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Ben Bernanke - Hocus Pocus or Hokey-Pokey?

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I’m sorry but the game (and I am sure that you will all agree) is becoming rather tiresome with boorish Ben Bernanke at the Federal Reserve. I have the distinct impression that either he is doing the hokey-pokey (one foot in, one foot out, except it’s the markets that are getting shaken all about) or he is doing his Peter-and-the-Wolf pantomime number for the kids.  One minute we hear that Quantitative Easing is going completely, then it’s going a bit and withdrawing in side-steps and little paces and then it’s going to carry on. Where do we stand? He’s making the markets dizzy with all this waltzing around back and forth. Or is that the idea? Get the markets so dizzy that Quantitative Easing will be withdrawn as the masses are trying to pick themselves up from dazed and dazzled bewilderment. If that’s the objective, Ben Bernanke and the Federal Reserve are right on line. Bullseye Ben!

During last night’s talk that Ben Bernanke was giving at the national Bureau of Economic Research in Cambridge, Massachusetts (July 10th) he stated that loose monetary policy was far from over! $85 billion is being pumped into the US economy and he said that the bond-buying days were still with us. He spoke of “highly accommodative monetary policy for the foreseeable future”. He went on to state that despite the fact that analysts seem to be pretty positive about the direction the US economy is heading in (although that’s very debatable), perhaps the true rate of unemployment was higher than present figures might be suggesting. He also added that there were signs of ‘internal weakness’ in the US economy and that a 6.5% unemployment rate will not “trigger tightening by itself”. Only two weeks ago he was speaking of pulling out of Quantitative Easing and tightening the belts on the economy.

So, what is Ben Bernanke playing at? The markets reacted today to that statement favorably. China’s Shanghai Composite hiked 3.23% (+64.87 points to 2, 072.99) today. The FTSE 100 increased +0.65% (+42.36 points to 6, 547.32). The DAX went up 1.25% (+100.93 points to 8, 167.41) and the Nikkei rose +0.39% (+55.98 points to 14, 472.58). The CAC40 was also up by +1.01% (+38.81 points to 3, 879.34) at 07:52 ET today. Imagine that! Just a few words from Ben Bernanke that the Quantitative Easing will still be there and the markets rally. The power that is in that man’s hands (or mouth)! The markets feed off of it like a prophecy from the Messiah. But, having said that, maybe in two weeks there will be a change of tune and we’ll be back to square one, with the markets getting no change out of the Federal reserve at all (not even small change, for that matter).

That statement during the speech will certainly have some effect on the Dollar but also on the EU’s trouble and strife at the moment. The Dollar rallied just a few weeks ago against other world currencies and in particular caused some trouble for the Euro, making matters worse for the EU’s growing debt woes.

Dollar

The Dollar has come in for a bit of a hammering from the markets today. This is due primarily to Bernanke’s statement yesterday but also because of the minutes of the FOMC which clearly showed that there was a divergence of opinion at the Federal Reserve. Many stated in those minutes that they needed to see improvements in the unemployment rate that were far more substantial than at the present time before the taps are turned off on the loose money being dished out. There were also comments about bond buying continuing well into 2014, rather than tapering off in September and being withdrawn completely by January 2014. The Federal Reserve seems very much divided on the situation. But, will this mean that the compromise would be that tapering should begin in 2013 and end in 2014 over a longer period? If we are to judge the comments of Ben Bernanke last night no tapering will occur until the jobless rate hits below the 6.5%-mark.

The weekly report was issued today by the Bureau of Labor Statistics regarding the current situation for jobless claims. For the week ending July 6th, there were 360, 000 initial claims, which is an increase of 16, 000 on the week before (344, 000). That means a 4-week average of 351, 750 (up 6, 000). The advance (seasonally adjusted) insured unemployment rate stood at 2.3% for the week ending June 29th.

We will see what reaction that brings in the market.

The Euro rose today against the Dollar as a result of those comments. The Euro was up 0.65% against the Dollar today at 08:32 ET (+0.0084 to 1.3062).

Euro US Dollar Exchange Rate 11th July

Euro US Dollar Exchange Rate 11th July

The Dollar also fell against the Yen (-0.48% by 0.4800 to 99.2000).

Dollar Yen Exchange Rate 11th July

Dollar Yen Exchange Rate 11th July

The British Pound was up 0.65% (+0.0098 to 1.5113) at 8:33 ET today also.

GBP US Dollar Exchange Rate 11th July

GBP US Dollar Exchange Rate 11th July

The Dollar took a tumble against all major currencies, anyhow on Thursday as a direct consequence of those doubts now being raised.

EU

The statement that Bernanke made will also have some effect on the woes of the EU. If tapering starts in the US, then tapering will also probably have to start in the EU at some point and it’s far from the right time to actually do so with the number of government securities that are held by European banks at the present time.

There will be some respite for the EU, therefore. If the US continues its bond-buying then interest rates will not rise and the EU won’t have to increase their interest rates either. There are 1, 700 billion government securities that are currently on the books of European banks, which can only mean trouble at some point if interest rates rise.

So, is Ben Bernanke doing the hokey-pokey on us? Uncannily, he probably is given the fact that the origin of the words ‘hokey-pokey’ stem from ‘hocus pocus’, the traditional and well-known incantation of a magician. That itself can be traced back to Jesus Christ’s words at the Last Supper: “hoc est enim corpus meum”, meaning ‘this is my body’. We all know what happened afterwards: the bread got handed out and Jesus ended up being crucified, nailed to the cross. Ben Bernanke has done just about the same thing. He handed out the bread, didn’t he? He threw that from his helicopter to the masses below. Only one thing that is left to do now and the prophecy will come true!

Originally Posted: Ben Bernanke Hocus Pocus or Hokey Pokey

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Fri, 07/12/2013 - 01:26 | 3744118 jack stephan
jack stephan's picture

Year of the snake is getting warmed up kids.

http://youtu.be/jIB2av7TvN4

Fri, 07/12/2013 - 01:27 | 3744117 jack stephan
jack stephan's picture

Oops my bad

Fri, 07/12/2013 - 00:55 | 3744075 GoinFawr
GoinFawr's picture

You put your right jowl in,

You take your right jowl out,

You put your right jowl in,

and you wag it all about.

Do the prestidigiflation and you churn it all around,

And that's what it's all about!

 

You put your left jowl in...

Fri, 07/12/2013 - 00:37 | 3744061 OustBernankeNow
OustBernankeNow's picture

Bernanke is obviously manipulating the stock market. He must be tried for treason and for stock market manipulation.

As far as the anti-stimulus QE is concerned, it is not be design nor implementation any sort of economic stimulus nor does it produce jobs. Had it actually produced jobs we would have seen it already with the trillions he has gone through.  He is thus a liar. The economy is worsening, not getting better. Look at any economic data and parse out the real rate of inflation, or the population growth rate as i pertains to employment, anything at all, and the data clearly shows there is no improvement, and all the while our debts keep growing and growing which is BAD. We are losing by not getting bank interest, losing from the real 8% inflation, and losing more if investing far on the side of fair value for this economic depression we are in. Historical data shows in bad times the PE ratio tends to under 10 and even in the 6 to 8 range. Today is so bad like never before in history to suggest a fair PE ratio now would be around 5.

Bernanke is making a wider wealth divide that is crippling our country. Already the wealthiest are buying overpriced property to be used as rental income as the rest of the people will never be able to afford to buy a house when the wealthy and their cohorts in banks withholding the supply of homes on the market. We are turning into a third world in this way.

Those shorting this 2X overpriced market need to be compensated based on the unlawful manipulation done by Bernanke. The economy not improving yet it going up 130% in 4 years shows utter corruption. Even if the market went up only 50% during this time, a person shorting by being at their computer would still be able to profit as they should but when the manipulation is so one-sided preventing normal fluctuations, it becomes rigged against those who use their minds to invest as going long is senseless being valuations make no sense relative to the horrific economy. Notice also time and time again of horrific economic data and the markets so often surge 1 to 2 percent in a day, and sometimes for multiple days. This is based on the Bernanke manipulation in some form or another - it could be from him simply flapping his lips, the unlawful Fed POMO in overdrive, or the plunge protection team working their fingers like crazy pushing buttons.

Guantanamo Bay would be a perfect retirement location for Bernanke, the ECONOMIC ENEMY COMBATANT against the American people.

Fri, 07/12/2013 - 04:05 | 3744278 BeetleBailey
BeetleBailey's picture

Ben Bernanke is pure evil, masquerading as a human being.

Execution is not even good enough....

Thu, 07/11/2013 - 22:58 | 3743872 Ned Zeppelin
Ned Zeppelin's picture

I think it was perhaps at most 2 weeks ago when I said prepare to be whipsawed. One only had to look at the POMO schedule to see that buying showed no signs of stopping. And this time equities went up, but bond rates have stayed up. Perhaps the jawboning effect is slowly losing its power.

Thu, 07/11/2013 - 20:34 | 3743485 blindman
blindman's picture

jawboning .
the power of the great whale, the leviathan.
it is the song of moby dick !.
.
" you will smell land where there is no land" and all
that my mates.
.

Thu, 07/11/2013 - 20:32 | 3743478 Umh
Umh's picture

When the market is volatile you can earn more profit than you can when it just goes in a steady direction. Insiders can make a great deal of money with very little actual change in the market just by trading on how they know people will react to the FED.

Thu, 07/11/2013 - 20:31 | 3743476 BandGap
BandGap's picture

What a load of bullshit. Tapering? Really? Ask the fucking addict when they want to quit and go in for treatment. Cutting the money flow is going to raise holy hell and we all know that these fuckers are going to turn the spigot back on.

The junkie dies via poor nutrition and a compromised immune system, but is a user till the last breath.

Thu, 07/11/2013 - 20:31 | 3743474 blindman
blindman's picture

" eternal life .... is for sale?
.
seriously, @"where we stand..."
.
there is no "place" to stand in this domain.
one either rides on high or cowers in the caves.
.
the in between world is less and less inhabited
as most see it as the place of great burning and
suffering. where have all the hobos gone?
formerly of the surface among the trees, weeds
and rails.
underground, where there is protection from those
riding on high.
the caves my friend, establish precedent in a good
cave I say , a drone proof cave is all the rave !
with no self to call,
no attention to draw
all gone and no tomorrow. "
.
a poem by b.m.

Thu, 07/11/2013 - 19:12 | 3743246 ebworthen
ebworthen's picture

Hokey-Pokey, with other people's money (ours).

Or more accurately:  "Oakum-Hokem-Smoke'em".

Thu, 07/11/2013 - 18:23 | 3743118 geno-econ
geno-econ's picture

An old story accounts how Stevie Wonder, the blind singer, was invited to a synagogue to experience a Jewish service and consider converting to Judism. During the service Stevie Wonder was given a matzo at which point he felt and fingered the matzo and exclaimed "Who wrote this shit".    Similarly one wonders who writes Bernanke's speeches which befudles, confuses and manipulates the markets------beware the consequences of all that shit

Thu, 07/11/2013 - 18:14 | 3743094 SKY85hawk
SKY85hawk's picture

Greenspan's words were incomprehensible,

Bernanke's actions are incomprehesible.

Same game different decade, BWBS.

 

Thu, 07/11/2013 - 18:13 | 3743089 Yancey Ward
Yancey Ward's picture

One minute we hear that Quantitative Easing is going completely, then it’s going a bit and withdrawing in side-steps and little paces and then it’s going to carry on. Where do we stand?

Well, clearly, it is going to be all three at the same time.

Thu, 07/11/2013 - 18:43 | 3743174 NotApplicable
NotApplicable's picture

YMMV

Thu, 07/11/2013 - 17:56 | 3743031 moneybots
moneybots's picture

" Ben Bernanke has done just about the same thing. He handed out the bread, didn’t he? He threw that from his helicopter to the masses below."

 

47 million on food stamps.  14.3% underemploymnet.  The masses haven't been thrown anything, except BS.  It is the elites that wre liining their pockets from Bernanke's largess.

Fri, 07/12/2013 - 00:42 | 3744065 OustBernankeNow
OustBernankeNow's picture

23-26 percent unemployment. Start with the 240 million working age adults and 135-140 million workers who have at least a minimum wage part time job. Subtract those incarcerated and in mental institutions and the rest who canot work, estimate the number who are so rich who do not work presently and whom will never want to work (Paris Hilton for example), and you will arrive at a similar number. Don't go by government statistics except when it comes to certain raw measures. Shadow stats site is a good one to look at for this and for the real inflation rate.

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