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3 "Hangovers" From The FOMC's 'Taper'

Tyler Durden's picture





 

Submitted by F.F. Wiley of Cyniconomics blog,

Here are a few moments from Wednesday’s FOMC press conference that stuck in our heads, all from Ben Bernanke’s comments in his last Q&A as Fed chair:

 

On financial instability questions

[W]e can’t control [financial instability concerns] perfectly and there may be situations when financial instability has implications for our mandate … which we saw of course in the Great Recession. So it’s a very complex issue. I think it will be many years before central banks have completely worked out exactly how best to deal with financial instability questions.

Has the chairman been this forthright recently about the Fed’s lack of understanding of financial instability? If so, I don’t remember it. He seemed to take a different approach in his last presser versus, say, congressional testimony. Here’s how Janet Yellen dealt with the same topic in her confirmation hearing last month:

No-one wants to live through another financial crisis, and the Federal Reserve is devoting substantial resources and time and effort at monitoring those risks. At this stage, I don’t see risks of financial instability. There is limited evidence of ‘reach for yield’. We don’t see a broad build-up in leverage or the development of risks that I think at this stage poses a risk to financial stability.

This is closer to what we’re used to, which is essentially: “Look, we have a whole bunch of people working on this thing and don’t see any problems. Next?”

On Bernanke’s personal regrets

Whether or not we could have prevented [the global financial crisis] or done more about it, that’s another question. By the time I became chairman, it was already 2006 and house prices were already declining. Most of the mortgages had been made. But obviously it would have been good to have recognized that earlier and tried to take more preventative action.

Do FOMC governors not count? Don’t they have responsibilities? Except for the last seven months of 2005 – when the FOMC was on an autopilot rate hiking program of 0.25% per meeting – Bernanke has participated in every FOMC meeting since August 2002 as either a governor or chairman. He never cast a dissenting vote. As a known deflation hawk and inflation targeting advocate, he was closely associated with the June 2003 rate cut that lowered the fed funds rate to its housing boom trough of 1%. He famously dismissed the possibility of a fall in house prices. Were the bolded sentences really necessary?

More on financial instability

Our general philosophy on financial instability issues is where we can that we try to address it first and foremost by making sure that the banking system and the financial system are as strong as possible.

This is another way of saying that the Fed will never again let another large financial institution fail. There’s nothing new here; just a reminder that all talk of ending bailouts is empty and all Fedspeak about the dangers of moral hazard is lip service.

 


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Sat, 12/21/2013 - 14:20 | Link to Comment TeamDepends
TeamDepends's picture

Does any of this matter if Harvey Organ is correct that the COMEX will more than likely run out of phyzz next week?  Anyone follow Harvey?  Perhaps the stackers will have a very very merry Chistmas!!!

Sat, 12/21/2013 - 14:23 | Link to Comment Obama_4_Dictator
Obama_4_Dictator's picture

When has Harvey Organ ever been right??

Sat, 12/21/2013 - 14:28 | Link to Comment Harlequin001
Harlequin001's picture

Or his brother Huge...

Sat, 12/21/2013 - 14:37 | Link to Comment NoDebt
NoDebt's picture

I will caution you that COMEX has been "a week away from running out of gold" for the last 8 months.

Sat, 12/21/2013 - 15:34 | Link to Comment negative rates
negative rates's picture

The Fed, always wrong but never in doubt!

Sat, 12/21/2013 - 15:57 | Link to Comment new game
new game's picture

and how credible is the CRIMEx? (silence) thought so... nuf said.

Sat, 12/21/2013 - 16:02 | Link to Comment new game
new game's picture

dude - meet ya at(you name the location), cashiers check for 40 oz for 100kI got some gold i'll sell you, if that will shut you the fuck up...

Sat, 12/21/2013 - 16:26 | Link to Comment negative rates
negative rates's picture

I've been waitin for ya to drop it off for a decade now, where the fuck have you been? Don't answer, we know exactly the hell where you head is at and what your intentions are and have been. Always wrong at the moment, but never in doubt about the denial of it all! 

Sat, 12/21/2013 - 20:36 | Link to Comment philipat
philipat's picture

"I will caution you that COMEX has been "a week away from running out of gold" for the last 8 months".

Exactly. For December alon it was siad there was only enough Gold to deliver 3K contracts. As of now about 4.7K contracts have been delivered and, as far as I am aware, the Comex is still operating just fine. People should stop trying to make any sense of data which, well, doesn't make any sense.

Perhaps that is why, earlier this year, Comex itself put a disclaimer in place to the effect that they accept no responsibility for any of the data they release.

Conversely, that is somewhat Orwellian?

Sat, 12/21/2013 - 14:40 | Link to Comment jballz
jballz's picture

Oh the desperate cry of an underwater goldbug.

Any little shred of a dream to hold onto...

Then they drown in their delusions.

They're outta pyzzz!!!!

Lol.

Funny but sad.

Sat, 12/21/2013 - 14:48 | Link to Comment TeamDepends
TeamDepends's picture

If ignorance is bliss, you must be very happy!

Sat, 12/21/2013 - 15:03 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

How is this gold talk relevant to the article?

Sat, 12/21/2013 - 14:48 | Link to Comment The Wisp
The Wisp's picture

Underwater as in Boating accident..?

  or Underwater as in I would like to Hold you Under ?

Sat, 12/21/2013 - 15:15 | Link to Comment ZH Snob
ZH Snob's picture

the holders of these debt notes called money appear to have  stockholm syndrome about their value.  we are so used to earning debt, selling debt and buying debt that we've convinced ourselves all this debt is serving us and is worth defending.  but this is the nature of the ponzi scheme that has been perpertrated on the world the past 100 years.  any good con relies on the greed of the person being conned, and the federal reserve's scam of fiat currency is the greatest con ever created.  so great, in fact, that people have no idea how valueless it really is.  God help the last ones to realize this.

Sat, 12/21/2013 - 17:42 | Link to Comment lasvegaspersona
lasvegaspersona's picture

The Comex is not the proper indicator, it has peanuts and barely counts. GLD still has 814 tons and that amount is available to the system to satisfy the need for physical gold. When that runs out however I do not see another source. There is of course the daily flow from mining and scrap but the excess demand must be met somehow, or the entire gold derivative market becomes illegitimate. When gold derivatives fail I'm betting the rest of the derivative market has only milliseconds to survive.

Sat, 12/21/2013 - 14:20 | Link to Comment 666
666's picture

Either they're all a bunch of liars or they suffer from Greenspanitis. Or both.

Sat, 12/21/2013 - 14:23 | Link to Comment buzzsaw99
buzzsaw99's picture

i feel so CONfident after reading that

Sat, 12/21/2013 - 14:26 | Link to Comment holdbuysell
holdbuysell's picture

The owners of the Fed will never allow said Fed to let them fail. It's just that simple.

Sat, 12/21/2013 - 14:39 | Link to Comment NoDebt
NoDebt's picture

Agreed.  They take care of their own.  

If that happens to help others along the way, it's by luck.  If it doesn't.... tough titties.

Sat, 12/21/2013 - 14:34 | Link to Comment Obama_4_Dictator
Obama_4_Dictator's picture

Guys! Did you hear!!!! Maguire - Shocking Amount Of Physical Gold Bought In 7 Days!! This is truely shocking news!

Sat, 12/21/2013 - 14:48 | Link to Comment Al Huxley
Al Huxley's picture

Can you believe it!  Surely THIS will finally bring about the collapse of the LBMA and Comex!  LOL...

Sat, 12/21/2013 - 18:01 | Link to Comment TeamDepends
TeamDepends's picture

Okay brothers, we can take it.  But if we are right, prepare yourselves for relentless abuse.

Sat, 12/21/2013 - 20:32 | Link to Comment Obama_4_Dictator
Obama_4_Dictator's picture

I am on your side TeamDepends - I have to self depricate to make it through these trying times.....I have been and continue to be long things of real value....

Sat, 12/21/2013 - 14:40 | Link to Comment raki_d
raki_d's picture

We made a big deal of recession. Nothing happened. Shorts got burnt. Fed won bigtime. If we are trying to make a big deal of this taper thing again, same shit happens, again! Fed wins everytime. Bulls win. Banks win. Bears better stay out. Dont ever short this market . Never again. Never ever fight the fed! Its 1 way. Yea i believe in 36k dow- yes even after taper!

Sat, 12/21/2013 - 15:10 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

You must be young.

The Fed existed in 2001 and equities fell not quite 50% from 2000 to 2002.  The Fed existed in 2008 for a fall of 60+%.

So now you believe the Fed will never let another big drop happen.

Why?

What could the Fed do about $450/barrel oil?  What could the Fed do about a CDS explosion from Japanese bank exposure?  What could the Fed do about a tanker war between Japan and China?

Presuming it will never happen again is silly.

Sat, 12/21/2013 - 16:11 | Link to Comment HardlyZero
HardlyZero's picture

I am not invested in the stocks, except for metals/miners or phys metals, and am willing to learn (at any age).

Want to know about next time to short the market.  When is key.

When ? (not why ?)

Sat, 12/21/2013 - 18:57 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Why short the market?  Why buy the market?

It's a shrinking entity of share buybacks and HFT manipulation.

Don't play in that stadium.  For either team.

I'm not a gold believer but I don't care about it at all, other than to wish there was less talk about it on articles not pointed at it.  But if you think that's a place to be (rather than equities) good for you.

Farmland is hard work, so hire a farmer for it.  Don't measure its performance in dollars, because the point of owning it is to be insulated from them.  Measure owning farms in joules or calories. 

Measure owning anything else in exactly the same way.

 

Sat, 12/21/2013 - 18:16 | Link to Comment moneybots
moneybots's picture

"We made a big deal of recession. Nothing happened."

 

47 million people on food stamps.  Chronically high unemployment, resulting in jump in disability claims.  100 million people not employed.  49% of population receiving some form of government benefit.

Sat, 12/21/2013 - 19:54 | Link to Comment raki_d
raki_d's picture

All central banks got no other option but to print print print. Deflation is never gonna get hold. Steady reflation till 10 more years. Taper my ass. Any hint of losing control- brakes on taper, hold it there till every one gets tired. Todays bubble will be tomorrows normal. Buy houses & stock market- thats it- buy buy buy. Go long - any risk gets rewarded as long as its not short. Juz dont go against banks! Gold juz another metal. Ron paul? Juz another gold bug even though a man with good ideals but flawed monetary logic. Free handouts to every one. Gone those days of market meltdowns. Gone those days of market fundamentals. Fed is here to stay- thats the 1 and only fundamental rule!

Sat, 12/21/2013 - 14:46 | Link to Comment The Wisp
The Wisp's picture

These people who record conversations and take notes must be shot,  why just yesterday i remember i said I loved them dearly

 

Sat, 12/21/2013 - 15:01 | Link to Comment ebworthen
ebworthen's picture

"...just a reminder that all talk of ending bailouts is empty and all Fedspeak about the dangers of moral hazard is lip service."

 

BINGO.

Wish I had a personal FED that would bail me out every time I maxed out the credit card on a bender in Vegas.

Sat, 12/21/2013 - 15:02 | Link to Comment Dadburnitpa
Dadburnitpa's picture

I'm struggling to see what this article brought us that was new and/ or different.

Sat, 12/21/2013 - 15:13 | Link to Comment NIHILIST CIPHER
NIHILIST CIPHER's picture

I'm with Hoss Cartwright above..."where's the beef" in this article? The Fed is tap dancing until they slip out of town when the chaos starts.

Sat, 12/21/2013 - 15:25 | Link to Comment Mike in GA
Mike in GA's picture

Jim Rogers for Fed Chmn.  No more TBTF enterprises.  If you exist, you can succeed OR fail.  Don't privatize the profit and socialize the loss any more.  Banks are gonna screw us all out of our own country. 

Sat, 12/21/2013 - 16:04 | Link to Comment deerhunter
deerhunter's picture

Just lip service seems to have taken on a whole new meaning with our neighbors to the great white north of Canada,  Merry Christmas to all.  

Sat, 12/21/2013 - 17:56 | Link to Comment moneybots
moneybots's picture

" So it’s a very complex issue. I think it will be many years before central banks have completely worked out exactly how best to deal with financial instability questions. "

 

Never, would be the correct answer.

The FED  creates financial instability.  Greenspan wrote that 1920's FED policy lead into the Great Depression.  Instead of avoiding that policy, Greenspan doubled down on it.

Bernanke said he would drop money from helicopters, if necessary.

Yellen says savers wear many hats, so it is acceptable to crush them.

What a bunch of clowns.

Sat, 12/21/2013 - 18:05 | Link to Comment moneybots
moneybots's picture

"Whether or not we could have prevented [the global financial crisis] or done more about it, that’s another question."

 

Math is rather simple.  100% of bubbles burst and deflate.  The bigger the boom, the bigger the bust.  What of that does Bernanke pretend not to understand?

Sat, 12/21/2013 - 18:19 | Link to Comment moneybots
moneybots's picture

"No-one wants to live through another financial crisis, and the Federal Reserve is devoting substantial resources and time and effort at monitoring those risks. At this stage, I don’t see risks of financial instability."

 

At This Stage...

 

At this stage... Greenspan said the housing market was just frothy.  He later admitted "we knew it was a bubble all along."

 

When does Yellen's next, I didn't see it coming, stage, arrive?

Sat, 12/21/2013 - 18:28 | Link to Comment Element
Element's picture

Don't believe a damn word of it. The FED is hiding new trillions in debt agreements just like they did right after Lehman's collapsed. If the economy was recovering there would be zero QE, but instead they are busy trying to pretend that QE is a valid part of a functioning healthy market.

 

Wanna buy a bridge?

Sat, 12/21/2013 - 18:36 | Link to Comment moneybots
moneybots's picture

"He famously dismissed the possibility of a fall in house prices. Were the bolded sentences really necessary?"

 

Yes, in order to create a false narrative.  They will never hold themselves accountable.

 

Sat, 12/21/2013 - 21:37 | Link to Comment Crusader79
Crusader79's picture

Anyone who read Zero Hedge in 2013 lost their shirt. This doom, gloom and conspiracy stuff has gotten very old.

Sat, 12/21/2013 - 22:51 | Link to Comment Carpenter1
Carpenter1's picture

Its old until its right. ZH does not tell you what to do. 

Sat, 12/21/2013 - 22:55 | Link to Comment glenlloyd
glenlloyd's picture

The Fed is very good at creating the conditions that justify their existence

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