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Don’t play hanky-panky with Bernanke

RobertBrusca's picture





 

I have been busily watching the markets and assessing the new economic numbers and there is a good deal of confusion to sort out in the economic reports for the US to be sure. And there is also a great deal of irregularity in the reports from the economies abroad.

As I look at a top down view of the US, while I am not very satisfied, I am impressed that the US is doing so much better than most other major economies. Consider that the US was ground zero of the financial crisis the economy is recovering better than most and US banks are in much better shape than banks in most other regions. And while Mr Bernanke is not a very a popular figure on this web site he may actually be the best central banker in the world right now (and I will distance myself from any of those who tried to set a similar if not more glorious title on Alan Greenspan before it all came down around our ears).

Bernanke has so far navigated a sold course for the US. Is there still risk? You Betcha. Is his reputation burnished? Well not yet. History will not forget him for all the innovative things he has done. But how he is judged is yet to be determined. But so far the US things are looking pretty darn good.

Compare to the UK… Bernanke’s old roommate Mervyn King has let the UK inflation rate percolate up to average over 3% over the last two years. The UK has an inflation ceiling of 2% and no dual mandate as a distraction. Currently the UK money supply (M4) is contracting at 4% Yr.yr in real terms and the economy is in recession.

China is a Go-Go growth economy and is hard to evaluate. But it has been struggling to get back on track. It’s banks are suffering and the jury is still out on China. When it gets settled China is supposed to shift gears to promote domestic demand in place of export-led growth. This switch should be tricky if China decides to stay with it. The central bank and all of chain’s policy will be challenged,

Japan is still struggling and it has had several central bank heads. It is still under the yoke of deflation and not righted its economy after its triple disasters of last year. The fiscal side seems in a tangle since the rebuilding impact on GDP still has not kicked into gear.

Europe… EMU is a great case study in WHAT not to do. They could write the book ‘Optimal currency areas for dummies: what not to do. Money growth is still weak. There is only the vaguest stirring of growth in money supply in the wake of several rounds of LTRO lending. Private sector credit is not stirring. We know why. LTRO monies mostly went into the government bond markets where banks have grabbed some more of that ‘tier one capital’ that is not really named that because of the threat that it could cause tears to stream down investors’ faces in the future.

What is really interesting in Europe is how austerity has spread its impact beyond economics to the political system. This was obviously going to happen and it why I keep saying that Europe has a competitiveness problem that just can’t be fixed by keeping the Zone together. The pain required to fix it would strain societies past their limits for tolerance.

In Europe, not all because of austerity but there is political instability in spades…Belgium still does not have a government. The Dutch government fragmented. France is facing elections with Sarkozy very much at risk and his opponent is the anti-Merkel. And in Greece a number of minority parties, and in some cases kooky parties, are in the running for influence. How’s austerity going there? Even in the UK where there is an independent central bank and a separate currency austerity is not faring so well.

Trichet, before he left the ECB, was too tight, busily putting the polish on his legacy. Draghi came in sort of sounding German then he switched and endorsed bond buying… then he opted for the LTRO injections. The Germans in response quit the ECB. Weber refused to take the head job that had been his for the asking. Jürgen Stark left. I can appreciate a guy who stands for his convictions but the Germans also quit. This leads so further suspicions of what the Germans are planning. If they are no longer working inside the ECB for EMU are they planning for the big split?

Compared to this tension I think we give Bernanke very high marks. He has muddied the financial markets and their signals with QE and Twist. He has blown up the Fed’s balance sheet and getting out of that could prove tricky.

But he is assailed by the anti Wall Street crowd on one side and by the libertarians like Ron Paul on the other as well as by a host of conservatives. And liberals don’t exactly like what he has done/is doing. Still a lot of people (FOMC members) from varying backgrounds endorsed this policy course. Now as the economy is improving we are seeing more dissent and desire to stop the special programs and to unwind the balance sheet bloat... soon.

As I said Bernanke’s legacy is still to be made. But he has put the US economy in a position from which it can succeed. If Europe falls apart, it will be more difficult. If we fall of the fiscal cliff we will have our own Thelma and Louise moment. The Fed Chairman has already said he can’t save us from that shock. It’s really time for fiscal policy makers to step up. As long as they refuse it makes Bernanke’s job all the harder. And the pressure on him is intense.

Liberal economist Paul Krugman (former Noble Price winning economist and currently NY Times communist-oops typo! I mean columnist) has lampooned Bernanke for not (NOT) creating more inflation. In a response to that demand but not targeted at Krugman, Bernanke said it would be reckless for the Fed to try to spur growth through inflation. In his next column maestro Krugman called Bernanke reckless for not pushing more inflation. Such is Bernanke’s life.

Want to know what it’s like to be him for a day?

Watch a Zombie movie. Always someone else coming at you from another direction; they never stop.

As for the inflation gambit of Krugman-how would that work? The Phillips curve is a discredited ‘tool.’ There is no unemployment inflation tradeoff over the long haul. There is so much unemployment and competition that if we got inflation going, I doubt it would get it wages higher. Instead the real wage would actually fall. And that would not be good. I can’t see it hiking house prices rising because the CPI went up. How would inflation work” what prices would rise and how would that help?

How Paul? Enquiring minds want to know… Can they take away a Noble Prize for stupid policy suggestions?

 


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Sat, 05/05/2012 - 14:49 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

Such IGNORANCE.

I thought this was written by MillionDollarBonus_

THAT'S JUST SO WRONG.

Bernanke is the most dire criminal of criminals. The USA banks are ALMOST ALL Insolvent. More than 80% without debt are BROKE.

The very notion Bernanke did anything right or that the USA has in any way recovered is a fraud.

Bank of Japan is under MILITARY CONTROL by the UNITED STATES since 1945 AND DON'T YOU FORGET IT.

 

Fri, 05/04/2012 - 04:09 | Link to Comment Loukanika the r...
Loukanika the riot dog's picture

Another Fucking Idiot!!

Dear ZH readers

Please, raise awareness if you have dated, known, worked with, are related to, married to (or divorced from) or have children to someone who suffers from being a fucking idiot. We all need to understand, being a fucking idiot is real and must be taken seriously. You could be sitting next to a fucking idiot right now. There is still no known cure for being a fucking idiot, and sympathy does not help. Sometimes a piece of 4x2 to the back of the head helps, but not a lot. But we can raise awareness!

Thu, 05/03/2012 - 16:35 | Link to Comment lasvegaspersona
lasvegaspersona's picture

On Bernacke's watch (not saying it is all his fault) we have seen the equities markets loose the confidence of anyone paying attention (MFGlobal, flash crash, manipulation by HFT, outright purchases by the Fed, lack of prosecution of short selling fraud, ditto for other market manipulation...and). He has had outright and open manipulation of the markets for gold and silver occur likely by those under him at the Fed. He has increased the money supply to dangerous levels and exposed us to the risk of hyperinflation. He has created a financial world in which his actions are more important than any market condition (s) and thereby destroyed the price finding mechanism of the market and destroyed the ability of the market to provide capital to industry. He has maintained zero interest rates by purchses he makes destroying the retirement income of millions of elderly and widows and orphans. In summary he has placed himself at the center and destroyed the perifery of all world markets and caused the destruction of capitalism and the begining of something new and awful.

Thu, 05/03/2012 - 16:28 | Link to Comment Itinerant
Itinerant's picture

US government economic statistics are about as good a measure of what's going on as those triple AAA ratings for toxic sludge.

How much as been borrowed for ever so slight "gains"?

And are average Americans doing better than their counterparts in (northern) Europe?

(It's a rhetorical question)

Thu, 05/03/2012 - 15:14 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Bernanke is a god among Cnetral Bankers.  He may not have seen the crisis coming, but when it did, he knew just what to do:  leverage his balance sheet to it's limit and allow the Private Dealers to continue to risk-trade unimpeded.

Thu, 05/03/2012 - 14:24 | Link to Comment ali-ali-al-qomfri
ali-ali-al-qomfri's picture

Waiter....waiter...... please send this back to the kitchen this Brusca isn't fresh, it's turned.

Thu, 05/03/2012 - 14:50 | Link to Comment Eireann go Brach
Eireann go Brach's picture

Bernankes legacy?...are you fucking kidding! This is the same man who touted in 2006 that subprime is contained, has doubled the US debt under his watch and is now openly lying on TV with quivering lips! Yet you espouse him just like all the other pricks in suits to be some sort of hero! His legacy will go down in flames one day, around the time the printers fail to work anymore!

Thu, 05/03/2012 - 14:19 | Link to Comment Clowns on Acid
Clowns on Acid's picture

Hey Bobby B. - Nothing new here, same gibberish sprinkled with master of the obvious comments, except you protecting Ben's flank vs Krazy Krugman.

Question - You answer your own question (straw man arguments are sooo Wash DCish) with " Is there still risk? You Betcha." Well perhaps you could define what you see as risks, to the markets, economy, indeed the socio-political structure of the US (and Westren Europe) given the historic money printing and debt creation by the Fed, and the unwillingness of the US Congress (and current Czar) to address runaway spending.

Also, please give us your opinion on abolishing the DOE and Dept of Housing and Urban Planning (saves $ 1T / yr from deficit),

I am setting the table for you Bobby for a article that may get you more than 1 star on the rankings.

Go for it ! No extra charge.

Thu, 05/03/2012 - 13:53 | Link to Comment skepticCarl
skepticCarl's picture

Bernanke is the clueless parent giving his spoiled, tantrum-throwing children all of the goodies for which they scream.  Claiming that this is the better strategy than the tough love Dad because of the short term success is incredibly premature, and stupid.

Thu, 05/03/2012 - 13:39 | Link to Comment vmromk
vmromk's picture

Brusca, would you and Bernanke mind getting together and sucking my cock ?

Thu, 05/03/2012 - 12:47 | Link to Comment daneskold
daneskold's picture

Krugman...if there were a nobel prize for being a douche, he'd win every awarding of that prize for the rest of his life.

 

The Douchebel Prize!

 

Redce unemployment by promoting inflation...unemployment plus inflation...what is the term for that?  I've heard it before!  During the Carter Administration!

 

Yes!

 

STAGLFATION!!

 

Krugman wants STAGFLATION!

 

The Douchebel Prize hereby is awarded to Paul Krugman

Thu, 05/03/2012 - 12:37 | Link to Comment RealityGuy
RealityGuy's picture

Please spare me.  What Bernanke has done is simple and should be considered criminal behavior.  He has effectively stolen from the poor, all those on fixed income, mainly retired or nearly retired people, and funnelled the money to the big banks making it even more painful when they fail.  Several big 'retail' banks should have failed 4 years ago, Bof A, Citipuke, and the like.  Some say this would have caused the financial system to collapse, not so.  It would have been bad but well managed banks would have come in to pick up the pieces quickly and at fire sale prices.  Branches would have been bought, some closed, but no disaster.  At the same time he has 'forced' people on fixed income to 'invest' their money in the stock market, something not appropriate for many, and they will likely get fleeced of the majority of their funds when the plug is pulled eventually. 

Bernanke claims that what he is doing is not inflationary because he 'intends' to sell the Fed's assets back 'in the future' for real money to negate the transaction.  Tell me, who is going to buy 30 year treasuries that pay barely over 3% from him?  Nobody will unless the price goes way down, like 20-40% off, so he will end up selling every trillion dollars worth of them for 600-800 billion, a tidely loss of several hundred billion for every trillion - hey let's let him buy even more.  This guy is completely out of control and nobody responsible is willing to say it. 

Bernanke also claims that the economy is growing at 2-3%.  This is yet another bad joke.  GDP INCLUDES government spending so when they are over spending what they take in by at least 6%, it means that the GDP numbers are elevated by that extra 6% that has been either borrowed or printed so actual GDP of the real economy is likely shrinking by 3-4%.  It looks like we are really in for it down the road with this level of irresponsibility.

BTW, we are seeing more and more references to Paul Krugman.  He makes Bernanke look responsible.  If Obama is re-elected and Bernanke comes under fire, watch for a Krugman nomination as chair - that will be a very bad day but the stock market will love it.  You may think you love it too until you realize that you have to subsidize your parents food and fuel budgets, ironically the main things that fixed income folks need that are not counted when calculating 'their' actual inflation. 

Robert, sorry to say, you have this very wrong.  You must be very liberal and much smarter than the rest of us.  Come on people, think about what is happening - it really is NOT rocket science!

Thu, 05/03/2012 - 17:33 | Link to Comment Kayman
Kayman's picture

 "GDP INCLUDES government spending so when they are over spending what they take in by at least 6%, it means that the GDP numbers are elevated by that extra 6% that has been either borrowed or printed so actual GDP of the real economy is likely shrinking by 3-4%. "

Precisely. Time for productive private sector people to downsize and live on what they need. Let the various parasite classes feed on each other. 

Thu, 05/03/2012 - 14:28 | Link to Comment Assetman
Assetman's picture

Good reply.

Simply put, Bernanke deserves some credit for allowing the banking system some time to avoid insolvency.  Unfortunately, many of those same banking institutions will prove to be insolvent regardless of the creative can kicking.

What Bernanke has endosed, then, is a policy where savers lose at the expense to debtors.  Capital is allocated to levered banking institutions and levered governments-- which have already proven in the recent past NOT to be good capital allocators (of course the government never is a good allocator of capital).

What has all this bought?  At best, 1-2% economic growth (though it still hasn't proved sustainable), lower interest rates (that hasn't translated to significantly higher loan volumes), and a higher stock market (because we all know through Bernanke that higher stock prices build confidence and improve economic activity).

When you compare that against the backdrop in Europe, it all looks good.  That's not much of a comparison-- though what I will say is that the policies in Europe will probably will go further to change their distructive behaviors (more spending, more debt) that brought Europe to the brink it is now peering over.  And why not, when one can already see the abyss?

The most troubling issue with how Bernanke and the Obama administration has handled this crisis is how policy has done almost absolutely nothing to change the destructive behaviors born within the financial system and within our own government.  Bailouts without conditions hasn't changed behaviors in the past, so why would banks act any differently now, especially since some of them are to "bigger" to fail?  Capital injections, free borrowing from the Fed window, and the ability to front run the equity markets have been a pretty good racket for the Jamie Diamonds' and Lloyd Blankfeins' of the world-- but it fails to address real capital formation, which is key to sustainable economic growth.

And today, the Fed is essentially financing US governement debt at artifically low rates so that maintaining that debt doesn't get out of hand.  Not only that, the Fed continues to encourage the government to spend well beyond its means to stimulate growth and avoid deflation.  But much of that capital will be used for government transfers-- not for effective/efficient growth endeavors that should be directed at the private sector.

Add it all up, and I think history will prove Ben Bernanke to be an idiot.  Sure, he saved the financial system and likely the US economy from immediate collapse.  But he's endosing policies that will make the next collapse worse, not better.

And Paul Krugman?  He's an even bigger idiot... let's not even go there.

Thu, 05/03/2012 - 21:19 | Link to Comment OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

I think it's a great debate but people miss the most important point. The real question is whether a government or private group should be allowed to fix prices and manipulate supply and demand, in this case the price and supply of money. The theory behind the entire idea of central banking itself is that a coven of financial alchemists and fortune tellers can and should engage in price-fixing and supply manipulation. But every capitalist in the world would agree that the government fixing prices and manipulating supply of anything else (corn, wages, rents) is a spectacularly bad idea. Why is the answer 100% different when the commodity in question is money?

So comparing who is "better" or "worse" at this task is stupid. They shouldn't be doing it in the first place.

Thu, 05/03/2012 - 22:02 | Link to Comment akak
akak's picture

Outstandingly concise and logical response --- bravo!

Thu, 05/03/2012 - 16:39 | Link to Comment DaveyJones
DaveyJones's picture

 "Not only that, the Fed continues to encourage the government to spend well beyond its means to stimulate growth and avoid deflation."

spending and not spending is exactly the only tool (and the most powerful) left for the common man. Most of the "law" has been shelved. We know they will not encourage discipline because inflation tends to benefit the big ones, deflation not so much. It is also a conscious effort to make the debt mean less. We must impose the discipline, stop buying and bring the system basically down then bring them basically to the table. Protest will only be interpreted as terrosim or crime. It's hard to make them make us buy stuff.  

Thu, 05/03/2012 - 13:26 | Link to Comment Bananamerican
Bananamerican's picture

"Several big 'retail' banks should have failed 4 years ago....  Some say this would have caused the financial system to collapse, not so."

yup.

Amerika still has the tentacles of its banking predator class wrapped around its neck and will remain prostrate, gasping for air until they are removed...or until death do they part....

We NEEDED a banking collapse in '09. We needed the People to see for themselves the degree of chicanery, fraud and embezzlement that had occurred, to feel its effects and then PURGE the system of its financial criminals....to drive the moneychangers out of the American temple...instead, Bernanke made a crib for the bastards...."what rough beast" indeed...

And "History will not forget him"???

of course not. They'll be making sci-fi flicks like "They Saved Bernanke's Brain" in 20 years....

Thu, 05/03/2012 - 12:23 | Link to Comment Eric L. Prentis
Eric L. Prentis's picture

Robert Brusca, your toadying, demented bankster shill ideas are beyond reproach. Please stop, we get it, you’ve sold out.

Thu, 05/03/2012 - 12:05 | Link to Comment williambanzai7
williambanzai7's picture

I believe this is some form of demented entertainment.

Thu, 05/03/2012 - 12:02 | Link to Comment Papasmurf
Papasmurf's picture

It looks like LulzSec is active again - hacked into ZH.

Thu, 05/03/2012 - 12:00 | Link to Comment JeffB
JeffB's picture

Yeah, drug dealer Bernanke saved the day by administering more heroin to his addict who was writhing in pain.

Europe who decided they couldn't perpetually increase the dosages for their economies, at least until things seemed a bit too painful, appears to be doing even worse than we are.

Therefore, Bernanke is doing a great job.

Yes. We have a mega debt problem. Therefore: Print money. More debt. Take the savings from the public to bailout the incompetent businesses.

Quite stupid reasoning I'm afraid. Worse yet, it's dipshits like you who are in charge of the world economy.

Heaven help us.

 

Thu, 05/03/2012 - 11:59 | Link to Comment AnAnonymous
AnAnonymous's picture

This US citizen looks as if he has a soap box many other US citizens envy...

Thu, 05/03/2012 - 13:53 | Link to Comment akak
akak's picture

Too bad being so much Chinese Citizenism citizens not having soap from box said for the washing of hands follows making deposit of nightsoil onto Chinese roadsides, as is norm in People's Republic of Nose-Picking.

Thu, 05/03/2012 - 11:57 | Link to Comment ddtuttle
ddtuttle's picture

What we are witnessing in the US is the adaptability if the US economy.  No other country can switch directions faster than the US, especially considering our size.  This will be our our saving grace in the end.  However, their are many chapters yet to be written in Ben's memoirs.

The financial system is not broken, it never worked right in the first place.  It's sole funciton is to enrich bankers, whatever social benefits it may have are mere conicidence.

The real problem is that it will collapse if left to evolve its own.  Bernanke has no conception that we are playing for all the marbles.  He understands the immediate problems facing the economy and belives it will right itself given enough time, which he purchases with QE.  But I don't believe he understands that the system itself is unstable, and will crash hard without drastic action right now.

As bad as that is, the whole global financial system is one big hair ball.  If the US banking system goes down, everybody elses's goes with it.  And countries whose banking system are bigger than the country will go down too.  (France, Germany and many others)

At the moment Europe is such mess, Ben is waiting to see how it will play out.  The US is OK for the moment and he needs to keep some powder dry for a Euro breakup.  Europeans seem pretty smart, but you just have to reread a little history about WW-I and WW-II to remember how colossally stupid they can be.  

Tick Tock.  If we don't reform our system it will fail.  This means reaking up the big banks, restoring Glass-Stiegal and probably rearchitecting the Fractional Reserve system (which just leads to an infinite series of credit bubbles and depressions).  Oh yes, and clearing the existing debt.  This stuff is the right thing to do, but politically painful.  It would probably loose Barack and Ben their jobs.  I was amazed that Dallas Fed president(?)  actually came out said as much.  Wow!

However, none of this happen.  First, the bankers will do anything and everything in their power to stop  it.  Second, politicians don't have the stomache for it. Third, the US empire is based on the Pax Americana provided by our military, and the advantage provided by the reserve staatus of the dollar.  Within this world our banks need to be global power houses that can bring the world to its knees with debt.  In the end the banks believe they will own everything in th ename of the USA. The banks are the real army in our empire.  Hence, their power will never be curtailed.

If Dick Cheney had gotten more than a C- in history, he would have been able to understand this, and we never would have gone to war with Iraq, because we don't need to.  Anyway, we have to fix this thing, but it will not happen.

 

 

Thu, 05/03/2012 - 12:06 | Link to Comment AnAnonymous
AnAnonymous's picture

The real problem is that it will collapse if left to evolve its own. Bernanke has no conception that we are playing for all the marbles. He understands the immediate problems facing the economy and belives it will right itself given enough time, which he purchases with QE. But I don't believe he understands that the system itself is unstable, and will crash hard without drastic action right now.

_______________________________________

Yep, Ben is an intellectual midget. He needs somebody to draw the whole picture. He wont see it.

Back in 2008, US citizens were talking about maxing out the credit cards to stock up before decoupling from the main economy.

Looks like Bernanke is doing the same, allowing US citizens to stock up while there are still goods to stock up on.

Thu, 05/03/2012 - 11:56 | Link to Comment NotApplicable
NotApplicable's picture

Best. Troll. Ever.

Thu, 05/03/2012 - 12:19 | Link to Comment JamesBond
JamesBond's picture

best reply ever

Thu, 05/03/2012 - 11:36 | Link to Comment Bastiat
Bastiat's picture

Gold down on the day and didn't go back up in Bernanke's face (yet).  Brusca's doing a little proxy Fed victory dance,  like Obama in Afganistan.   Don't fuck with Bernanke?  Please.

Thu, 05/03/2012 - 11:30 | Link to Comment marathonman
marathonman's picture

Where the Hell did ZeroHedge dig up this guy?! 

Thu, 05/03/2012 - 11:46 | Link to Comment Papasmurf
Papasmurf's picture

"Where the Hell did ZeroHedge dig up this guy?!"

 

Fair and balanced.  I think he's been smoking hopium.

Thu, 05/03/2012 - 11:51 | Link to Comment Divided States ...
Divided States of America's picture

Robert, stop sucking Bernanke off. You will never be selected to work in the FOMC.

Thu, 05/03/2012 - 11:56 | Link to Comment NotApplicable
NotApplicable's picture

Yes, but what about CNBS? They'd likely pay well for someone who could say all of this shit with a straight face.

Thu, 05/03/2012 - 11:08 | Link to Comment HAhyperion
HAhyperion's picture

 

Since the 2008 crisis, the "too big to fails" have actually grown bigger. BOFA absorbed Merrill and Countrywide, Chase bought Bear Stearns, and there were many other consolidations. The top 5 financial institutions now control 56% of the entire US economy. Dodd Frank essentially has not been implemented and even if its more significant parts such as the Volcker rule come into being the delay (now 3 more years of extension) may be tardy to head off another market collapse. 

CDO's/ swaps etc even per Dodd Frank will not be forced to be traded on exchanges. The CDO/swaps market is now some $700Trillion - global GDP is $68T effectively a 10 x 1 leverage. The FED is leveraged 50 to 1 and the big banks have surpassed Lehman leverage ratios.

Unfortunately, few if any of our Nobel prized economists have stated that these fictional instruments need to be prohibited by law.  They are corrupted shills who can not be relied upon.  But look at the terminology: credit default, liquidity swaps, nominal value (meaning billion dollar deals have an underlying small or no value), "naked" calls - meaning the entity calling the option does not own the underlying security, "hidden tail risk," collars and the term derivative itself - derived from, no underlying real asset essentially the movement of one variable in relation to another. 

All of these instruments are traded desk top to desk top, in the shadows. The reason for that should be clear: highly risky trades that in many cases are betting on losers or a negative event. The financial industry reaps the rewards when the "good times" roll, but does not pay the price on the downside. 

Profits are privatized: losses are socialized. Contrary to the rule of "free market economics": he who takes the risk must bear or suffer the loss. Since the creation of the FED, there has been no real accountability for market risk: just transfers of risk onto the backs of the masses.  

Our entire system as well as the "global one" - global finance, etc is upside down and rewards negatives and unethical behavior. There is no room for any sanity or investing based on true fundamentals - like making an actual product that has actually purpose/benefit.  Rather we get ultimately only rotten "Apples" despite its fraudulent valuation and our faces "Face booked" by its coming ludicurous IPO. "Growth" is based on unsustainable and irresponsible leverage. The entire economic system is fraudulent. The entire world political sphere corrupted. 

Treasury Secretary Geithner's

 contention that no fraudulent or criminal behavior occurred during the crisis is bald on its face. The reason for TARP ($700B) but moreover the backdoor FED continued liquidity support of $7.7Trillion is precisely related to the fact that no one really knows who owns what, what the collateral damage of contagion in a systematic collapse would be etc. Then how can one assert no wrongdoing?

I urge you to watch the excellent Frontline series where the inventors of these "synthetic" products admit few understand them. As well as the fourth installment where former and current traders all but admit clients were defrauded. 

http://www.pbs.org/wgbh/pages/frontline/money-power-wall-street/

The clean up starts with conducting a true exhaustive investigation and if criminal behavior is discovered holding those responsible, responsible. And then and only then perhaps unearthing more of the underlying causative elements and correcting them. Like putting Glass Steagall back in place, repealing the Commodities Futures Modernization Act of 2000 and requiring banks to make mortgage principal modifications or write downs to get housing back on track.

A global "come to Jesus" debt jubliee meeting is needed where banks not citizens take haircuts, suffer austerity in the form of reigning in outrageous compensation and their ridiculous speculative free styling, free roulette "wheeling" ways. 

Actually, for anyone who has studied economics, finance or accounting, the answers to our economic problems are really rather simple. We just collectively have no political will to do it since the financial lobby "owns" our politicians (all of them, both sides of the aisle.)  But rather we get a continued "papering" over of the exposures by the actions of the FED and even disclosure now has gone "dark" as the H4's have removed central bank liquidity swaps. 

Think about this, through the FED and bailouts, your tax dollars, since Dodd Franks passage, the banks/financial sector have spent $320M fighting implementation and watering down the rules.

That $320M effectively your money. That is criminal on its face.

Will petitions like these below do anything? Perhaps not.  But collectively people need to start somewhere.

Tell Pres. @BarackObama: Don't give Wall Street crooks a "get out of jail free" card. http://bit.ly/Kr675M #p2 #ows #ffraud 
 


No "get out of jail free" card for Wall Street bankers.

act.credoaction.com
If the financial crimes task force President Obama announced in his State of the Union speech doesn't hand down criminal indictments soon, we might never see Wall Street bankers held accountable for causing the worst economic collapse since the Great Depression. Take action today.

 

 

Thu, 05/03/2012 - 11:06 | Link to Comment SilverSavant
SilverSavant's picture

yes, Ben's Legacy will be made, when he is hanging by his neck, to the cheers of our dear readers. 

Thu, 05/03/2012 - 10:57 | Link to Comment CvlDobd
CvlDobd's picture

Lenny Bruce, Richard Pryor, George Carlin, Robert Brusca.

Rank 'em.

Thu, 05/03/2012 - 10:57 | Link to Comment shadowboxer
shadowboxer's picture

...bury him next to Krugman, they can share the same epitath: Stupid Fuck

Thu, 05/03/2012 - 10:50 | Link to Comment Stuck on Zero
Stuck on Zero's picture

I have a pothead friend who'd like to buy some of the stuff Brusca is using.

 

Thu, 05/03/2012 - 10:43 | Link to Comment jomama
jomama's picture

A+ would read again.  not.

Thu, 05/03/2012 - 10:42 | Link to Comment Hedgetard55
Hedgetard55's picture

Bob,

 

     Take Ben's shlomo out of your mouth.

Thu, 05/03/2012 - 10:42 | Link to Comment Elmer Fudd
Elmer Fudd's picture

The author's paycheck is obviously derived from the top-down, not the bottom-up.  Is this a part of the FED's new marketing strategy?

Thu, 05/03/2012 - 10:38 | Link to Comment cfosnock
cfosnock's picture

OMG who wrote this article talk about swimming with the sharks. As far as the US economy being better than the rest who cares, to borrow a quote "its like being the prettiest model at the Victoria's Secret Show' or in this case the prettiest girl in a "dogfight".

Thu, 05/03/2012 - 11:53 | Link to Comment xtop23
xtop23's picture

I had to check to make sure I was on the correct web site.

I kept looking for the <sarc and it became apparent that it wasn't forthcoming.

Excuse me waitress? Can I get a bong load of the Hopium that guy is smoking?

Thu, 05/03/2012 - 10:53 | Link to Comment SheepDog-One
SheepDog-One's picture

Sheesh Bob....lame...what are you a troll columnist? 'US doing far better than other economies'....'Bernank has so far masterminded a 'solid course' for the U.S. to succeed'....WTF??  Yea real swell solid course.. 101.5% debt/GDP ratio, jobs collapse, and the only reason anything 'appears' good at all is 0% interest while the banks are blasted free money ass-to-firehose nozzle. The reason this country has gone to shit is because of ass hats like you.

Thu, 05/03/2012 - 10:32 | Link to Comment Coldfire
Coldfire's picture

You are a bear for punishment, "Brusca". Bernanke is an arrant fool for thinking he - or anyone - can "run the economy" with the sweat act tools of the Fed. And so are you. What are you doing here?

Thu, 05/03/2012 - 10:28 | Link to Comment buzzardsluck
buzzardsluck's picture

"Enquiring minds want to know… Can they take away contributor status for stupid policy suggestions?  I hope so, this shit is sad. 

 

Bring back leo, the comments on his posts always gave me a good laugh.

Thu, 05/03/2012 - 10:23 | Link to Comment Winston Churchill
Winston Churchill's picture

Pseudo keynesians.

They have cherry picked his theories to create their doctrinaire

interventions.Nothing ,except the coming total collapse, will

stop them,and then their excuse will be 'we didn't do enough".

Thu, 05/03/2012 - 10:20 | Link to Comment DaveyJones
DaveyJones's picture

 "history will not forget him" 

well, that phrase is correct

Thu, 05/03/2012 - 10:16 | Link to Comment Hohum
Hohum's picture

I see Mr. Brusca assumes the CPI is "inflation."  I guess that means a rising WTI cannot end these games as long as CPI is under 2%.

Thu, 05/03/2012 - 11:23 | Link to Comment JR
JR's picture

There are lies and then there are Big Lies. For the government-connected economists and the government-connected financial media, it is in their line of work to pretend that the Fed's take on inflation is correct. At this point, they have lost all credibility; but to go one more step and suggest that this inflation lie is even "understated" is a criminal offense against the people of the United States. Here faithfully, Bloomberg presents the lie:

Sadly, Congress and the White House seem incapable of agreeing on substantive measures to tackle the $10.4 trillion mountain of U.S. debt.

But there is one long-overdue piece of important business that can and should get done: The adoption of a more accurate gauge of U.S. inflation that would yield immediate savings and help put the economy on firmer ground. The fix has already been endorsed by lawmakers in both parties, the Obama administration, many economists and a series of bipartisan deficit-reduction panels. Best of all, it would help shore up Social Security. Trustees for the retirement fund on April 23 projected it would run dry in 2033, three years earlier than last year’s forecast.

It has been widely recognized for almost two decades that the current measure, the consumer price index, contains several biases that cause it to overstate inflation anywhere from 0.3 percentage point to 0.8 percentage point, depending on which expert you talk to. The miscalculation has damaging consequences for the U.S. economy. The CPI is the benchmark that determines cost-of-living adjustments for a wide range of government programs, including Social Security and federal employee pensions. It also is used to peg income-tax brackets, exemptions, deductions and credits.

To which Karl Denninger replies in Look! More Advocacy Of Fraud! (Chained CPI):

Chained CPI is the extension of this distortion to all changes in purchasing habits that result from price changes and personal economic circumstance, removing that influence. So as meat becomes too expensive for seniors and they "trade down" to dogfood, chained CPI would eliminate the price increase in meat from the computation by shifting the weighting to dogfood as behavior changes.

This is "hedonic adjustment" on steroids, and effectively allows the government to screw anyone who is impacted by actual price changes by counting their behavior change as a mitigating factor.

“The gall of such a proposal is extraordinary -- but not surprising given recent history. It also belies the desperation of the government; the fact of the matter is that monetary inflation and personal income looks like this [Annualized Monetary Inflation and Income].

If you want to know why the government is so desperate to "rebase" CPI, it's found in this chart [Actual Annualized Income Progress (Ex Financials). Put simply since 2000 you have been serially raped as a consumer in terms of actual spending power…”

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