as not to crash the economy (which will inevitably happen anyway) but to allow what he and others have allowed is treasonous.
I agree. Ben is just some guy, with all the failings, trappings, and insecurities of any other person. He has a good education, but that doesn't mean he's capable of fixing a system that is broken. If anything, it makes him more cognizent of just how bad the situation is. His only defense mechanism is to avoid discussion of the truth, and say things that reinforce hope. Ben aggressively defends Fed secrecy because it's the only card he has to play. If the truth were on display, we'd begin a new chapter (and it starts with disorder). Ben probably fears that the truth may jeopardize his personal safety.
And every time you wake up Ben, just keep saying those things to yourself. Consider adding these things to your motivational talk:
1. I am, a man. I am, a man. I am, a man.
2. I'm good enough, I'm smart enough, and dog-gone-it, people like me.
Hey, there might be something to that...it obviously didn't hinder Stuart Smalley from getting to DC.
its all about managing the expectations. if everyone believes a lie, it becomes the truth.
Too late for that. The truth is out, and enough people know it that information management is no longer feasible. It's not stopping him from trying, though...
http://maxkeiser.com/2010/05/25/kr45-keiser-report-goldman-sachs-undecla...
"It doesn't take superhuman predictive powers to have the ability to look at markets. What is it that Mr. Bernanke and company look at other than the rear view mirror when making prognostications about growth, unemployment and inflation?"
It doesn't taken superhuman reasoning ability to understand that a public figure such as the head of a central bank by definition cannot come out and say "the sky is falling, sell eveything and buy bullets and bullion." I am not defending Bernanke, and think he was a poor choice (twice!) for head fed, but it is his job to inspire confidence in markets and the economic system. He cannot say the market is in the crapper, a priori. Anyone who thinks otherwise in naieve, superficial and/or ignorant (or all 3 in some cases).
I'm your Huckleberry...
Whether shaken, stirred, or force fed, the medicine must be taken before any recovery can commence.
The medicine will cause social vomiting, diarrhea, and a general sense of malaise.
This cannot be avoided. No matter what Benji says, or doesn't say..
Goebbels job was to do what?
How did that work out for him?
We cannot handle the truth, eh?
The Goebbels comparisons are cute, if not misguided. You seem to suggest that his is a consciousness effort to deceive, to present an alternative reality. I make no such presupposition, and merely point out that a public figure's words can have power effects, unintended and otherwise, on markets, to say nothing of psyches.
Continuing your metaphor, do you think it would have been a good idea in 1934 if FDR had declared “Our system is bankrupt – we cannot repay our debts. The Nazi-led LBO will make us whole and guarantee employment and prosperity for all.” Many of his statements were completely bankrupt, serving only to rally the nation. You may argue that this time around the goals are less noble, but the means are the same.
I sincerely hope you can handle the truth, and part of that truth is that public figures often can be disingenuous (or worse) in public to pursue higher goals. Whether those goals are right or wrong is a value judgment. To deny that such things take place is to be ignorant of the system. If you expect honest analysis from politicians you are likely to be disappointed.
"a lie, if audacious enough & repeated often enough, will be believed by the masses " ...... GOEBBELS
test
Oh, dear God. Not one of those retarded "Minyanville" talking animals!
Shouldn't you be off watching Cramer while attending a "furry" convention?
I like Harrison. <shrug>
Bernanke trying to guide market = monkey with etch-a-sketch trying to copy Rembrandt
Helicopter Ben's job is to keep all the lemmings marching in the same direction and to recruit more lemmings and get them marching in the right direction.
Everyone believes the myth of Helicopter Ben, the lemmings keep on marching believing the lie.
There is absolutely nothing Helicopter Ben can do other than to try and keep the lemmings going until they arrive at the black pit.
Ben is no match for the equation long-term. The equation always wins the war even though it loses all the battles along the way. This war was over when it started, the outcome was always known, the equation will win and plenty of humans will be liquidated.
Yep, Ben has marched everyone up high enough to ensure they all die when they hit the bottom. At least there won't be anyone left to ask for their money back from the banks.
The lemmings pay the Benny to give them orders and keep themselves inline, when the lemmings get to the end of the road and see the cliff into the pit... they turn to Benny and say, "what gives?". Benny says I am only doing what you asked me to do.
How much is being issued in the Treasury auctions this week?
Sure, Ben doesn't know what he is doing.
You can always count on Barney Frank to say what is in his own best interest. What a hero.
http://www.marketwatch.com/story/does-barney-frank-believe-his-own-words...
Walking side by side with one of the most corrupt public "servants" in Senate history.
As far as the banking system is concerned, the derivatives game is actually transparently simple: they are a vehicle for being able to claim that leveraged risk has been hedged, thus avoid forced deleveraging. Derivatives enable higher levels of leverage; it's not any more complicated than that. Disabling leverage in the middle of a deleraging would be catastrophic, so it'll never happen. End of story.
Amen to that.
Rick Santelli for Fed Chairman!!!
Hurry CNBC tell the lunch viewers were up off the lows. The market always jumps off the lows near lunch and CNBC always says "as the market rallys off the lows.
Feds corrupt manipulation of the market breathtaking. No care as to hide the obvious, now they are just bald faced liars.
Come on! The key reason the Fed has such a miserable record of making accurate projections is because they are LYING. Bernanke has been lying since the moment he took the job. Lying to cover up the steps taken by the guy before him, lying to cover up the reasons for the steps he, himself, is taking. He has lied about what he knew and when he knew it, betrayed everything he purported to have learned about history. He has been an integral part of multi-faceted, coordinated lies. Big lies about the state of the banking system, about the moves that have been taken and not talked about, about the effect of accounting rules, about the inescapable worthlessness of the toxic assets we were forced to consume.
Things are really bad, okay, and they are about to get worse. That's why they are putting on the false happy face while continuing to steal our money with monetary policy.
One thing we have to stop tolerating, though, is conventional wisdom statements about the narrowly-avoided "near collapse of the global economy." That's been baloney from day one. Fear mongering rhetoric from the guy who set fire to your house and is running off with your insurance money and telling you it's for your own good. BALONEY. Without substantiating evidence. There is more evidence, in the form of record bank and hedge fund inflows and profits, that those were like claims about Saddam's WMD program.
The collapse has occurred, kids. Look around you. Nothing has been averted. The losses have simply been transfered. Take away the theft that Bernanke and company have been orchestrating and a bunch of people with money would have lost a bunch of money and fought with each every step of the way and worked out their problems to mitigate their losses as quickly as possible so they could get back to the business of making money, which is what they do. Economies and ordinary people would have suffered, but they're suffering anyway. The difference is, our future would not have been stolen from us.
That right, of banks, to steal the future, is what Bernanke, Blankfein, the Senate Democrats and the Obama administration have just succeeded in encoding into law with their despicable financial "reform" legislation.
pretty much yup.
His job in not to keep the game going, nor has the Fed been 'creating expectations'... (beautiful, just fraggin' beautiful) - the market, the numbers, the individuals everywhere who make up the market, from Jamie Dimon to Tyler Durden to Joe Sixpack, everyone, wants a safer, less casino-like financial system which actually has some positive return on capital at it's base- the actions, read lobbying, of the TBTF -in the interest of the BHCs' - and, effectively, their man on the button 'Dear Chairman' has been what 'as pushed -with unlimited dollar support, mind- against 'getting the system fixed, so it can work on its own. As Chairman of the NYFED, he has further entrenched the paradigm associated with the office of just spending money and more money and not using 'expectations' or policy with any subtlety, for national security reasons.
Sorry, folks - but these are probably good predictions.
1. Of course U3 rate will get down to around 9.1%, as millions of people don't have benefits extended & fall off the radar. Plus many of those will realize they need to take that job at McDonald's or Jiffy Lube after all... which is employment. Lots of middle-aged men with families are starting to take these jobs, in my observation.
2. A prediction the economy will expand at the rate the Fed indicates is either wishful thinking about inflation kicking in this year, or just plain inside knowledge of more QE coming.
These predictions can be basically correct and have nothing to do with any sort of real recovery. They will be celebrated, though.
Whover junked me ... explain yourself, dumbass.
Ben is a new age thinker who believes that he can create that which he wishes, just by thinking it, saying it and believing it.....
The man is downright delusional, but he won't quit until he wrecks us all.......
A=A.
We continue to ignore it at our peril.
His name is Benjamin SHALOM Bernanke, just as it is Barack Hussein Obama (or is it Barry Soetoro?).
Know your enemy.
Keynes created the system. The politicians loved it cause it gave them the power over the monetary system(s). Even if Keynes admited he was wrong before his death, the politicians won't surrender the system until it self destructs... And although they used the system to fuck us all, they will still blame the speculators who just tried to kill the beast before it killed us... But hey, for the older generation (not me, notice the name) it worked great; otherwise we wouldn't have quotes/"facts" like "the market always goes up in the long run".... Fuck you keynes. There was, and is, no free lunch.
The politicians loved it cause it gave them the power over the monetary system(s). Even if Keynes admited he was wrong before his death, the politicians won't surrender the system until it self destructs...
This is IMO the exact reason for the widespread acceptance of the obviously idiotic Keynes. Want acceptance as an academic economist? Better get with the program. Want funding from deep pockets to do economic research? Same program. Want your B school grads to succeed and rise to the top in the new system? Same.
Agree - Two thumbs up.
The Fed can estimate future GDP because it is the GDP.
"They" control which information is published in this ever growing ponzi scheme.
Ben does not go on the record to predict anything. His scripted utterances in public are just propoganda. Ben is paid to say what he is told. But, this is nothing new for the FED. Before Ben it was Greenspan, no real information just public relations.
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Ben is not uninformed. The FED's data collection is impressive. The data is all there. The FED is business as usual. The problem is on the fiscal side. Soon the FEDs only real role will be to write checks to Treasury. When this QE is a matter of policy to pay the bills, the final USD decline depends on debasement (inflation, money supply) relative to savings.
This decline will be much faster than Japan.
However, I do see equilibrium reached at a rate of decline. Unless massive measures are taken to reduce spending (positive cash flow), we will suffer a quarterly trend (adjustment) in monetary inflation, which will erode the real worth in savings (USD).
The politicians do not understand the effects of taxation relative to revenue. Tax is viable when charged against real economic output. Without fundemental strength there is no capacity to tax. My guess is they will discover the real cost of taxation on labor. That taxation is not the only form of "tax". We are paying more "tax" everytime the FED QEs and the Government wastes borrowed money. It is just in what manner this tax will be collected.
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Monthly Treasury statement;
http://www.fms.treas.gov/mts/mts0410.pdf
I was really impressed at how well the media ignored the April tax receipts. FY2010 April was down 7.9% from FY2009.
This is monumental failure on the part of the Obama administration.
What does this decline mean?
A lot has happended over this year in terms of stimulus spending. The question is why didn't the investments reflect themselves in income and payroll tax? This is very very bad news indeed.
How do you explain this decline after a year of unprecidented stimulus spending and Increasing Government GDP numbers? Something is very wrong.
Its like we live in a pretend economy. Perhaps Alice should run for President.
Mark Beck
HeliBen is doing exactly what he’s told to do. He is in line for one of these:
Order of the British Empire
“Several past American statesmen and diplomats who have performed service for, or on behalf of, the United Kingdom have been given the designation of Knight Commander of the order”.
Interesting list:
List of honorary British knights and dames;
· George H. W. Bush - GCB (1993)
· Rudolph W. Giuliani - KBE (2002)
· Alan Greenspan - KBE (2002) also, Commander of the Légion d'honneur (Legion of Honor) – (Alphonse James de Rothschild - Alfred de Rothschild - James Mayer de Rothschild - Marie-Hélène de Rothschild)
· Not Honorary The Rt. Hon. The Lord Rothschild, OM, GBE, FBA (1998)
· Ronald Reagan - GCB (1989)
· Caspar Weinberger - GBE (1988
· Edward Kennedy - KBE (2009) – (Tokenism)
· Wesley Clark - KBE (2000)
· George Patton – GCB
· Colin Powell - KCB (1993)
· Dwight D. Eisenhower - GCB (1945), OM (1945
· Bill Gates - KBE (2004
To list but a very few.
What kind of service/s have they performed for, or on behalf of, the United Kingdom?
President Kennedy’s Executive Order 11110 of June 4, 1963, sealed his fate; do not fuck with the banksters. Presidents who attempted to or did revoke the authority of the banks to control and print money had the same fate. Abraham Lincoln, James A. Garfield, William McKinley and a failed attempt on Andrew Jackson.
The thlot pickens.