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Bernanke's Policy = Reckless Endangerment
Reckless endangerment: A culpable disregard of foreseeable consequences to others from the act or omission involved.
Bernanke made an interesting comment yesterday about his future as the boss of the Fed:
"I don't think that I'm the only person in the world who can manage the exit"
Bernanke could have said the same thing using different words:
I know that I can manage the exit, I'm pretty sure someone else could as well.
How can Bernanke be so sure of the outcome? What knowledge does Ben have that the naysayers don't? The answer is clear. No one, including Bernanke, has a clue what will happen when the exit door is opened. That is an indisputable fact. How can Bernanke claim that a Fed exit from QE will have no consequences? It's never been done before. Not by the Fed. Not by any Central Bank. To think that such a daunting task can be accomplished without negative consequences is foolish.
Given that there is no road map to look at when pondering what happens when the Fed starts to off-load a few Trillion of bonds, Bernanke is either bluffing or he's lying. Either way, Reckless Endangerment is a valid accusation.
Bernanke describes his monetary policy as "Highly Accommodative". That's a bullshit. I wish he had a better description of the realities of his policies. If there was a rating system of 1 to 10 for "accomodative" the current Fed policy would be a 9.5. A better description for Ben's policy would be "Maximum Accommodation"; or better still "Emergency Level Accommodation".
Is Emergency Accommodation appropriate in March of 2013? I don't think so.
- Stocks are at record levels.
- The credit market is in good shape - spreads are very low.
- There is no top 20 bank that is in an jeopardy today.
- The US will sell 16m cars this year. There can't be a recession with that level of sales.
- The real estate market has more than stabilized.
A) Housing starts are up 34% YoY.
B) Permits for new construction are above the 2008 levels.
C) Currently, there is the lowest level of supply on the market since 1999.
D) Real estate prices are rising at double digit rates again. Bidding wars are back in many areas of the country.
E) Things have turned around so much that Fannie and Freddie have turned profitable and are repaying the government what was lost in 2008.
- GDP is growing at 2.5%. Yeah, that is a bit stinko, but the reality is that this IS the new normal. The US can't have a high growth economy and at the same time have a rapidly aging population. QE will not move the needle.
- Yes unemployment is high, but by what standard? Looking at what the economy produced in terms of jobs in 1990 is irrelevant to 2013. Bernanke is trying push a string.
- Total payrolls today are ~140m, while unemployment is 7.8%. To get to 6.5% unemployment means that about 2m jobs are needed. While I'm sympathetic to those not employed, there is another side to Bernanke's obsession with achieving a 6.5% rate.
A) Social Security, the Military Retirement Fund and the Civilian Retirement fund are being bled dry with low Treasury rates
B) Every State and private pension fund is also being bled dry. Why are aren't the costs of destroying savings included in the Fed's calculations?
C) Zero interest rates and QE makes it easy for DC to borrow to oblivion without apparent cost. Congress has sat on its ass for four years, Bernanke is facilitating that. We have idiots like Senator Chuck Schumer (D-NY) publicly pushing Bernanke to print more as Congress and the Administration can't agree on a thing. And Bernanke responds, "No problem Chuck! I'll print your way our of trouble." I find that disgusting.
D) Every private saver is getting clipped. Bernanke responds. "Just buy stocks!" Bernanke is desperately trying to create another bubble. Why would he do that? Every bit of evidence shows that bubbles end badly.
E) The #1 lesson of 2008 was systemic risk. Does the size of the Fed's balance sheet constitute a systemic risk? I think so. Bernanke disagrees. Fine Mr. Bernanke, but if the current balance sheet of $3.1T (headed to $4t) is not a systemic risk, then what is? Is it $5T? 10T? Are there no bounds to this? The universe maybe boundless - monetary policy is not.
F) The #2 lesson of 2008 is TBTF. I think the Fed has already reached the point where too much risk has been concentrated. The Fed's own economists, as well as Fed governors have pointed to the potential for large losses at the Fed. Bernanke dismisses this by pointing to the fact that the Fed can have book losses without consequence. I disagree. What happens when we get these headlines:
Bond Market Falls Again - Dollar in Free Fall - Stocks in Global Drop
Losses on Fed's Book Now Exceeds 1/2 Trillion
Chinese to Abandon Dollar Peg - Vows to Reduce US Holdings
S&P Lowers US Rating Again
- Bernanke has not provided any evidence that QE 3 is doing a damn thing other than putting a temporary bid under the stock market. Hot stocks may make the millions who have a 401Ks feel a bit better, but it doesn't change consumption by much. Meanwhile, the top 5% are getting richer by the hour. That is the consequence of Ben's policy - More wealth transfer. Is that really what most Americans want? Is that what Congress wants?
- Ben has failed to demonstrate that QE3 has any incremental value. He has acknowledged that the efficacy has worn off. But he persists.
Me? I think Bernanke is telling the greatest lie ever told. He says that his successor can unwind the mess he has created without consequence. That's a joke. Can you imagine Janet Yellen trying to accomplish an exit? Not a chance. She knows nothing of markets - she would fail miserably.
Mr. Bernanke - I'm accusing you of reckless endangerment. You have no right to drive "your" car at 100 MPH on a public road. The emergency of 2008 is over, emergency monetary measures are no longer appropriate. As head of the Fed, you are insulated from any legal liability arising from your choices. Lucky for you. Reckless Endangerment is a Felony rap.
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If a regular guy did this he would die a quick and accidental death....or would pull a Hoffa.
The higer Stocks go, the more Money it takes to bid them up even higher.
If things get serious you have to lie!
Bruce, here is the problem. There is no more mystery. It's tough for people like you whose job it is to write and help us all connnect the dots to some giant puzzle.
There is no puzzle. There is no mystery. Bernanke is blowing the biggest bubble in history and he knows there is no way to let the air out slowly. It's just a matter of time before it pops. No need to listen to his words anymore. His actions have said it all.
I think Ben's (and Obama's) real goal is to crash the dollar and usher in the era of the IMF administered SDR. Just imagine a global central bank free from any one country's control that can inflate away and steal the value of the entire world's wealth. That I believe is the banker jackpot at the end of this crap wagon ride to Hell.
And their prize is? These guys are already dripping in wealth - so what's the motive? Satanic worship?
Power.
Money is just the means to it.
When money and power are your highest values, you can never have enough money or power. It's that simple.
obama gives speeches and does just what he is told... the real power hides in the shadows.
That photo shows someone has put graffiti on Warren Buffett's property, a freight car wagon of the BNSF railway that he owns
Obviously economic terrorism is rampant
Bruce Krasting soon to get an FBI visit as to why he is promoting it
Just an FYI - for those of us who use a little re-education on the Fed - the Wikipedia article on the Federal Reserve is quite informative. If you haven't read it, when you have a spare hour or two, take a look. Considering the things that get said here, it's not a bad idea to at least review what the Bernank has on his hands. My question to myself is: what would/could I do that would be any better? Not saying the Fed couldn't do better by us all by stopping the insane issuance of $$ trillions in I.O.U. bonds, but what a beast it is. Must be like trying to bronco buck a dragon. Just sayin'.
Here's a better idea ...
Spend several YEARS studying history, markets, capitalism, law in a variety of different forms. Top it off with specialized focus on mathematics, the success of Austrian economics vs the failures of Keynesian economics and socio-economic psychology.
Then come back and hopefully you'll be brighter than citing Wikipedia for an informed understanding of the world's current global clusterfuck.
Actually, it was not the FBI who called to protest. It was the Secret Service.
The boys at the Secret Service are trying to raise some extra money so they can reopen the White House tours. So they are doing rent-a-cop duty for for Warren B. on the side. (Big bucks involved, so I'm told...)
They were pretty nasty on the phone. I told em to buzz off.
the secret service took time out from whorin' and bar fightin' like a bunch of cunty frat boys?
Money talks...
I got the clue like it were glue!
Speaking of "getting a clue", it's time for Bruce to lay off the Kool-Aid:
- Stocks are at record levels. The Fed is giving the TBTFs $85 billion every month to gamble with. And that's just the OVER the table money.
- The credit market is in good shape - spreads are very low. The Fed has deliberately crushed the curve and guaranteed that no bank can lose money through lending. To the Treasury or another TBTF.
- There is no top 20 bank that is in an jeopardy today. All that impressive Tier Capital are belong to the Fed.
- The US will sell 16m cars this year. There can't be a recession with that level of sales. Channel stuffing and subprime auto loans, bitchez. See http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012...
- The real estate market has more than stabilized. My realtor just told me that this area has 17 years worth of $400k+ inventory.
A) Housing starts are up 34% YoY. That's seasonally adjusted. Actual Feb starts were a tiny 31k homes.
B) Permits for new construction are above the 2008 levels. Ditto, and 2008 was a weak year.
C) Currently, there is the lowest level of supply on the market since 1999. Banks are holding REO inventory off the market and trickling them in.
D) Real estate prices are rising at double digit rates again. Case-Shiller says prices are still falling in most cities. Phoenix, LV, LA and Miami are not the country.
E) Things have turned around so much that Fannie and Freddie have turned profitable and are repaying the government what was lost in 2008. Yeah, and we're making money on Maiden Lane 1, 2, and 3.
- GDP is growing at 2.5%. Only if you count the trillions that the Treasury is borrowing to spend on food stamps and EUC as "GDP growth". Back out the borrowed money and GDP is declining by about 8% annually.
Holy crap, Bruce. You can do better than this. Next you'll be telling us our money is safe in U.S. banks because we have the FDIC.
Epic bingo.
Hmmm So you think that current conditions warrent Extreme Monetary measures. I disagree.
You have 17 years of inventory? Where do you live?
Even Atlanta has seen a turnaround. South Florida (except for Naples) is back to normal . All the Miami condos have been sold to all cash buyers from S.America. Cali is doing just fine in most areas. NY and the burbs are doing fine. Metro DC is booming, so is Boston and Chicago. Texas never skipped a beat.
Are things great? No. But we are not in an emergency.
You are a Bernanke supporter. You want more QE. You will get it your way. Bernanke will not stop. But there will come a day (it may be years) when you will recognize that both you and Ben made a bad choice at the wrong time. We're well past insanity on this.
Bruce,
You've fallen to the level of sophistry. How sad. How ... liberal. Disagreeing with YOUR straw man arguments DOES NOT equate to believing Extreme Monetary measures are warranted.
Some of us have been objecting to the Extreme Monetary measures from the very beginning as unwarranted meddling that prevented the markets from clearing.
Examples:
OH NOES ...some Too Big Too Fail Banks would have died !?! GOOD, they should be dead.
GM would have gone bankrupt and millions of jobs would have been lost !?! HORSESHIT, GM would have been restructured and the UAW would not have gotten the biggest crony deal ever.
And now to YOUR propaganda:
- There is no top 20 bank that is in an jeopardy today.
I guessed you missed this piece in Bloomberg - not too surprising - the MSM didn't want to talk about it.
http://www.bloomberg.com/news/2013-02-20/why-should-taxpayers-give-big-banks-83-billion-a-year-.html
The BULK of those 20 banks would NOT be making a profit if it wasn't for the government handing out $ 83 billion a year.
So YOUR position is the fact the top 20 banks would NOT be making ANY profit is PROOF they are not in JEOPARDY ???
In order, Bruce:
So you think that current conditions warrent Extreme Monetary measures. Yes, I think the BANKS MUST DIE.
You have 17 years of inventory? Where do you live? In Western North Carolina, near Asheville. But that's 17 years of inventory in the $400k and higher price range.
Even Atlanta has seen a turnaround. In this morning's unemployment claims report, only one state saw a significant increase in jobless claims. That was Georgia. ATL is far from out of the woods.
South Florida is back to normal. 60% of those sales are cash to private equity. That ain't normal, and the rental market there will soon implode under the weight of rental inventory. Och-Ziff Corp already pulled out because "returns did not meet expectations."
You are a Bernanke supporter. You want more QE. My name is Inigo Montoya. You killed my reputation. Prepare to die.
Bruce, I'm sorry, but you must get this through your head. WE DO NOT NEED A CENTRAL BANK to plunder us. THE FED IS A CRIME SYNDICATE. Read it from Barry Ritholtz:
http://www.ritholtz.com/blog/2013/03/bankistan-vanquishes-america/
I have to admit, I live in central Florida on the west coast. If you go on Zillo and look at the number of houses for sale in my area, Citrus/Hernando/Hillsborogh Counties, the inventory is thru the roof.
I think he wants some accountability you arrogant fuck. We have already had and are in an enviornment of extreme monetary policy. You cite the Southeast as an example of a recovery? Tell me, how do their wages compare to the rest of the country?!?!? Beyond fucking ignorant and stupid. Whether intentional or not. If it's intentional, then you really are an immoral fuck.
Tax all central banks in the country at 200% net income.
Can you imagine the politicians when they figure out that the more they borrow, the more they collect in taxes?
Would the central bank raise rates? For what? To pay more in tax?
Long phys silver gold land lead pussy popcorn
Short confidence patience rbob coffee bonds natgas
The reckless endangerment began when private banks were given the power to create $1 for every $1 they had in deposits. It's all just mushroomed from there into the greatest Ponzi scheme in human history which is now at its ultimate irrational extreme. When the insanely leveraged financial pyramid collapses, it will be swift and all-consuming IMHO. The global banking system as we know it will cease to exist.
http://thespiritoftruth.blogspot.com/2008/10/greenspan-i-have-found-flaw...
http://www.youtube.com/watch?v=HfpO-WBz_mw
Isn't that $10 for every $1 they have on deposit?
Then watch the 1.6 billion hollow-points fly - at us, maybe.
While you wrote this, Napolitano was before Congress refusing to answer their questions about those ammunition purchases.
Fascism, she is here.
Because maybe those purchases in reality don't exist. Not to say that I'm in the know, but this may all be a disinformation campaign.
My question is, exactly what type of war are they planning on fighting with hollow point rounds and only 7000 assault rifles?
Sit down and think about, exactly what army does the DHS command to do its fighting?
What training does DHS have to fight an urban war?
Who are DHS' tactical and strategic commanders.
With a fat assed lesbian at the helm of DHS, what's there to worry about.
The most you'd have to concern yourself with is whale sized lesbians falling on you after getting drunk.
The Nazis had a bunch of fags leading their goon squads too. The goon squads followed orders as did the police and the military when it came down to it. It will happen here. People will follow the pay.