Bernanke Leaks, Spoils the Punch

Bruce Krasting's picture


Bernanke Leaks, Spills the Punch

By Bruce Krasting

Jon Hilsenrath, at the WSJ, must have had a phone call with Ben Bernanke on Saturday. Accordingly, Jon put an article out just in time to influence the market on Monday morning. The headline says it all:


No doubt, Bernanke is watching the price of crude and the tape is telling him his inflation forecast is no good. The leak this evening is just Ben’s way of hinting to the market that he understands where we are on inflation, and he is not going to stir the pot anymore than he has.

The WSJ article indicates that the Fed is on hold for at least three months, till June. Moreover, Bernanke can’t do anything big on the monetary front within five months before a national election. Therefore, the next legitimate time for another LSAP/QE is in December of 2012.

Bernanke’s leak to Hilsenrath is not really new news. I have been saying that Ben is "done" for some time. This confirms it.

I don’t expect this development to significantly move markets. I see it as being mildly dollar supportive (other bigger factors are at play). It should put a floor under bond yields, but I don’t see this as a reason to sell bonds. It might very well take some froth out of the stock markets. I don’t see it affecting the price of crude one way or the other (again, bigger factors will drive crude).

Ben and Jon aren’t taking away the punch bowl just yet. We have a very long road ahead of ZIRP, and already bloated Fed balance sheets. I think the Fed is keeping the punch bowl full, but not putting any alcohol in it. Bernanke’s new punch might quench your thirst, but it won't get you high.



Said it before, I'll say it again. I’m disgusted that Bernanke uses Hilsenrath and the WSJ as his go-to place to leak monetary policy. Bernanke made a big deal about improving transparency at the Fed recently. He just blew any credibility that he might have gained. Nothing has changed. Ben B. is a leaker.


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Mon, 03/05/2012 - 12:46 | 2224165 NotApplicable
NotApplicable's picture

"Bernanke made a big deal about improving transparency at the Fed recently. He just blew any credibility that he might have gained. Nothing has changed. Ben B. is a leaker."

Well, anybody that would give Benron any credibility based upon his recent words just blew any credibility that they might have gained.

Besides, it's good to know which mouthpiece speaks with whose voice, IMO.

Mon, 03/05/2012 - 11:09 | 2223830 AN0NYM0US
AN0NYM0US's picture

from the archives December 3, 2008,

Ford Foundation Links Parents of Obama and Treasury Secretary Nominee

Mon, 03/05/2012 - 11:05 | 2223816 blueridgeviews
blueridgeviews's picture

In times of crisis the Fed will do whatever it thinks it can, election or no election.

Mon, 03/05/2012 - 10:06 | 2223692 azzhatter
azzhatter's picture

Komrade LIESman is in Russia now meeting with his masters, Benny had nowhere else to go

Mon, 03/05/2012 - 10:19 | 2223712 Don Birnam
Don Birnam's picture

"Moreover, Bernanke can’t do anything big on the monetary front within five months before a national election."

Why ?

If conditions warrant, does not the nation come before salvaging Barry's re-election hopes ? If not, then this serves to reinforce the prevailing opinion that this man Bernanke is unfit for his appointed postion as Chairman of the "independent" Federal Reserve.

Such a decadent, grasping nation we live in, governed by distasteful, self-aggrandizing individuals who are little more than paid mercenaries ( indirect, of course, via campaign "contributions" ) of Wall Street and its kith and kin appendage, the K Street lobbyist corps. 

Mon, 03/05/2012 - 09:52 | 2223662 rsnoble
rsnoble's picture

I'm sick of this zirp shit, it is literally fucking my family to tears.  Literally.  I hate these motherfuckers.

Mon, 03/05/2012 - 12:10 | 2224041 Papasmurf
Papasmurf's picture

That was the purpose.  Phase one was to steal from peoples future earnings.  Phase two was to steal past earnings from those too smart and conservative to fall for phase one.

Mon, 03/05/2012 - 10:44 | 2223751 LawsofPhysics
LawsofPhysics's picture

I'll second that.  Common sense 101, there is a very real cost for creating capital, especially if that capital does not lead to the creation of real value-added technology that makes life better for the working class.  QE (ZIRP by any other name), has been tried by Japan, why the rest of the fucking world thought it would work for them is beyond me.

Possession is rapidly becoming the law the world over.  Trade wars getting worse, got physical?

I see the spineless Ph.D. graduate students in eCONomics are serial junking again.  Fucking useless cowards.

Mon, 03/05/2012 - 11:53 | 2223983 earnyermoney
earnyermoney's picture

Those are not spineless Ph.D. graduate students, those are Ben and Jon fluffers at the Federal Reserve.

Mon, 03/05/2012 - 09:49 | 2223648 AN0NYM0US
AN0NYM0US's picture

[Ice Cube]
It was once said by a man who couldn't quit
Dope man please can I have another hit
The dope man said cluck I don't give a shit
If your girl kneels down and sucks...

Mon, 03/05/2012 - 09:24 | 2223588 Shizzmoney
Shizzmoney's picture

Therefore, the next legitimate time for another LSAP/QE is in December of 2012.

Those Mayans were good prognosticators, that's for sure.

Mon, 03/05/2012 - 09:02 | 2223551 mrdenis
mrdenis's picture

Anybody spot this under reported news ...

 Geithner Detained & questioned in NY...
Mon, 03/05/2012 - 11:35 | 2223927 paint it red ca...
paint it red call it hell's picture

nice little artcle, hope it is accurate

Mon, 03/05/2012 - 08:58 | 2223543 bernorange
bernorange's picture

"Therefore, the next legitimate time for another LSAP/QE is in December of 2012."

Jim Rogers says QE3 is already occurring:

We already have QE 3. Get out the Federal Reserve‘s balance sheet. You’ll see that they’ve been pumping up – you can see unadjusted M2 is going through the roof. Look at their balance sheet.

All sorts of assets are suddenly appearing on their balance sheet. Where did they come from? They didn’t come from the Tooth Fairy; they came because they’re in there buying in the market as fast as they can. There Is QE 3 already. They don’t call it that but it’s there.


Mon, 03/05/2012 - 10:40 | 2223761 LawsofPhysics
LawsofPhysics's picture

Precisely, ZIRP is QE.  Since most of this capital is being mal-invested or simply being used to cover debt costs, it will increase exponentially (see compounding interest) until faith is paper is lost.  the very definition of a liquidity trap.

Good times indeed, got physical?

Mon, 03/05/2012 - 08:21 | 2223498 virgilcaine
virgilcaine's picture

So his Phd thesis on money printing in a deflationary depression gets a "F". Excess $ makes the inevitable crash more severe, will be the endnote.  There's too m_ch bad debt in the system, which most here recognize.  Welcome to the real world Mr Bernank.

Mon, 03/05/2012 - 08:01 | 2223484 Implicit simplicit
Implicit simplicit's picture

When he leaves a leak. isn't he really taking a leak by pissing all over the middle class and savers, and playing the confisence game mirage for banker's benefit. Nine months gestation period for what?

Mon, 03/05/2012 - 11:17 | 2223863 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"Nine months gestation period for what?"

Son of ChairSatan?

Mon, 03/05/2012 - 11:42 | 2223952 Jay Gould Esq.
Jay Gould Esq.'s picture

The gestation period is actually on the order of 24-36 hours, before sonny...emerges.

Mon, 03/05/2012 - 06:44 | 2223434 disabledvet
disabledvet's picture

"Sound money sells itself." When you're Chasing Windmills doesn't hurt to have a Patsy tho either...

Mon, 03/05/2012 - 05:25 | 2223399 mikem54321
mikem54321's picture

Bruce where do you imagine $3.7 BILLION per day (!) is going to come from to finance the US deficit? The two biggest real banks financing the US are not loaning us anymore money as ZH has shown quite a few times. Russia is pulling back. China is pulling back. If you don't see Chairsatan counterfeiting it, where is the deficit financing going to come from? The figure is so large, it is not easy to hide. Liquidity swaps and Twist won't do it. MZM Money Stock growth proves they are doing something but not even ZH seems to be able to figure it out.

Mon, 03/05/2012 - 01:24 | 2223302 hyper-critical
hyper-critical's picture

Keep 'managing' them long-term inflation expectations, Benny Boy.

Jesus Christ - if we get another Pavlovian response and see indiscriminate selling of mining stocks, I'm going to back up the fucking truck.

Let the March Madness begin, boys and girls...

Mon, 03/05/2012 - 01:19 | 2223293 Tyler Durden
Tyler Durden's picture

For those who have forgotten the pre-story to the story...

On The New York Fed's Editorial Influence Over The WSJ

Mon, 03/05/2012 - 08:36 | 2223515 buckethead
buckethead's picture

Great post.


I wanted to chime in to mildly defend ARS's Too Big To Fail. (Mentioned within the post, with a jab trhown for good measure.)

TBTF was my introduction into Finance.

I realize it sounds ridiculous. It was as if a 10 year old girl was reporting on Justin Beiber. I get that.


I also read it with the knowledge that ARS was a NYT financial Columnist, which was all I knew about him (from reading the cover) but was enough to allow me to read between the lines.


It was an entertaining read, which made finance a bit more "sexy" for the layperson (me). 


It made me hungry for more, and the hunger ultimately led me here.

I guess I'm saying; Books are good. Even if they don't enlighten a single person, they can arouse curiosity.

No hate for ARS on my part. Financial "reporters" will get no (ZERO) info if they report all the facts, IMO. (hence anonymity at ZH)

It's a dirty business, as are most.

Mon, 03/05/2012 - 04:30 | 2223389 Jim_Rockford
Jim_Rockford's picture

Tyler - that was an outstanding post, thanks for putting up the link.  I needed to call Timmy the other day, I couldn't find his phone number and I was too lazy to time travel through the ZH archives.

Rockford //OUT

Mon, 03/05/2012 - 06:42 | 2223432 disabledvet
disabledvet's picture

I'm on it Jim:
we'll get to the bottom of this one way or another....

Mon, 03/05/2012 - 01:10 | 2223281 GoldmanSux
GoldmanSux's picture

Jon Hilsenrath is a prostitute

Mon, 03/05/2012 - 10:10 | 2223697 LongSoupLine
LongSoupLine's picture

Jon Hilsenrath is a prostitute


No, just a whore.  Protitutes at least get paid and put their "wages" back into the economy.

Mon, 03/05/2012 - 01:26 | 2223304 alien-IQ
alien-IQ's picture


Mon, 03/05/2012 - 06:43 | 2223433 disabledvet
disabledvet's picture

that's his job. and he will take his clothes off for you if you ask...

Mon, 03/05/2012 - 01:10 | 2223279 Tuffmug
Tuffmug's picture

Ding!! Ding!! Ding!! DING!

Did Ben just ring the bell at the top???

Mon, 03/05/2012 - 01:07 | 2223274 bobbydelgreco
bobbydelgreco's picture

ben qes before november; what you don't know bruce is the real state of the economy

Mon, 03/05/2012 - 01:05 | 2223272 I_Am_
I_Am_'s picture

BK - ......Ben B. is a leaker.

Ha Ha ha. Made my day visualising the stain on his pants!

Mon, 03/05/2012 - 01:02 | 2223270 Clowns on Acid
Clowns on Acid's picture

Well...Ben ahs leaked that he will not overtly announce QE3, the currency swaps w/ ECB. That is effectively QE3 as the ECB monetizes the swapped USD into the their (and the banks) balance sheet.

Without these recent and future currency swaps EUR/USD would be parity, and ES woukld be 10% lower.

Ben will not go down without a major fight. "They" told him not to.


Mon, 03/05/2012 - 00:46 | 2223258 q99x2
q99x2's picture

Maybe we'll reach Dow 13,000 this week.

Mon, 03/05/2012 - 11:12 | 2223842 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

How many times/cross-overs?

Mon, 03/05/2012 - 00:34 | 2223242 a growing concern
a growing concern's picture

Hey Bruce, I've heard CPI as a measure of inflation is shit, and I believe that conclusion based on the prices I see in the grocery store.  Do we have any idea what actual inflation is at currently?  

Mon, 03/05/2012 - 00:45 | 2223255 spinone
spinone's picture

about 9.6 percent according to shadowstats


Mon, 03/05/2012 - 00:43 | 2223252 LowProfile
LowProfile's picture

Shadowstats is really good, but here's my fave

Note the positive divergence between CPI and reality.

Mon, 03/05/2012 - 02:09 | 2223276 q99x2
q99x2's picture

Is there a chart like this strictly for food, gasoline, rent and healthcare. Those are the only items that I can think of that I use within a decade that have any impact on my expenditures. That is probably the case for most of the people in the US.

I guess anymore that may not matter because wealth distribution is so unequal that if 80% of the 70% of the us population, that goes into the consumer price index, were not even counted it would not effect consumer spending figures.

And, as far as the stock market, when you have central banks that can print their own money to put into it well there aren't really any statistics that can counter that type of market impact.

I guess what I'm saying is that statistics just aren't relavent when it comes to judging how well the economy is doing or isn't doing these days. You really have to keep an ear open to hear from those that know.

That is why even if the Bernank has lost credibility because he has been caught lying, if he says the economy is such and such, then for market purposes, that is the way it is. It is a fact because that is how we know - from Ben Bernanke.

So what I'm asking for is the reality based statistics that pertain to living life. Do those exist somewhere?

There aren't that many comments here so I'll mention why I ask.

If there are accurate statistics for what it costs for most people to live in the US, then we can determine the rate of change of their specific inflation and estimate the impact of Fed Balance Sheet Expansion on that inflation.

A date can thereby be determined which will, more or less, allow one to use as minimum date to be out of the country by.

Mon, 03/05/2012 - 10:11 | 2223701 Raging Debate
Raging Debate's picture

I like your commentary Q99x2. Real time sample can be collected using the Internet. Because of cost, it would be better to partner with an existing business that has fairly wide distribution to gather the sample than a new start-up. Alan Greenspan created a couple of basic methodologies and utilized telephone sampling. It would be ironic and I believe profitable for Zero Hedge to do the same thing.

A couple of bright guys at Econ Intersect named John Lounsbury and Steven Hansen would be worth talking to as they were working on a couple of basic methodologies.

Mon, 03/05/2012 - 00:26 | 2223234 Orly
Orly's picture

It means risk-off  'til September.

Whatever it is, sell it!


Mon, 03/05/2012 - 02:28 | 2223342 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

That is what Bernanke wants you to think!  His job is to confuse the rational consumer!

Mon, 03/05/2012 - 05:33 | 2223401 BeetleBailey
BeetleBailey's picture

He replied "yes" when Paul asked him if he shopped for his own groceries......

Now THAT is a picture we need to see; The Bernank in a Kroger deciding on purchasing a dozen eggs; extra large or free range....

Mon, 03/05/2012 - 12:32 | 2224113 rufusbird
rufusbird's picture

The closest thing to shopping that guy does is to look at a menu.

Mon, 03/05/2012 - 12:32 | 2224111 Papasmurf
Papasmurf's picture

I didn't know Neiman Marcus sells groceries.

Mon, 03/05/2012 - 13:02 | 2223918 Treason Season
Treason Season's picture

IMO that whole tet-a-tet btw those two reallly stunk. I mean wtf did Paul thinks the Beard would say?  "No, James the butler does the groceries." Paul sure ain't no crossexaminer. And after the long spiel from Paul, the Beard says, " And a good day to you too govenor!"  successfully playing to the peanut gallery and undermining Paul's argument. You'd think Paul would have figured out this Ashkenazi schtik by now and tried another tack. It seems Paul lacks the ability to cut and thrust with these sleezebags. He has to learn to play to the camera. Whatever.

Mon, 03/05/2012 - 00:27 | 2223223 dumpster
dumpster's picture

barnike leaked and spoiled the punch   lol

under doctors orders barnike was told not to eat peas for five years

yesterday the doctors said this time  frame was up..  Barnike announced that now would be his first pee in 5 years  .. thus spoiling the punch

Mon, 03/05/2012 - 03:23 | 2223368 RichardP
RichardP's picture

Ben B. is a leaker.

Prostate problem??

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