This page has been archived and commenting is disabled.

Would You Trust Your Life Savings To This Man?

Tyler Durden's picture




 

Every now and then you get a glimpse. A vision of reality that confirms the surreality occurring all around us. This time it comes courtesy of Coleman Andrews, co-founder of Bain Capital, who asks bluntly how confident can investors be that this monetary program will have the effects that the Fed claims it will have? A look at what Fed Chairman Bernanke was saying in the run-up to the 2008 financial turmoil gives some insight into the Fed's record at predicting market outcomes. A must-watch 150 seconds today as it appears belief in Bernanke's omnipotence is back for a moment as he asks "would you trust your life-savings to an institution with that recent record of completely missing what happened in the housing sector and more broadly in the economy." Indeed...

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 03/01/2013 - 13:54 | 3290904 SamAdams
SamAdams's picture

Trust and the FED are completely different things....

Fri, 03/01/2013 - 14:00 | 3290920 mikla
mikla's picture

There is no trust anymore.  Anywhere.

And, now that the "Average Joe" knows the Fed exists, and is increasingly aware of its illegality and incompetence, things get interesting.

Fri, 03/01/2013 - 14:09 | 3290960 irie1029
irie1029's picture

Average Joe has no clue.  Average Joe will think what MSM tells him.

Fri, 03/01/2013 - 14:14 | 3290983 I think I need ...
I think I need to buy a gun's picture

WARREN BUFFETT IS ON WITH BECKY QUICK ON MONDAY MORNING,,,,TO BRING CONFIDENCE BACK TO THE AMERICAN PEOPLE THAT THEY CAN GO BACK INTO INVESTING IN SUN MICROSYSTEMS AND GROUPON AND THAT YOU SHOULD INVEST IN COMPANIES THAT HAVE A MOAT AROUND THEM. ALL IS WELL,,,,,,,,

Fri, 03/01/2013 - 14:21 | 3291009 spastic_colon
spastic_colon's picture

slightly o/t - we all know what is going to happen, just like the obummer gang allowed the "fiscal cliff" BS to take effect right after midnight on the 31st so they could claim there solution as a "tax cut", the repubs will be allowed to come up with a solution right after midnight tonight so they can claim victory.

 

And all of this during after market/weekend/institutional trading hours - good luck playing the ES or any futures as you have been shut out!  all gains will be made after hours as the pelosi gang et. Al. short the ES right before close today, close them out, and then go all in long during the "weekend".

Fri, 03/01/2013 - 14:26 | 3291032 redpill
redpill's picture

Aside from the fact they were oblivious to the housing bubble and broader instability of the economy thanks to the derivative nightmare that had been festering under their noses, trusting your life savings to a man whose every policy is aimed at DESTROYING savings would probably not be the best idea.

Fri, 03/01/2013 - 14:35 | 3291062 Richard Chesler
Richard Chesler's picture

To err is human. To work for Dimon, Blankfein and every other thieving jew banker, well that's another story.

Fri, 03/01/2013 - 15:10 | 3291186 TerminalDebt
TerminalDebt's picture

Every president is a bigger dickhead than the previous one, every chairsatan is a bigger satan than the previous one.

Fri, 03/01/2013 - 15:15 | 3291207 James_Cole
James_Cole's picture

Sure, it's easy to point out the fed lies - don't need a rocket scientist to pull up funny quotes from any fed chair. But the old adage applies, action speaks louder than words - the Fed is not inept…

One pet peeve of mine is the idea (constantly regurgitated) that this is all a relatively recent phenomenon involving fed policy. Greenspan put his line in the sand officially in 1987, but the financial engineering had been going on wide scale minimally since the 1970s. 

This is not some crazy side-venture by Bernanke or Greenspan being an idiot.. pretending those guys are clueless is part of the problem.  

Fri, 03/01/2013 - 14:51 | 3291077 AlaricBalth
AlaricBalth's picture

This is a partial text of a speech given by Ben Bernanke in October 2003. In it he discusses the relationship between  equity valuations and monetary policy.

"A long-held element of the conventional wisdom is that the stock market is an important part of the transmission mechanism for monetary policy. The logic goes as follows: Easier monetary policy, for example, raises stock prices. Higher stock prices increase the wealth of households, prompting consumers to spend more--a result known as the wealth effect. Moreover, high stock prices effectively reduce the cost of capital for firms, stimulating increased capital investment. Increases in both types of spending--consumer spending and business spending--tend to stimulate the economy.

This simple story can be elaborated somewhat in light of our results. It is true, as I have discussed, that an easier monetary policy raises stock prices, whereas a tighter policy lowers them. However, easier monetary policy not only raises stock prices; as we have seen, it also lowers risk premiums, presumably reflecting both a reduction in economic and financial volatility and an increase in the capacity of financial investors to bear risk. Thus, our results suggest that easier monetary policy not only allows consumers to enjoy a capital gain in their stock portfolios today, but it also reduces the effective amount of economic and financial risk they must face. This reduction in risk may cause consumers to trim their precautionary saving, that is, to reduce the amount of income that they put aside to protect themselves against unforeseen contingencies. Reduced precautionary saving in turn implies more spending by households. Thus, the reduction in risk associated with an easing of monetary policy and the resulting reduction in precautionary saving may amplify the short-run impact of policy operating through the traditional channel based on increased asset values. Likewise, reduced risk and volatility may provide an extra kick to capital expenditure in the short run, as firms are more likely to undertake investments in new structures or equipment in a more stable macroeconomic environment."

http://www.federalreserve.gov/boarddocs/speeches/2003/20031002/default.htm

I would argue that Bernanke's transmission mechanism is broken on a several levels.

   Bernanke states that higher stock prices increases the wealth of households. However, in my opinion, with the number of households owning stocks at a twelve year low, the net effect is diluted.

   Secondly, he said that easy monetary policy reduces the amount of economic and financial risk for investors. IMO, the perception of risk is a behavioral issue that cannot be quantified with economic assumptions and models. The weekly percent change in the VIX index shows that even with the Fed's extreme monetary easing, peoples expectations of risk has been less predictable as shown by the increase in amplitude of the attached FRED graph. The expectation of volatilty is greater now than when he theorized the "wealth effect".

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=VIXCLS&scal...     -    Thirdly, he believes that easier monetary policy leads to a reduction in precautionary savings, which will flow into the stock market. I would argue that with the real unemployment and underemployment rate being 18-20%, people are raiding their savings accounts to survive, not buy stocks. The precautionary savings accounts of which he speaks are for a rainy day and it has been storming for years.


 

Fri, 03/01/2013 - 14:46 | 3291090 EscapingProgress
EscapingProgress's picture

Guys, guys, guys, calm down! This is just a little hickup in The Great Moderation.

"The Great Moderation, the substantial decline in macroeconomic volatility over the past twenty years, is a striking economic development. Whether the dominant cause of the Great Moderation is structural change, improved monetary policy, or simply good luck is an important question about which no consensus has yet formed. I have argued today that improved monetary policy has likely made an important contribution not only to the reduced volatility of inflation (which is not particularly controversial) but to the reduced volatility of output as well. Moreover, because a change in the monetary policy regime has pervasive effects, I have suggested that some of the effects of improved monetary policies may have been misidentified as exogenous changes in economic structure or in the distribution of economic shocks. This conclusion on my part makes me optimistic for the future, because I am confident that monetary policymakers will not forget the lessons of the 1970s." - Bernanke, Feb. 20, 2004

Fri, 03/01/2013 - 15:02 | 3291152 derek_vineyard
derek_vineyard's picture

bernanke has pulled off exactly what he targeted....inflate, print, pump up

exit strategy:  retire from fed and let the  next guy take the blame for the crash

Fri, 03/01/2013 - 15:31 | 3291257 McMolotov
McMolotov's picture

Speaking from personal experience, I imagine many of the people on ZH, prior to having an "Ah ha!" moment of some kind, thought exactly like Average Joe.

Those of us who are now awake have a duty, however exhausting it may be (and it is exhausting), to spread the word and wake up as many sleepers as we can before everything falls apart. If we can accomplish that, it will be to our benefit, too, not just theirs.

Fri, 03/01/2013 - 18:27 | 3291866 SamAdams
SamAdams's picture

Definition of Paranoid Schizophrenic - Someone who has recently understood the true implications of the Federal Reserve.  For example, "Holy Shit, It's the FED!"

Fri, 03/01/2013 - 16:29 | 3291453 yogibear
yogibear's picture

Ask them what fractional reserve banking is and the majority haven't got a clue.

Most of the people still think the Federal Reserve bank is part of the government.

Bernanke and the the rest of the Fed banksters know this. It allows the continued transfer of wealth from the 99% to the 1%.

Fri, 03/01/2013 - 14:09 | 3290961 Zer0head
Zer0head's picture

and when finished with that here's an hour of Howard Stern interviewing Alex Jones

http://www.youtube.com/watch?v=iRdI6JJheOk

Fri, 03/01/2013 - 14:39 | 3291081 smlbizman
smlbizman's picture

i listened to that yesterday....i liked how howard treated alex.....lots of respect...

Fri, 03/01/2013 - 16:08 | 3291375 monad
monad's picture

Read Inside The Iron Triangle by Dan Briody

Fri, 03/01/2013 - 14:12 | 3290968 DaveyJones
DaveyJones's picture

I don't know if I can trust your statement

Fri, 03/01/2013 - 14:19 | 3290992 Cdad
Cdad's picture

You got that right, mikla.

How would I answer the question about betting my life savings on Bernanke?  Well, I'm not sure.  One might want to poll the three groups of people about to be obliterated by the MASSIVE SPENDING CUTS in the sequester, namely janitors, school aged children of our soldiers, and babies in incubators.

I'm hearing that janitors are still on the fence about where to invest, representing a mix between high beta/high growth equities in a slow growth macro picture, or checking back with WalMart to see if the shelves have been restocked with Spam and Potato Buds.  I'm not hearing anything from school aged children of soldiers, I think because they are all busy with a spelling test just now.  Most disconcerting, however, are babies in incubators, who apparently have the nurses running down the hallways of hospitals to phone in orders for put options on the S&P.

These things being true, I guess I would have to say "no" to investing my life's savings on the back of Bernanke's economic calls and money printing, and I probably would favor acting with incubator babies.

Boy...investing sure is complicated these days.  

Fri, 03/01/2013 - 14:56 | 3291128 Imminent Crucible
Imminent Crucible's picture

Yep, investing is worse than complicated. It's pretty much impossible. That's because there really aren't any true investments anymore, and the Stan Druckenmillers and Paolo Pellegrinis are signaling this truth by retiring and sending everyone's money back home--"Sorry, I can't consistently make money in these manipulated and intervened markets. Thanks for the confidence you've placed in us, it's been nice knowing you."

Rather than investments, all we have left are hedges and speculations. Rental houses might make you money, if your tenants don't lose their jobs or smash all the windows in a crack tantrum. Gold might hedge the loss of purchasing power, if the Scourge Of Pakistani Wedding Parties doesn't confiscate it. Farmland might produce a yield, if you don't pay $13,000 per acre and then see the price of potash and ammonium nitrate and diesel fuel go through the roof.

This is our new normal, while it lasts.

Fri, 03/01/2013 - 14:18 | 3290994 I think I need ...
I think I need to buy a gun's picture

THE BANKER ON YESTERDAY MORNING WITH JOE KERNAN AND BECKY QUICK ON THE MORNING SHOW ROUNDTABLE CALLED BERNANKE THE GREATEST CENTRAL BANKER OF ALL TIME,,,,,,

THE END OF THIS ERA IS ALMOST OVER MY CHILDREN

Fri, 03/01/2013 - 14:11 | 3290971 westboundnup
westboundnup's picture

I already did  :-(

Fri, 03/01/2013 - 13:58 | 3290918 mdtrader
mdtrader's picture

No, but somebody just told me that every Monday this year has been a down day, so I'm off to sell stocks short. 

Fri, 03/01/2013 - 13:58 | 3290919 scatterbrains
scatterbrains's picture

What's Dr. copper have to say about this bankster induced recovery ? 

http://fiatflaws.blogspot.com/

Fri, 03/01/2013 - 13:59 | 3290924 vote_libertaria...
vote_libertarian_party's picture

But he said their bond buying really isn't impacting the prices much...

Fri, 03/01/2013 - 14:00 | 3290927 q99x2
q99x2's picture

If I could I'd have him shipped to Iran and tried.

Fri, 03/01/2013 - 14:01 | 3290933 Ned Zeppelin
Ned Zeppelin's picture

Wrong question. When you are watching, pretend it's a test, and the question is: Based on what you know today, who do you guess this man works for?

Fri, 03/01/2013 - 14:02 | 3290934 azengrcat
azengrcat's picture

Yes if it was in gold bullion, lead, and bitcoins

Fri, 03/01/2013 - 14:02 | 3290935 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Yup.  I recall when many perceived that Greenspan walked on water.  Not so much anymore.

Fri, 03/01/2013 - 14:10 | 3290966 HD
HD's picture

The fact the media STILL holds this man in high regard makes me sick. Greenspan's hubris is responsible for a level of human misery and loss right up there with history's greatest monsters.

Fri, 03/01/2013 - 14:06 | 3290942 optimator
optimator's picture

I would, if I was on his list of insider friends with offshore trading accounts..

Fri, 03/01/2013 - 14:07 | 3290953 mayhem_korner
mayhem_korner's picture

 

 

I hear Ben's mug is going to don the $1T platinum coin. 

Fri, 03/01/2013 - 16:34 | 3291469 yogibear
yogibear's picture

The other side will have Ben defecating dollar bills.

Fri, 03/01/2013 - 14:10 | 3290963 irie1029
irie1029's picture

NFW!

Fri, 03/01/2013 - 21:46 | 3290964 DaveyJones
DaveyJones's picture

I would not trust my life cereal to this man

I don't even trust the makers of life cereal

I do trust my wife

which is an improvement on the first one 

which only goes to show...

that wives are not like presidents

 

 

Fri, 03/01/2013 - 14:11 | 3290970 pragmatic hobo
pragmatic hobo's picture

"Would You Trust Your Life Savings To This Man?"

If you are a crook, a stupid, or both, then hell yeah!

Fri, 03/01/2013 - 14:12 | 3290972 MarsInScorpio
MarsInScorpio's picture

Why does any of this surprise any regular ZH reader?

 

There is not one person who reads this site regularly who doesn't understand that the bankster and Wall Street leadership is nothing but a criminal syndicate. Brother Ben is a big cog in the machine, but just one of hundreds.

 

You've got all the other mega-Central Banks, the IMF, the BIS, the Treasury Rate Advisory Committee, Goldman Sachs  . . . you know the cast of criminal characters.

 

And then then there are the cameo players like Mike Bloomberg, who said today that the supply of money in America is "infinite."

 

What more do you want to show that QEForever is the plan? (At $85-billion per month - and we are making a big deal out of the $85-billion sequester, why? What a pile of manure for the masses.)

 

So again, I ask, why does any of this surprise the regular ZH reader?

 

You know what they are going to do, so build your life around it.

 

Don't get mad; get rich.

-30-

Fri, 03/01/2013 - 18:08 | 3291745 Radical Marijuana
Radical Marijuana's picture

Indeed, MarsinScorpio, you appear to be right that:

"There is not one person who reads this site regularly who doesn't understand that the bankster and Wall Street leadership is nothing but a criminal syndicate. Brother Ben is a big cog in the machine, but just one of hundreds."

It may well be practical advice to accept the reality of this economic situation, and adapt saying to one's self: "Don't get mad; get rich." However, I believe that advice underestimates the degree to which the real world IS CONTROLLED BY A CRIMINAL SYNDICATE! After facing the astonomically amplified magnitude of that runaway criminality, the actual future is much more likely to become "DON'T GET MAD, GET MURDERED!"

Fri, 03/01/2013 - 14:14 | 3290981 sitenine
sitenine's picture

Another excellent opportunity for a gratuitous FUCK YOU BERNANK! Thank you ZH.

Fri, 03/01/2013 - 14:19 | 3290984 Yen Cross
Yen Cross's picture

  I wouldn't trust that man to pick up my newspaper for me when I go on vacation. 

  Why the hell are these markets bid? Just because sequestration won't throw the country into complete chaos, doesn't mean our politicians aren't FUBAR! Congress couldn't pick out their own socks without a color chart.

Fri, 03/01/2013 - 14:19 | 3290993 MarsInScorpio
MarsInScorpio's picture

The Bloomberg quote about the capacity of the US government to borrow endlessly:

 

 Furthermore, while saying the federal deficit does indeed need to be curtailed, Mr. Bloomberg argued the United States could owe “an infinite amount of money” and there is no specific amount that would cause the country to default.

“We are spending money we don’t have,” Mr. Bloomberg explained. “It’s not like your household. In your household, people are saying, ‘Oh, you can’t spend money you don’t have.’ That is true for your household because nobody is going to lend you an infinite amount of money. When it comes to the United States federal government, people do seem willing to lend us an infinite amount of money. … Our debt is so big and so many people own it that it’s preposterous to think that they would stop selling us more. It’s the old story: If you owe the bank $50,000, you got a problem. If you owe the bank $50 million, they got a problem. And that’s a problem for the lenders. They can’t stop lending us more money.”

 

The complete article is at:

 

http://politicker.com/2013/03/mayor-bloomberg-dont-panic-about-the-sequester/

-30-

Fri, 03/01/2013 - 14:22 | 3291018 DavidC
DavidC's picture

"They can’t stop lending us more money".

Errm, oh yes they can. Buy gold and say that they're going on to a gold standard.

DavidC

Fri, 03/01/2013 - 14:25 | 3291024 DavidC
DavidC's picture

.double post...

Fri, 03/01/2013 - 14:36 | 3291042 HD
HD's picture

"Our debt is so big and so many people own it that it’s preposterous to think that they would stop selling us more. And that’s a problem for the lenders. They can’t stop lending us more money.”

I'm sure it's just me - but is that just jibberish?  Who is "they"? The Fed is the top holder of our debt and if it wasn't buying it who the hell "can't stop lending us more money"?

Fri, 03/01/2013 - 15:04 | 3291163 IridiumRebel
IridiumRebel's picture

"When it comes to the United States federal government, people do seem willing to lend us an infinite amount of money."

 

 

Then why am I paying taxes? You said it yourself ya rich cocksucker.....If there is infinite money, then obviously we do not need to pay taxes. Where are my armed guards and helicopter....THERE IS INFINITE MONEY! I'll take the ribeye mid-rare and some fuckin' Louis Tre' in a warmed snifter.....FUCK YOU.

Fri, 03/01/2013 - 15:58 | 3291336 KCMLO
KCMLO's picture

They need your taxes to perpetuate the illusion that they have the means to ever repay any lender.  If money is fiat then taxes boil down to nothing more than the Federal Government removing cash from the system.  It doesn't actually pay for anything.  It's important that YOU don't have it, because YOU would cause inflation... but not our government or the banks... no, better hand that money over before you ruin us all!

Fri, 03/01/2013 - 15:06 | 3291171 Toolshed
Toolshed's picture

"And that’s a problem for the lenders. They can’t stop lending us more money.”

Just for the sake of.........ummmm, Friday humor, lets accept that statement and the overall argument. Now then, what happens when the "they" he refers to runs out of money to lend us? Then what?

Fri, 03/01/2013 - 17:50 | 3291760 Winston Churchill
Winston Churchill's picture

But they have stopped lending the US money ,and thats why the FedRes is dong

the circle jerk with the PDs, flipping the treasuries to give an appearance of demand.

The music has already stopped,Grab a deckchair on the Titanic and admire the view.

Fri, 03/01/2013 - 14:20 | 3291001 fonzannoon
fonzannoon's picture

this country is so fucked.

Fri, 03/01/2013 - 14:31 | 3291043 El Hosel
El Hosel's picture

Yeah, when do enough people recognize the enemy to make any difference?

Fri, 03/01/2013 - 14:46 | 3291054 falak pema
falak pema's picture

wrong question : do you trust him? Why ? You have no choice right now! 

right question : how do we make him come down and with him his policy?

(I know he's doing a good job to make it happen but it could take time; that's what he hopes!)

The fiat propagation problem he represents is like the meat food question : If the world, aka China/Brics, eats as much meat as first world there won't enuff meat to feed the world. Not enuff meat, not enuff oil and not enuff real stuff to back up shit fiat...

More, more, more desires,  less, less, less real stuff! We have a problem "Houston" on Yangtze or on Potomac! 

But the magical Ben affects works on the market : Inspite of Sequester kick off today, the DJIA is up !  : 14092 !

The great divide between real economy and risk assets goes "grand canyon" !

Fri, 03/01/2013 - 14:35 | 3291063 alphamentalist
alphamentalist's picture

I hope I go to the same FEMA camp as Bernanke so I can rent him out for smokes

Fri, 03/01/2013 - 14:45 | 3291096 f16hoser
f16hoser's picture

Would You Trust Your Life Savings To This Man?
Fuuuuuuuucccccccckkkkkkkk NO! That's why I own physical. Get out of the markets NOW! Take Profits/Cut-losses and get out now. Rant Complete.

Fri, 03/01/2013 - 14:55 | 3291121 dcb
dcb's picture

thank you I am currently posting on some social media why the bernanks testimoney from yesterday deserves to be ignored

Fri, 03/01/2013 - 14:59 | 3291137 IridiumRebel
IridiumRebel's picture

Just fucking centrally plan it all. I mean, they are so good at doing everything. Hell, income is at 20 year lows  so why should I worry? http://money.cnn.com/2013/03/01/news/economy/income-spending-saving/

Fri, 03/01/2013 - 15:11 | 3291189 fiftybagger
Fri, 03/01/2013 - 16:02 | 3291348 Clifhanger
Clifhanger's picture

Coleman Andrews essentially bankrupt his OWN bank in Jackson Hole, WY (Rocky Mountain Bank).  It is hanging by a thread.  He too was going after the lending market, making all loans to all bad credits.  No amount was too large and no rate was too high!  As they say, pigs get fat, hogs get slaughtered.  I wouldn't trust either of these guys!

 

Fri, 03/01/2013 - 16:02 | 3291350 KCMLO
KCMLO's picture

Awww come on you guys, you can trust your money to Ben.  He'll take your $1000 and turn it into $10,000 while giving you the purchasing power of $15 of your original sum.  You get 10x your original investment!!! Woot!

Fri, 03/01/2013 - 16:16 | 3291407 Disenchanted
Disenchanted's picture

I wouldn't trust that little fucker with my trash...

Fri, 03/01/2013 - 16:17 | 3291409 Fix It Again Timmy
Fix It Again Timmy's picture

His company has taken the dollar bill down to a value of less than 5 cents, not exactly a ringing endorsement for competency in regards to The Common Man In The Streets [TCMITS].  The Fed, just like Congress, works for K Street, not TCMITS...

Fri, 03/01/2013 - 16:19 | 3291417 Not My Real Name
Not My Real Name's picture

Only sheep trust bankers with beards.

On second thought ...  Only sheep trust bankers.

 

There, fixed it myself.

 

Fri, 03/01/2013 - 16:43 | 3291509 yogibear
yogibear's picture

Bernanke and the Fed banksters will take your $10,000 and make it $1,000 soon.

Fri, 03/01/2013 - 18:03 | 3291793 Westcoastliberal
Westcoastliberal's picture

-The market drives the economy

-The economy drives the market

Bernanke & Co believe it's the former rather than the latter.  What does that tell us and what is your belief?

Fri, 03/01/2013 - 21:41 | 3292309 Yen Cross
Yen Cross's picture

 West Coast Libertarian ?

Sat, 03/02/2013 - 14:01 | 3293462 caShOnlY
caShOnlY's picture

Your going to have to trust your life savings with that man.  They're going to take it (personal retirements) from you and tell you why it's good for you!!

Do NOT follow this link or you will be banned from the site!