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Don’t play hanky-panky with Bernanke
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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Tommy James and the Bendells.
You have now ruined that song for me. Besides, we all know Ben only does the "Twist" and the "Hustle"...
Mr. Brusca says,
"... 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 ...."
Just in case you're ever casting about for the perfect example of "damnation by faint praise"
I'm all for *cough* fair and balanced - but what's the point of posts like this on ZH? I can go to CNBC, USA Today or pretty much any other major news outlet to get the usual talking points.
There is a reason N.O.W is not a regular contributor to the pages of Playboy.
Wow. Starting the day off with optimism. That's different, lmao!
That's fine......I wasn't in the mood for the survival game just yet anyhow.
Who knows, time will tell. Doesn't change my opinion about much but crawling under a rock doesn't help the situation either.
I don't think RobertBrusca is a real person, but rather a stalking horse sent into ZH for reasons I don't quite understand yet.
He is just the anger-baiting replacement for Leo Kovilakis.
Shame on you, Tyler.
"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"
Typo or Freudian slip, there Brusca?
Best central banker in the world right now? Ha! I'll take Alan Bollard or Glenn Stevens and not look back. You can keep the lying beard and the ECB clowns. History will never forgive him for the shenanigans he's done. ANYONE can print money/create money out of thin air. Nothing special there.
You are deluded Robert.
Oh yea..Bernanke is taking a sold course..Selling us....Into debt slavery...
Thanks - hysterical
Robert, I agree that given the circumstances, Bernanke is playing it about as well as anybody could. It is amazing that even on these pages, folks still blame the FED for things that are strictly the politicians' fault. And THAT is my problem with Bernanke. He should be using his soapbox to sound clear alarm bells and put the spotlight on the politicians in Washington. Ultimately the FED will fail, and he probably knows that the odds of getting out of this aren't good given the spending programs yet to come.
At this point in time, perhaps we need someone who will say that further monitization is not productive, and that he won't be a party to it anymore since somebody ultimately needs to be the adult in the room
That, I think, will burnish his legacy
"given the circumstances, Bernanke is playing it about as well as anybody "
But the Fed was the architect of non-productive, bubble inducing, asset stripping, middle class killing, savings destroying circumstances.
Bernanke is simply doing what he is told and is clueless about productive wealth creation.
WRONG. The politicians are paid by the big banks who own the FED.
If I offered to pay you money to go perform an action which you KNEW violated your ethics and you took my bribe and did it, is it my fault or YOURS ?
If you hire a hitman, who is responsible for the murder, the hitman or you? You must think the banks and congress are 2 different teams and congress accidently got bought. Actually, I don't even think they bought them the last time. They said $700 billion for the banks or 20% interest and martial law and destruction of the country.
Why, the hit man of course. If there were no hitmen, there would be no murder in this situation. Intent, on its own, does not cause a murder. It may be a very evil thought, but that is it.
No, you take out the guy hiring the hitmen, first. It's just less work.
Please help me understand why Bernanke devaluing the money in my wallet at the same time he's inflating the cost of food and fuel all while adding to my tax burden is a positive - all so the current banking system doesn't have to take losses, be nationalized or change the status quo?
It is not a positive. And, for the record, I don't believe we should have a Federal Reserve
That said, the dollars being cranked out are strictly the fault of Treasury enabled by a spineless FED. You have to play this game his way given the current situation IF you don't want everything to explode instantly
The TBTF banks are being preserved to keep the PD network alive. Note that nobody is stopping small banks from failing.
The FED should at this point grow a spine and say they won't play with Treasury anymore. That probably won't happen because these folks like the power and probably truely believe that they can try to effect positive change sticking around .vs. quitting.
It will all burn down regardless of what these folks do.
Bank nationalization would fix the problem very quickly. Declare an emergency - nationalize them overnight with no warning for a period of 24 to 48 months. Freeze trading on the TBTF banks during that period (better than being wiped out ala Fannie, Freddie). Remove the CEO and boards and start again. After Bankers stopped shitting themselves, those that remain will straiten up and fly right if they know when push comes to show they will indeed pay.
Crazy? Unthinkable? This is basically what happens when a small bank fails. Government comes in unannounced - takes control, sells it off.
Why should the 99.9% be held hostage to 700 TRILLION is unregulated derivatives?
...and I agree when do not "need" a central bank.
Because it spurs you to channel your justified US citizen anger (US citizens are always justified in their anger so not that hard) toward the real and not the fake causes of the crisis: US citizen politicians.
If the card is well played, the shock will grow tremendously, so tremendously that the unthinkable will become reality: sheeple, those US citizens for whom US citizen is still working full stream and that has no reason to cry out, contrary to the some other US citizen middle class members whose entitlement to middle class status is supposed to be enshrined in the marble of the most liberating document paper ever written by men or gods, in a few words, the US constitution, is disappearing slowly but surely just as if sucked down by quick sand, so the socalled sheeple will wake up and hunt down the cause of all, the racial inferiors, uh no, wrong page, wrong page, will hunt down the US citizen politicians and put an end to the coercion apparatus of all, namely the State.
Long live US citizenism, never lose faith in the free market forces. Freedom, truth, justice at all costs, that or death. Bernanke the true prophet that lead the US citizen people toward true liberty once again. The promised land is a few strides away, keep up, dont despair.
AnAnonymous said:
Flipping-flopping back to singing praises to the glory of US citizenism again?
The rational hypothesis: Chinese citizenism strengthens multiple personality disorder.
Flipping-flopping back to singing praises to the glory of US citizenism again?
The rational hypothesis: Chinese citizenism strengthens multiple personality disorder.
______________________________________________
US citizen rationality then.
Not surprising it gives other results than rationality itself.
AnAnonymous said:
Observe Chinese citizenism citizen now flipping-flopping back to condemnation of US citizenism.
Another example of the tilt-a-whirl time-traveling algebraic coconuttery of Chinese citizenism.
I am guessing that our dear dishwashing troll comrade was thrown from the Double Lucky Panda tilt-a-whirl ride at the local May Day carnival (due, of course, to the complete lack of any safety standards as is the norm in the People's Republic of Expendable Human Ants), and hit his head against the side of a fried-puppy stand, thereby causing him to hallucinate his fantasies of middle-class-dominating "US Citizenism".
...While scratching his ass and rubbing his balls with some endanger species product like Rhino horn or sea horeses in the hopes a hard-on might develop in his future-assuming he could even locate a female in his society!
.
That explanation very explanational being is. Most sense making for cause to arrive at for Chinese citizenism flipping-floppery.
By traditional Chinese citizenism scientific judicious protocols, one saying so makes it so, so it is so.
US citizen rationality then.
Not surprising it gives other results than rationality itself.
///////////////////////////////////////////////////////
Yes, not unlike denialistic and hypocritical Chinese Citizenism, which is unable to find any faults within itself, even as it is riddled with them. Such as the blobbing-up of formerly independent Tibet, or the ongoing imperialistic warmongering threats against the independent Republic of Taiwan, or the massive environmental destruction currently taking place within the Middle Kingdom of Roadside Shitting in the manic quest for gold and rare earth elements, or the one-party totalitarian nature of your political regime, or the gigantic degree of cronyism and corruption inherent in such one-party authoritarian rule, or the accelerating Chinese blobbing-up of world resources, or the #1 ranking of the People's Republic of Puppy Frying and Nose-Picking as the world's most polluting nation.
Talking about Chinese Citizenism "rationality": Make me laugh!
akak
Methinks Anon figures rationality is the quality of his rations.
Rong Rive Algebraic Coconut Roadside Crapping Denialistic Chinese Citizenism!
China-bot, let me intoduce you to this thing --->. It is a period, used for separating distinct thoughts.
BTW, except for constantly paraphrasing from your little red book, do you have any original ideas?
No he does not. Unemployment in China must be on the rise.
The problem with this "reporter" is that he believes all those government propaganda numbers. He's right, in the same way that someone who scored a 1600 on the SAT in 2007 did not really score as well as someone who scored a 1600 in 1990. When you keep changing the metrics, you can make numbers tell any damn story you wish... Lies, damn lies, and statistics...
Grannys nest egg sure doesn't share your optimism.
Yes, Saved the day.
My 80 year old parents are watching a lifetime of savings evaporate as the actions of the Fed transfer their wealth to the banking cartel through ZIRP & inflation.
Krugman may be a fool and a nonsense rambler but it’s instructive to follow his words because they reveal the identical thoughts and actions of far more talented poker facers and accomplished liars, like the current Fed chairman. Here, in all its disgusting reality in the voice of Krugman, is the insensitiveness and ruthlessness of the tyrants who control this country.
“Finally, how is expansionary monetary policy supposed to hurt the 99 percent? Think of all the people living on fixed incomes, we’re told. But who are these people? I know the picture: retirees living on the interest on their bank account and their fixed pension check — and there are no doubt some people fitting that description. But there aren’t many of them.”
The typical retired American these days relies largely on Social Security — which is indexed against inflation. He or she may get some interest income from bank deposits, but not much: ordinary Americans have fewer financial assets than the elite can easily imagine. And as for pensions: yes, some people have defined-benefit pension plans that aren’t indexed for inflation. But that’s a dwindling minority — and the effect of, say, 1 or 2 percent higher inflation isn’t going to be enormous even for this minority.”
http://www.zerohedge.com/news/guest-post-wealth-inequality-%E2%80%93-spitznagel-gets-it-krugman-doesn%E2%80%99t
Well, on the plus side he seems to recognize what Krugman is so there is at least that.
I have a question on European "austerity"- is it actual in the sense that there is hard evidence that government spending has actually decreased in any substatntive way or is it illusory like it is in the US (only existing in the minds of media while deficit spending stays sky high and only future growth rates are theoretically nibbled at the corner)?
I see the word used alot, anyone have solid documentation in either direction? It seems to be the case in the UK, but in the Euro zone?
I guess you have not seen protests and riots in the Spanish or Greek streets. That Spanish retirees below the poverty line will have to kick in 10% for pharmacy purchases and so on.
At least the people, average citizens are doing something in some of Europe. Actually for decades, black market have existed: Spanish underground gdp estimated at 35%, Italy 45%, Greece 60% bc no one trusted their governements way back when.
Some will claim that things going underground ie no tax revenues exacerbated their nation's problems; however, globally we have witnessed that the indentured and owned politicians will continue to extract from the average citizen (debased currency, taxes, commodity/staples price increases) to reward and line the pockets of the defunct 1% and their insolvent banks.
Many here including myself keep thinking the collapse or correction will come: the debt in relation to unemployment, "growth" based on leverage still masks contraction, etc. The implosion or explosion around a close corner.
But it does not.
Until people eveywhere rise up, refuse to pay taxes or for that matter credit cards, utility bills (tax bury instruments) stop consuming, buy locally, grow some of their own food, shift money to smaller local and regional banks: unfortunately until then the endless shell game, the debt inferno will rage.
Since all FED and central banks leverage or liquidity tsunamis are ultimately based on underlying total US deposits (granny's savings account, etc) what would happen if everyone started taking the maximum withdrawls out daily and putting funds in safes at home or their mattresses? (See recent data on flight from Italian, Spanish, French banks)
Austerity is real in the eurozone at the moment.
A very small (statistically not relevant) example: while the media was concentrating on one pensioner in Greece, dozens of pensioner's suicides happened in Italy. But of course the Greek man's gesture was politically more exploitable.
There is a lot of buzz in the european parties about spending less and more smartly, even on the Left expecting to get more power in the coming electoral cycles.
I have my doubt about the UK, though, the numbers I see look more like a braking on excesses than real austerity - which is the general direction anyway.
"...the numbers I see look more like a braking on excesses than real austerity..."
OMG can the statists & crony's survive?...what will become of them?
Save the Whales...Save the Snails...Save the Crony's ;-)
"The political economy in Europe is such that the politicians chose to default on their spending obligations to their citizens in order to honor the pact with their financial creditors and so as time goes on, the politicians are being rejected." – Hugh Hendry on the state of Europe, May 1, 2012, The Milken Institute conference
HH also said: "If you want to understand the Germans, ask the British", a Classic
Would you happen to have any handy links to reliable statistics on the subject?
Brusca, unless what you wrote is intended as comedy, you are an outright moron.
You stated: Bernanke said it would be reckless for the Fed to try to spur growth through inflation.
That is precisely what Bernanke's goal is.
Did you see the GDP number this week ? It was only 2.2%. If you factor in the Fed's supposed rate on inflation of 2.7%, there is no growth, the economy is contracting. The goal of QE is to mask the contraction and give the apearance of growth.
Brusca, God help any pour soul who follows your advice, for you are a clueless moron.
"Brusca" is a CB media tool for the Internet.
Brusca = Cramer.
"Brusca, God help any pour soul who follows your advice, for you are a clueless moron"
I have come to determine that Brusca is channeling MadHedgeFundTrader and Dennnis Gartman.............just without picking a trade for you to lose money on...............
He serves evil you will never be able to see. He knows it, and pity you do not.
http://miha.ef.uni-lj.si/_dokumenti3plus2/193000/Bernanke1983.pdf
Bernanke said it would be reckless for the Fed to try to spur growth through inflation.
<sarcasm>I will try to remember that when I fill my car with gasoline while going to the grocery store this weekend</sarcasm>
Let me guess: 1.Your not retired and living on your lifetime savings and a fixed income?