This page has been archived and commenting is disabled.

No Laughing Matter: Fed Laughed As Bubble Burst

Tyler Durden's picture




 

Whether it’s their remarkable ability to justify the creation of asset bubbles by claiming they are “smoothing out the business cycle” or something more subtle, like getting the day of the week wrong on an official conference call transcript, it’s hard not to chuckle at the Fed. 

At the end of the day though, it’s important to remember that even as they transform modern markets into laboratories and market participants into guinea pigs in the name of figuring out whether high-minded economic theory works when applied to the real world, central bankers are people too, and it’s nice to know that every so often, they get a chance to have a little fun.  

When we parsed the newly released 2009 Fed transcripts yesterday we were too busy looking to uncover things like a previously unreported plan to create a bad bank to look for signs of central planner levity, but fortunately, the research department at Bloomberg was looking for the important stuff. Thanks to their efforts we have the official Fed Chuckle Count for 2009 which, based on the graph below came in at 39.7 — there was oddly no word on what economists polled by Bloomberg were expecting. 

Breaking this down, it’s important to note that recorded incidences of laughter at FOMC meetings hit their highest level on record in July 2007, which coincides exactly with the moment when the housing bubble finally burst (remember: they weren’t laughing at you, they were laughing with you). Here’s a quick rundown of exactly what was going on at “peak chuckle”: 

On July 10, around four months after it warned on the market initially, Moody’s downgraded 399 bonds backed by subprime mortgages which together totaled some $5.2 billion. Meanwhile, S&P suggested it was close to cutting ratings on more than $12 billion in mortgage-backed securities due to declining home prices and rising default rates. On July 12, Fitch Ratings placed 19 structured collateralized debt obligations on Ratings Watch Negative due to a significant deterioration in the underlying portfolios of residential mortgage-backed securities. That same day, S&P cut its ratings on 498 subprime mortgage related bonds worth some $6.39 billion.

 What followed for the Fed was a dramatic decline in spontaneous outbursts of laughter in the halls of the Eccles Building which lasted until March of 2009 the very month that the Fed abandoned the bank aggregator (bad bank) plan and decided instead to launch QE. You cannot make this stuff up. 

Here are some highlights from 2009 via Bloomberg: 

January — Cleveland Fed President Sandra Pianalto, on the general public's desire to get policy in order: "Our discussion yesterday about what the effect is of a $250 billion purchase of MBS or a $250 billion purchase of longer-term Treasury securities demonstrates that we just do not have certainty around the effects of those actions. Before this crisis began, the public had a fairly good grasp of our policy rule. Now they are trying to find the new rule, and I hope they do not find one before we figure out exactly what it is."


August — Richmond Fed President Jeffrey Lacker, on the FOMC's own confusion: "President Plosser and I discussed output gaps with Mr. Kiley at the June meeting. That conversation may have seemed a bit confusing. It was [confusing] when I read the transcript."


April — Chief Economist David Stockton, on his early introduction to green shoots: "While in high school, I had a brief job with a lawn service. One day while I was riding my tractor, a woman came running out her back door gesticulating wildly. It turns out that the patch of unruly weeds I had just mowed down were, in fact, the green shoots of her emerging asparagus garden. Two weeks later, I was working in a local slaughterhouse. That life lesson taught me that an inability to distinguish the green shoots from the weeds can have unpleasant consequences for one’s career path."

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 03/05/2015 - 19:34 | 5859326 Lumberjack
Lumberjack's picture

Looks like he finally got a blow job.

Thu, 03/05/2015 - 19:43 | 5859358 Manthong
Manthong's picture

Well, they actually did turn the entire U.S. and global economies into a big joke.

Thu, 03/05/2015 - 19:45 | 5859363 whotookmyalias
whotookmyalias's picture

I don't get it.....

Thu, 03/05/2015 - 19:59 | 5859398 negative rates
negative rates's picture

There's no laughter in heaven.

Mark Twain.

Thu, 03/05/2015 - 20:04 | 5859417 NidStyles
NidStyles's picture

Don't worry, the laughter will end once the killing starts.

Thu, 03/05/2015 - 20:05 | 5859422 Dizzy Malscience
Dizzy Malscience's picture

“I don't get it.....”

Look, they say they are targeting GDP inflation when all along they are creating ASSET inflation for the 1 percent and DEFLATING the economy the rest of the suckers live in.. it’s hilarious how everybody has fallen for the ruse.

Soon, it will all go bust and the 1 percent will pick up the pieces for pennies on the dollar.

What a hoot!

I don’t see how they can contain themselves.

Thu, 03/05/2015 - 20:15 | 5859448 LawsofPhysics
LawsofPhysics's picture

Yes, that is the plan, but in the coming global weimar I am willing to bet that global supply lines break first.  Where they gonna run too?  Mars?

Thu, 03/05/2015 - 20:27 | 5859476 SMG
SMG's picture

Shows how concerned they are about the real pain and suffering they caused the "little people".  Hang 'em high!

Thu, 03/05/2015 - 22:42 | 5859515 NidStyles
NidStyles's picture

Why would you want to run, it's the greatest opportunity of all time to come out on top. They have been buying gold and silver as well.

Thu, 03/05/2015 - 20:20 | 5859464 NotApplicable
NotApplicable's picture

<=  Dick jokes

<=  "Let them eat cake!" jokes

Thu, 03/05/2015 - 21:33 | 5859663 Manthong
Manthong's picture

<= “Let them eat dick” (bankster) jokes.

<= Cake jokes

:-)


 

Thu, 03/05/2015 - 20:40 | 5859509 Miffed Microbio...
Miffed Microbiologist's picture

It could be hysterical laughter. I was trying to help a man who was severely injured after being thrown from a horse. This woman was laughing like a hyena driving me insane. She thankfully stopped and I turned to look. Some guy knocked her out cold on the ground.

Miffed

Thu, 03/05/2015 - 20:53 | 5859537 Thirst Mutilator
Thirst Mutilator's picture

Insane how those types of things need to happen now & then...

 

U never know where & when they may occur!

Thu, 03/05/2015 - 21:31 | 5859653 Thirtyseven
Thirtyseven's picture

Mostly true for the goyim killing and being killed.

Thu, 03/05/2015 - 19:44 | 5859360 Cognitive Dissonance
Cognitive Dissonance's picture

It will be interesting to see who laughs standing in front of the gallows.

Thu, 03/05/2015 - 20:24 | 5859472 Winston Churchill
Winston Churchill's picture

Spring is nearly here.

Have them dangling from the DC cherry trees, plenty of room for all the bankers,

politicos, and presstitues.The blossoms will cover the smell of the carrion as a bonus.

Thu, 03/05/2015 - 20:44 | 5859518 TheFourthStooge-ing
TheFourthStooge-ing's picture

I'm sure that at least a few of us in the audience will be laughing.

Thu, 03/05/2015 - 22:48 | 5859894 angel_of_joy
angel_of_joy's picture

... Looks like he finally got a blow job.

Yeah, but from Janet !

Thu, 03/05/2015 - 19:35 | 5859329 Thirst Mutilator
Thirst Mutilator's picture

If you're GOY... Consider yourself 'laughed at'...

Thu, 03/05/2015 - 20:10 | 5859437 NidStyles
NidStyles's picture

You shouldn't worry yourself. You're talking about people that can't do anything outside of lying to others to get what they want.

Thu, 03/05/2015 - 19:38 | 5859339 Wild E Coyote
Wild E Coyote's picture

You know, in all fairness to the money masters, they could be seeking to cool their nerves during those terrible times, with jokes.

Thu, 03/05/2015 - 19:39 | 5859347 LawsofPhysics
LawsofPhysics's picture

Of course they did.  More assets for them at firesale prices...

Retribution will be paid motherfuckers, it always is.

Thu, 03/05/2015 - 19:56 | 5859386 toys for tits
toys for tits's picture

Then they'll be laughing out of the other sides of their faces.

Thu, 03/05/2015 - 19:48 | 5859365 THE DORK OF CORK
THE DORK OF CORK's picture

The entire post Tudor artifice was one sick joke

The rot started again with Henry Viii 1545 usury law......

 

 

Thu, 03/05/2015 - 19:47 | 5859366 NoDebt
NoDebt's picture

I wouldn't publish that stat, if I was them.  There's just nothing good going to come from it.

Thu, 03/05/2015 - 19:59 | 5859395 PirateOfBaltimore
PirateOfBaltimore's picture

Long nailguns.

Thu, 03/05/2015 - 20:03 | 5859416 LawsofPhysics
LawsofPhysics's picture

Honestly I cannot make sense of Tim Geihtner's book to this day.  Pretty damning stuff.  It's pretty much a exhibit A for the guillotines.

something wicked this way comes.

Thu, 03/05/2015 - 19:52 | 5859374 SheepDog-One
SheepDog-One's picture

Well of course, 'markets going down' was planned by the Fed they needed the fear and panic to pull off their big heist of the public.

Thu, 03/05/2015 - 19:55 | 5859382 The Proletariat
The Proletariat's picture

That laugh count has to be off the charts in a hockeystick fashion from 2010-2014

Thu, 03/05/2015 - 20:10 | 5859409 Monetas
Monetas's picture

Becky be nimble .... Becky be quick .... Becky jumped on my candlestick .... chart !

Thu, 03/05/2015 - 20:03 | 5859413 THE DORK OF CORK
THE DORK OF CORK's picture

The social creditors have been proven 100 % correct.

Nothing comes close to their Observations of past current and future economic dark comedy sketches 

 

 

Thu, 03/05/2015 - 20:33 | 5859418 iofera
iofera's picture

Zeroes can thank Bernanke for the gold bull's epic run. Without him we'd still be looking at a three-figure gold price. And given the choice between our current monetary situation and someone who held the reins a bit tighter, Zeroes would pick Big Ben every time.

So, Zeroes, stop whining about Ben and Janet - y'all love 'em! 

It sounds unappreciative when you want both what they can give you - a higher gold price - and the right to bitch, moan, whine and carp (okay, y'all also like to occasionally threaten them with bodily harm).

Thu, 03/05/2015 - 21:45 | 5859684 WhackoWarner
WhackoWarner's picture

You have been here 4 weeks kid.  Try again.  Too schmoozy IMHO.  Pretending to have some relationship with current opinion? The interjection of the "As ZH'ers WE  etc."    Wrong tactic. Stands out like the wannabe girls that nobody wants to dance with at the prom.

 

Back to the drawing board kiddo. 

 

You are on the wrong troll path.  If you want the bonus you have to up your game.  And now you have to figure a way to cover your butt  for this "above" comment.  Or change your ID.

 

But YOU DO GET POINTS FROM THE SPELLING POLICE.

Thu, 03/05/2015 - 22:21 | 5859804 iofera
iofera's picture

Sorry Bob, I've been here on and off for years.

You need a retort based on ideas, not ad hominem attacks. :-)

Thu, 03/05/2015 - 22:49 | 5859903 angel_of_joy
angel_of_joy's picture

No potato for ya today ! That'll teach you...

Fri, 03/06/2015 - 05:39 | 5860531 Tall Tom
Tall Tom's picture

Alright Amerikan Patriot.

 

Do you wonder what idiom of your writing gave you away?

Thu, 03/05/2015 - 20:05 | 5859421 Squid Viscous
Squid Viscous's picture

Maybe Ben shalom has a future in stand-up, after his fed policies have been revealed to be a joke and no more $250k speaking gigs

Thu, 03/05/2015 - 20:09 | 5859436 THE DORK OF CORK
THE DORK OF CORK's picture

Holding the reins a bit tighter........

 

I love that.

But you are the fucking horse.

It's generally accepted that these guys must have the monopoly of credit.

They own the commons and all the little busy rabbits that run on it.

 

 

Fri, 03/06/2015 - 04:39 | 5860494 Benjamin123
Benjamin123's picture

Actually anyone can issue credit up to a point just by accepting IOUs as payment.

Thu, 03/05/2015 - 20:10 | 5859438 bowel collapse
bowel collapse's picture

and every time I push one out I imagine some fucking banker with his little adviser fluffy floaty following him down the S Bend!! exciting times...oxygen fucking thief

Thu, 03/05/2015 - 20:12 | 5859443 Monetas
Monetas's picture

Fuck Bernanke .... let's talk about Becky !

Thu, 03/05/2015 - 22:00 | 5859744 f16hoser
f16hoser's picture

Agreed. Who's Becky?

Thu, 03/05/2015 - 23:12 | 5859967 TheFourthStooge-ing
TheFourthStooge-ing's picture

She's the one that changes Warren Buffett's diapers.

Thu, 03/05/2015 - 20:25 | 5859474 Hannibal
Hannibal's picture

The Great Reset will take place only when ALL economies/countries are completely destroyed.!

Thu, 03/05/2015 - 22:04 | 5859759 f16hoser
f16hoser's picture

Agreed. You left out that all Central Banksters and their Minions are Hung too.

Thu, 03/05/2015 - 22:07 | 5859688 TomGa
TomGa's picture

.

Thu, 03/05/2015 - 21:53 | 5859726 f16hoser
f16hoser's picture

Bernanke would look really good in a Columbian Necktie.

Thu, 03/05/2015 - 23:36 | 5860035 iofera
iofera's picture

Are you threatening the former FOMC chair, Bob?

Fri, 03/06/2015 - 00:46 | 5860237 Which is worse ...
Which is worse - bankers or terrorists's picture

You make that sound so negative when you say it that way. 

Fri, 03/06/2015 - 05:45 | 5860532 Tall Tom
Tall Tom's picture

And just what are you going to do about it, bitch?

 

Personally Bernanke needs decapitation for his crimes..

 

Your deceitfulness is tiresome.

 

And...You know where I live. I am generally home.

 

Looking forward to meeting you and your ilk.

Fri, 03/06/2015 - 04:32 | 5860485 Benjamin123
Benjamin123's picture

I have finally accepted that gringos misspelling Colombia as Columbia is just a fact of life.

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