Ben Bernanke

The ongoing collapse in bond prices is making John Meriwether blush with envy at the wholesale wanton destruction of capital undertaken by Ben Bernanke. Keep in mind LTCM - the organization which proved definitively that Nobel prizes in economics are given only to the most consummate destroyers of value, logic, reason and humility - lost "just" $4.6 billion from its peak before it became the biggest systemic risk in the world back in 1998 and had to be rescued by a consortium of banks. The bottom line: with about $10 billion in SOMA losses today alone, Ben Bernanke has generated more than double the losses that nearly destroyed western finance 13 short years ago. And nobody cares.

Sick of bears explaining QE2? Prefer to watch Jon Stewart roasting the monetary Hewlett Retard instead? Here is your chance. Somehow catching Ben Bernanke lying on national TV has become not only a national sport, but one that provokes uncontrollable laughter... Ironically that is the laughter of all those whose money on a daily basis is worth less and less, courtesy of the Chancellor (Chairman is so QE1) buying back $50 billion in debt every week. Presumably laughing as one's net worth is getting destroyed makes it more palatable. Just wait as the country collapses into uncontrollable hysteric guffaws as the 30 Year mortgage passes 5%, then 6%, then 7%, etc. destroying up to 25% of household net worth.

Bernanke: Economic Recovery 'May Not Be' Self-Sustaining

Bernanke: Could Buy More Bonds Depending On Inflation, 'How Economy Looks'

Bernanke: Getting 'Awfully Close' To Range Where Prices Start Falling

Bernanke: Could Be 4-5 Years Before US Sees 'More Normal' Unemployment Rate

Bernanke: Defends Plan To Buy Treasury Securities

Bernanke: High Unemployment Rate 'Primary Source Of Risk' To Economy

Bernanke: Double-Dip Recession 'Doesn't Seem Likely'

I would like to feel sorry for Ben Bernanke because of his bumbling and confusion about what to do about the economy, but I can't. Every time he turns around he does the wrong thing. Can you say "cognitive dissonance?"

Well, folks, it's official - mark November 22, 2010 in your calendars - today is the day the Ponzi starts in earnest. With today's $8.3 billion POMO monetization, the Fed's official holdings of US Treasury securities now amount to $891.3 billion, which is higher than the second largest holder of US debt: China, which as of September 30 held $884 billion, and Japan, with $864 billion. The purists will claim that the TIC data is as of September 30, and that as the weekly custodial account shows UST buying continues the data is likely not correct. They will be wrong: with the Fed now buying about $30 billion per week, or about $120 billion per month, for the foreseeable future and beyond, it would mean that China would need to buy a comparable amount to be in the standing. It won't. In other words, the Ponzi operation is now complete, and the Fed's monetization of US debt has made it not only the largest holder of such debt, but made external funding checks and balances in the guise of indirect auction bidding, irrelevant. For what tends to happen next in comparable case studies, please read the Dying of Money. And congratulations to China for finally not being the one having the most to lose on a DV01 basis on that day when the inevitable surge in interest rates finally happens. That honor is now strictly reserved for America's taxpayers.

The three biggest problems with QE 2 are:

1) The potential for a US Dollar break-down
2) Treasuries falling and pushing interest rates UP
3) China retaliating.

Of these, #3 is the most worrisome for the global financial markets. Let’s be clear here, China is extremely adept at making investing/ financial decisions. And while we do need to take its decision to cut Treasury exposure seriously, I cannot believe China would actually telegraph that it was dumping Treasuries when the dumping really starts.

The following chart prepared recently by JPMorgan demonstrates something rather scary, and makes it all too clear how the Chairman's plan to "assist" the US population via some imaginary "wealth effect" due to QE2, is about to backfire. As is now becoming very evident, the prices of energy and food products are about to surge, and in many cases have already done so, but courtesy of some clever gimmicks (Wal Mart selling what was formerly 39 oz of coffee as a 33.9 oz product for example) the end consumers haven't quite felt it yet. They will soon. There is a limit to how much every commodity can open limit up before it appears on the SKU price at one's local grocer. And while a marginally declining "core CPI" is irrelevant for this exercise as it measures only items that are completely outside of the scope of everyday life, what will be far more important to end consumers will be the push higher in food and energy costs. The problem, however, is that for the lowest 20% of Americans, as per the BLS, food and energy purchases represent over 50% of their after-tax income (a number which drops to 10% for the wealthiest twenty percentile). In other words should rampant liquidity end up pushing food and energy prices to double (something that is a distinct possibility currently), Ben Bernanke may have very well sentenced about 60 million Americans to a hungry and very cold winter, let alone having any resources to buy trinkets with the imaginary wealth effect which for over 80% of the US population will never come.

In recent decades, we have become increasingly accustomed to central banks coming to the rescue when stock prices and the economy slide too far. Despite the fact that economies everywhere have been stimulated fiscally and monetarily on a large scale since the outbreak of the credit crisis, the recovery has only been modest. Worse still, the recovery in the US has already clearly declined again and it looks as if this will shortly happen in Europe, too. On the basis of experience over the past few decades, the assumption is that central banks will come to the aid once more. Especially as it is evident that we cannot expect much further help from the fiscal quarter. In theory, central banks are certainly capable of helping. In practice, however, in our view they no longer have much room to maneuver. After all, the concern is that if monetary policy is loosened much further confidence in the central banks will be lost. That swiftly leads to a currency crisis and soaring long-term interest rates. In other words, a disaster for the economy.Assuming that there, indeed, turns out to be little room left for the monetary authorities, then we foresee the S&P 500 index rapidly falling below the crucial 1,010 level. In our view, this will be accompanied by EUR/USD falling over the coming months to quarters towards approximately parity. We then also envisage yields on 10-year US and German Treasuries falling further by around 0.75% before soaring due to fears of further deteriorating public finances. - ECR Research

As day two of the FCIC hearing into why the Fed flips a coin, and/ore answers a call from 200 West, to decide which bank is TBTF and which isn't, watch Ben Bernanke's tenuous dance with truth and reality at the following FCIC link.

What ZIRP means to me. What it means to the economy.

Even as we collect ever more information on the computer desktops of the rich and infamous, we have managed to get our hands on this artist impression of the facebook page of the one and only Chairman. If there is one dot matrix, er, person you want as a friend in this world, Shalom is it. Why? Whereas everyone wanted to be an investment banker in the 90's, and a hedge funder in the '00s, the coolest thing now, by a quadrillion dollar margin, is to be a central banker.

Excerpt from the much anticipated letter of what will soon be a hedge fund even bigger than Goldman Sachs: "As our mortgage investments mature, we will use the cash proceeds to seed FRC. FRC will then go out and buy S&P 500 futures, wheat, etf’s, leaps, reit paper, speculative biotech stocks, BRIC assets, and anything else you can think of. The Fund’s mandate is to be long only-everything- anywhere on earth." The fund is also rumored to have a lock-up period of 1 milisecond to allow HFT frontrunners to park their securities at FRC LLC, while the traditional 2/20 payment structure will be inverted, with Bernanke paying out 2% on all AUM, and will also pay out an additional 20% to any profit (or loss) generated by the fund for its LPs.

Same prepared remarks, different audience, identical theater. Watch the full thing live and commercial free here (CSPAN).

Those interested in the latest compendium of mendacious vomitus emanating from the primary orifice of the Fed chairman for about 4 hours can do so here (C-Span) or here (Closed Circuit senate camera where the interns whisper off to the side).Oh, and that rumor about the Excess Reserve interest rate cut was total premeditated BS as expected.

Attached for your viewing pleasure is an artist's (well, reader's) rendering of Ben Bernanke's PC desktop.