Bernanke's Lying Through His Teeth and Not A Single Pundit/Analyst/Banker Has Called Him On It!!

Reggie Middleton's picture

No, I didn't even bother to listen to the Bernanke speech! It was a waste of perfectly good hot air. The MSM is all abuzz with the bullshit. A quick Google search for Fed QE3 reveals the cackle...

So, this is the scam story, in a nutshell - Bernanke says he will target the mortgage market to reduce unemployment by pledging to buy $40 billion USD of mortgage securities per month until a demonstrable improvement in the labor force materializes. What the F^ck!!!! So, is it just me or does everyone assume that the most common job in the US is MBS trader? Exactly how direct is the mechanism between MBS purchases and employment? Does anyone truly believe (obviously, from the links above, many actually do) that Bernanke can lift employment by buying mortgage securities? 

Okay, all bullshit aside, this is the skinny. The banks are in trouble again. Actually, they've been in trouble since 2007, but the stress seems to be approaching the acute phase again. The housing scam is once again catching up to this nation's lenders and credit gamblers. The pending downturn in the CS index will prove my point, as will the stress emanating from the inevitable break in Europe. Bernanke has come to save this market and its participants by a) buying the stuff that there is still really no market for, and b) announcing that he will do so indefinitely.

Do I sound conspiratorial? Well, mortgage rates are already at record lows, so what the hell is the purpose of trying to push them even lower, and by force at that? Oh yeah, I forgot... To increase employment. Let's not leave all of those MBS traders to fend for themselves in the unemployment line.

This is what I would do if I was Fed Chairman and I was serious about lowering unemployment - Which Bernanke is not!

 I would take the Fed's resources and purchase SBA bonds aimed at pumping cash into the small business sector, not the housing sector  which is still trying overcome the ramifications of the last bubble popping.  You see, the SBA guarantees loans to small businesses, a group which represents the single largest contributor to employment this nation has. $40 billion per month in SBA bond purchases which would be used to guarantee loans to business creating a significant multiplier effect of no less than 5x - 7x ~ around a quarter trillion US dollars per MONTH in direct small business and direct employment stimulus is like sparking a live wire in a vat of gasoline with a semtex lid - at least in terms of the potential explosiveness this would have in terms of invigorating the small business sector, hiring and within a very short order, the spiking of employment. Now, I admite that this would be blowing a new bubble, but Bernanke is trying to do this now with housing finance, no? Now I admit, the process would not be that simple, but its a whole of a lot simpler than what Bernanke is trying now - that is unless he's really not trying to boost employment... Hmmmm!!!!

The argument can't be made that the SBA loans are not that liquid either. I query, how liquid is the MBS market now?

Of course, the old Bernanke put - which has morphed and metastasized, and is now the Bernanke CDO cubed with inverse kickers - has lit a fire under the ass of stocks. As usual, fundamentals and common sense take second seat to momentum gambling and non-sense. When does the math return? When things get real ugly. This is why my team and I have been focusing on the sector that has mistakenly been seen as much stronger than it actually is - the retailers and vendors of consumer discretoinary products and services!

Is The New US Consumer Consumption Bubble Primed To Pop? Yes, There's A Bubble!!!

Recent and related research

Below are three companies that probably will not do well even with Bernanke's machinations. When and if Bernanke fails, look out below.... Click here to subscriber!

Retailer Preliminary Analysis 08/03/2012

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mackeyreport's picture

Reggie is a lot better at Financial Analysis than Economics. Why should the government guarantee loans to small businesses? Interest rates are near zero and banks are flush with cash, the problem is there are no small businesses that actually want to take out loans!


This sounds a little like Krugman saying in 2001, 'The Fed needs to blow up a housing bubble to replace the NASDAQ bubble'

Ungaro's picture

No matter how low the Fed takes mortgage rates, the unemployed, deeply underwater borrower can neither refinance nor sell. If the problem is too much debt (of all kinds) in the system, more debt is not going to help, not even SBA loans. The debt has to be unwound, one way or another, before any meaningful growth can take hold.

I am willing to learn from counterpoints.

hannah's picture

reggie - until we have global deleveraging, no one will be able to start buying consumables. we have too much debt as a society. we cant make the min payments. hell, we are skipping payments because we dont have enough money to pay every bill....and these are people that actually have jobs.



jomama's picture

damn reggie have you been working out? 

all those slots with lauren would have me hitting the gym too!

nohweh's picture

What a fucking liberty Berwanke


shovelhead's picture

Thanks Reggie,

You have confirmed my meager thoughts as to how buying MBS's will boost employment outside of saving belly up banksters. Hell, I ain't even smart about the number crunching stuff but my momma always said "If it walks like a bailout and sounds like a bailout, then chances are, it's a bailout."

The Federal Reserve Hypocritical Oath:

First, do no Banker (unless designated) harm and secure the health of the at risk. This is your sacred charge.

I like the SBA idea but the problem there is the SBA itself. Ever apply for an SBA loan? Nightmare City.

I'd much rather take the risk of blowing a production and jobs bubble than funding bonuses for bankers by propping up mountains of derivatives.

That's probably because I'm getting old and cranky and out of touch with the new 'New'.


PS. No self respecting Conan would be caught dead in charcoal suitpants. Go with dead animal skins. Way cooler.

Westcoastliberal's picture

Reggie, I don't disagree that buying MBS won't honestly even move the unemployment meter one tick downward, but have you ever gone through the process of applying for an SBA loan?  I have, and others like me avoid taking on "the government" as a partner like avoiding Ebola.

Besides, even if money for small biz loans is available, most small biz won't borrow in a economy like this; it's suicide.

What we need is demand.  And the only way I know to create demand is to find a way to honestly put paychecks in the hands of millions of now unemployed and out-of-luck Americans.

Seems to me what we desparately need is a WPA-style infrastructure rebuilding program.  Put $80 Billion a month in that direction and you'll see the unemployment level come down and GDP go up.

endicott glacier's picture

Yes Bernake is a liar, has too much power, is smart enough to understand all the things you wrote, and doing these things to help political cronies and banks. The other problem is even if some section of people understand this the feel powerless to do anything about it other than reactively adjusting their own portfolios. The election does not provide promising choices as well. The problem is that the country is now so divided along economic boundaries that the things that people want belonging to different classes have very little intersection, so don't expect a common fight from a large % of population under a common cause. The govt realizes thais and would like to keep this distinction as long as they can. If one were poor they would like Obama to win and hope he engages on more social policies to keep the gravy train going at the cost of others (taxpayers), if one were rich they would want the tax breaks Romney would give them. Considering many middle class is now poor Obama has strength in numbers and considering that rich are even richer Romney will get support from Lobbysts (more money). Right now the best thing that can happen is govt doing as little as possible and we need to vote for that.

LawsofPhysics's picture

Yes Reggie, a bailout to make those "assets" look like they are worth something.  Ben is saving the banks, again, color me "shocked".

No word from either political camp either, stupid fucking sheep.

Meesohaawnee's picture

actually heres the problem.. small businesses dont write campaign contribution checks. they dont have gagillions in lobby money. So while your premise is sound. Your living in the 1950s thinking that someone actually wants to do whats right. Can forget it.Glad you pointed out what a lie Bernake played. To say this is about jobs should insult a 2 year olds intellect.

Matt's picture

Small Business Owners should get together and form a lobby/special interest group, so they can buy politicians like everyone else.

LawsofPhysics's picture

correct. the destruction of the currency will proceed at an exponential pace until suppliers of of real goods and services start defaulting on contracts to deliver, then we get WWIII.  Hedge accordingly as history is most definitely rythming.

Theosebes Goodfellow's picture

Thanks for confirming what I believed was/is happening, Reggie. When I heard Chopper Ben saying that the Fed was buying MBS, my gut reaction was, "He's bailing out the banks of their worthless sub-prime loans!". When he said that it would go on in perpetuity, the old joke of "The beatings will continue until morale improves." stuck in my head.

There is no doubt. The Federal Reserve is monetizing junk home loans to bail out the banks at the expense of the US taxpayer. Now if any of you see this differently, please set me straight. I'll grant you that in all this economic stuff I'm neither that schooled nor I do it for a living, (except for the stackin' bit), but even I could see that this is nothing more than another swindle of the working middle class.

willien1derland's picture

Nothing typifies Bernacke's misadventure as much as Zynga's 7.5+% pop today....Virtual Farm Animals mirrored by Virtual Economic/Monetary Policy....Hopefully Bennie Boy will parade down Pennsylvania Avenue riding a Unicorn that sh*ts FRNs while talking on an iPhone 5 - Economic treason!

Benjamin Glutton's picture

MBS motive seems more likely to prevent discovery resulting from worldwide lawsuits and of course to protect banksters/banks from harm by sucking up all the crap they were allowed to spray throughout the financial sector.


Realistically the banks cannot afford to make good on these nearly worthless securities...only the printing press CAN make good these criminal instruments.


Employment/unemployment...hilarious. You need only ask yourself one question. Would the FED have willfully enabled this financial disaster if it were at all concerned about 'JOBS'?


Thanks for calling the liar out, Reggie. You should watch the PCon. here's a link in its entirety.



JR's picture

Reggie you’ve been telling it like it is all along and now the truth is more apparent than ever, not that it’s comforting. There’s little doubt the Fed is panicking.

What’s also missing from this national picture is the benefit big corporations receive from Fed stimulus, such as in food processing, that’s gotten into the hands of a few giant companies. Programs such as SNAP, that enrolls 46.7 million people, directly guarantee price inflation.

The total cost of SNAP to taxpayers as of August 30, 2012 hit $75,689,000,000, according to USDA. Powerful industry sectors that benefit from SNAP include  “1) major food manufacturers such as Coca-Cola, Kraft, and Mars; 2) leading food retailers such as Walmart and Kroger; and 3) large banks, such as J.P. Morgan Chase, which contract with states to help administer SNAP benefits…”

Obviously, these large multinational corporations with their many diversified industries are major clients of the banks; in fact, the banks are these corporations because of their entangling alliances, their stock ownership and directorships.

This unholy alliance between giant international banks, the multinational corporations, and government guarantees a windfall of profit taking that pushes inflation upward. Food stamp money goes directly into higher food prices and enables these multinationals to indirectly strengthen their monopoly hold over competitors, particularly small businessmen.

The result of the government's partnering with selected companies helps in the creation of multinational corporations around the world—example, the J.R. Simplot Co., a potato processing corporation, was built on the money from government contracts for use of its potatoes in cattle feeding operations during World War II.

In an article entitled Farm Bill Jackpot – How Much Do Corporations Benefit from SNAP?, the author writes: “Most details about where SNAP dollars go remain hidden. For example, although such data is readily available, the U.S. Department of Agriculture (which administers food assistance) refuses to make public how much money individual retailers make from SNAP. In addition, Congress does not require data collection on specific SNAP product purchases (such as Coke versus Tropicana), despite such information being critical to effective evaluation of the program.”


D-Man's picture

Not so fast. I work for a global CPG company and I can assure you we do not rely on SNAP for our profits or to stay in existence. Should the government stop handing out SNAP tomorrow, people will still buy food and drinks to survive, they'll just use real money to do it like they did before the government pushed them onto SNAP. There are plenty more SNAP dollars going to drugs, booze, strippers, steaks, lobster, etc. The whole purpose of SNAP is to create a new class of Americans, dependent on Government to survive, so they will vote them into office into perpetuity. They do not do it to help CPG companys, retailers, or  banks. Lastly, food stamps do not make food prices higher. People will eat with or without stamps. Supply and demand coupled with infinite money printing is what is driving food prices higher.

williambanzai7's picture

I think Bernanke thinks housing is the only viable industry and everyone will wind up brokers or construction workers, which is a complete canard and reveals what flimsy cover the so called employment mandate is...cover for the Feds only mandate, enabling bankster thievery.

Zero Govt's picture

the Fed was fraud and corruption at its bastard birth was never going to grow up to be Mary Poppins in a million years

YouAreBliss's picture

No need for the Ryan Plan or Simpson-Bowels - the FED has just announced it will monetize the entire US deficit!  Forever - no matter how large!!! It's a Print fest party!!!  Keynes on acid and steroids - WOW my head is swimming in liquidity.

China are you listening???

You are now accepting worthless paper for shiny new slave-labor produced iPhones!!!

Hooray for US 2000's style capitalism - a true thing of beauty.  And they say you can't fool all the people all the time.

How many are there in China??  1.3 Billion - that's a lot of fool'in going on.





viahj's picture

i don't think that China is 'fooled' one bit.  if they aren't going to be selling ~$30b/m of MBS very soon, they will take other monetary options involving the USD.  Bernie just unzipped his fly.

XitSam's picture

No Pundit/Analyst/Banker may have called him on it but all of ZH did.

nohweh's picture

What a fucking liberty

rcintc's picture

Turn out the lights.....The party's over......All good things must come to an end.....