Barney Frank

Spoiler Alert: They’re mostly still in office  (so much for building suspense).

On October 3, 2008, 338 elected officials (263 House reps, 74 Senators and 1 President) took it upon themselves to save America from certain financial doom by passing the Emergency Economic Stabilization Act of 2008, completely ignoring the will of the American people,  opting instead to fulfill a Thomas Jefferson prophesy:

“The end of democracy and the defeat of the American Revolution will occur when government falls into the hands of lending institutions and moneyed incorporations.” 
~ Thomas Jefferson

TAG ought to be allowed to expire at the end of 2012, but people like Barney Frank and Tim Johnson will be working to preserve this corporate subsidy for their clients among the large banks regardless of the deleterious effect on the US economy.  

Two years ago, in January 2010, Zero Hedge wrote "This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied" which became one of our most read stories of the year. The reason? Perhaps something to do with an implicit attempt at capital controls by the government on one of the primary forms of cash aggregation available: $2.7 trillion in US money market funds. The proximal catalyst back then were new proposed regulations seeking to pull one of these three core pillars (these being no volatility, instantaneous liquidity, and redeemability) from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal would give money market fund managers the option to "suspend redemptions to allow for the orderly liquidation of fund assets." In other words: an attempt to prevent money market runs (the same thing that crushed Lehman when the Reserve Fund broke the buck). This idea, which previously had been implicitly backed by the all important Group of 30 which is basically the shadow central planners of the world (don't believe us? check out the roster of current members), did not get too far, and was quickly forgotten. Until today, when the New York Fed decided to bring it back from the dead by publishing "The Minimum Balance At Risk: A Proposal to Mitigate the Systemic Risks Posed by Money Market FUnds". Now it is well known that any attempt to prevent a bank runs achieves nothing but merely accelerating just that (as Europe recently learned). But this coming from central planners - who never can accurately predict a rational response - is not surprising. What is surprising is that this proposal is reincarnated now. The question becomes: why now? What does the Fed know about market liquidity conditions that it does not want to share, and more importantly, is the Fed seeing a rapid deterioration in liquidity conditions in the future, that may and/or will prompt retail investors to pull their money in another Lehman-like bank run repeat?

Ben Bernanke's prepared remarks in today's second session of his semiannual Humprhey Hawkins testimony will be identical to yesterday's, but one thing is certain: the questions asked of the Chairman will be far more colorful, courtesy of the inquiry of such penetrating financial experts as Barney Frank and Maxine Waters et al.

The FDIC decided to wait with its dose of pre-holiday humor until after the Barclays fixing for today's market close turned out to be spot on. And by that we mean that official release of the US banks' "living will" statements, which as far as we know is about the most worthless exercise ever conducted, and about the dumbest thing to be conceived by that very undynamic duo of Barney Frank and Chris Dodd. Because last we checked, the treatment of living wills in bankruptcy court, where all these firms will end up eventually anyway, is... non-existent. But the real fun is when one actually reads this indicative statement from Citigroup: "Citi is today a fundamentally different institution than it was before the crisis." And that's where we stopped. Because it is banks wasting their time (and taxpayer bailout money) on gibberish like this instead of analyzing the risk inherent in their prop positions that guarantees the next CIO-like blow up will not be just $5 billion but far, far more, and will certainly prove that living wills when one has to equitize tens of billions in unsecured debt are worth exactly didely squat.

“Over the last thirty years, the United States has been taken over by an amoral financial oligarchy, and the American dream of opportunity, education, and upward mobility is now largely confined to the top few percent of the population. Federal policy is increasingly dictated by the wealthy, by the financial sector, and by powerful (though sometimes badly mismanaged) industries such as telecommunications, health care, automobiles, and energy. These policies are implemented and praised by these groups’ willing servants, namely the increasingly bought-and-paid-for leadership of America’s political parties, academia, and lobbying industry.” – Charles Ferguson

Once you dig into the details beneath the thin veneer of Bernaysian obfuscation, you realize the corporate mainstream media storyline of middle class decline has a veiled storyline of a powerful, connected 1%, enriched at the expense of the middle class.

We skipped the first part of today's hearing by the Ron Paul-chaired Domestic Monetary Policy and Technology Subcommittee titled “Improving the Federal Reserve System: Examining Legislation to Reform the Fed and Other Alternatives” as one of the two panelists was Barney Frank, which immediately meant it would be a complete and utter waste of time, and everyone would walk away far dumber from it, with god likely not having mercy on anyone's soul. The second part however promises to be far more interesting featuring such names as John Taylor (not the FX Concepts Taylor or the musician), Peter Klein, James Galbraith and Alice Rivlin. While everyone knows wha has to be done about the Fed, the likelihood that this will happen before the Big Reset is zero, but at least people can talk, dream and speculate. Watch the live webcast for more of the latter.

As the economy slows, demand for jobs are about to increase, right? After all, it must be true, they just said it in the news!!!

Get those rotten tomatos ready

On a day when the sad reality of our (AAPL-free) centrally-planned economy came a little unhinged, it is perhaps useful to reflect on just how different our 'capitalism' in the US now is from other 'capitalist' societies and the one we had in the 1900s. Robert Murphy (of The Politically Incorrect Guide To Capitalism book fame) explains how everyone has an agenda - yet everyone agrees that they despise capitalism. Capitalism is the system in which people are 'free to choose' and this is compared to socialist economies (where prices are set by the Fed state and assets can be confiscated for the benefit of the people). The fear of capitalism's citizenry running riot with unregulated actions leaves critics focused on a belief that regulators and bureaucrats know better than private citizens how to make their own decisions. This brief discussion ends with a sprinkling of Ayn Rand, Obama, Geithner, Barney Frank, and Harry Reid and their efforts to evade Capitalism's features, misrepresent its nature, and destroy its last remnants.

• China's Central Banker to Fed: Act Responsibly (WSJ)
• Spain's debt to jump to 78 percent of GDP: De Guindos (Reuters)
• Rajoy Needs All the Luck He Can Get (WSJ)
• Spain Faces Risks in Budget Refit (WSJ)
• Top JP Morgan banker resigns to fight abuse fine (Reuters)
• Reinhart-Rogoff See No Quick U.S. Recovery Even as Data Improve (Bloomberg)
• Program to help spur spending in domestic sector (China Daily)
• Barnier hits out at lobbying ‘rearguard’ (FT)
• U.S. CEOs' take-home pay climbs on stock awards (Reuters)

  The Fed's new price rule raises more questions than it answers. The real question is whether 'the rule' is a beard for the Fed's coming plan to ignore it and work on its unemployment 'mandate?' Can the expression of a rule, even one that is poorly articulated, cause expectations to cluster around it?  And is that where the Fed is going...  

Nearly two years after his catastrophic foray into Op-Ed writing, here is Tim Geithner's latest, this time making the hypocritical case to "not forget the lesson from the financial crisis"... which he himself ushered on America as head of the New York Fed. Frankly we are quite sure it is not even worth reading this drivel: the unemployed man walking has been a total disaster during his entire tenure (at both the New York Fed where he supervised all the banks that subsequently fell, and the Treasury), and we are fairly confident that reading anything written by this pathological failure will cost collective IQs to drop by 10 points at a minimum. Hey Tim: is there a risk the US can get downgraded? Any risk?

Anyone Who Thinks that War Is Good For the Economy Has One Eye Covered ... And Is Only Looking At Half the Picture ...

History is repeating itself, again.