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NBER's Martin Feldstein Bashes The Deplorable US Economy, Says Bernanke Has Engineered Another Stock Bubble

Tyler Durden's picture





 

That the market is merely yet another transitory sugar high bubble creation of the Chairsatan and his central planning colleagues in various marble buildings around the world is no surprising to anyone, at least not anyone who maintains a pretense of objectivity, is not desperate to sell a weekly newsletter, and has a frontal lobe. What however is not only surprising, but outright shocking, is that such embedded members of the aristocratic status quo elite as Martin Feldstein - a professor of economics at that bastion of Keynesianism Harvard as well as president emeritus of the NBER - the folks who tell us when recessions start and end, are starting to get it. To wit: "The economy is slow and weak. We are not doing very well. The economy is just coming along at a snail's pace. The first quarter numbers that we just got last week were not very good at all" and warns "if we are going to see that jump in taxes, that is going to push the economy next year into a serious recession" but the punchline: "The stock market is, I think, responding to the Fed. I think the real danger is that this is a bubble in the stock market created by low long-term interest rates that the Fed has engineered....The danger is, like all bubbles, they burst at some point" Well, uh... if it is now common knowledge that everything is manipulated, and that the economy is collapsing, and would be outright imploding if it weren't for the Fed's goosing of the stock market, does that mean it is time for Zero Hedge to hang up our hat?

Feldstein on Bloomberg TV with this stunning confession:

Full transcript:

Feldstein on the U.S. economy:

"We are not doing very well. The economy is just coming along at a snail's pace. The first quarter numbers that we just got last week were not very good at all. The GDP number was 2.2%. That was a disappointment, but you know, it was all automobiles. 1.6 out of the 2.2 was motor vehicle production. So, people were catching up after not being able to buy them the year before. So, this is a very weak economy. The payroll employment numbers, we are going to get some new ones in April. Let's hope they are better than March where it fell by half. The stock market is, I think, responding to the Fed. I think the real danger is that this is a bubble in the stock market created by low long-term interest rates that the Fed has engineered."

On the danger of a bubble in the stock market:

"The danger is, like all bubbles, they burst at some point. Remember, Ben Bernanke told us in the summer of 2010 that he was going to do QE2 and then ultimately they did Operation Twist. The purpose of that was to make long-term bonds less attractive so that investors would buy into the stock market. That would raise wealth and higher wealth would lead to more consumption. It helped in the fourth quarter of 2010 and maybe that is what is helping to drive consumption during the first quarter of this year. But the danger is you get a market that is not with the reality of what is happening in the economy, which is, as I said a moment ago, is really not very good at all."

On whether another recession is on the horizon:

"Anything I say is telling my views and nothing to do with the NBR's business cycle dating committee. A recession is still a low probability, but there are a number of negatives out there. The economy is slow and weak. Then you add to that fact that Europe is sliding into recession. That is going to hurt our exports. You add to that the risk that the end of this year in there is a very large fiscal cliff, that is $5 trillion tax increase next year if new legislation is not passed. Nobody wants to see that happen, but it is a dangerous game of chicken that could happen after the election. So, I think that is something anybody who is thinking about investing, whether it is in the stock market or a business thinking about investing, has to ask, if that happens, if we are going to see that jump in taxes, that is going to push the economy next year into a serious recession."

 


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Wed, 05/02/2012 - 11:53 | Link to Comment DaMule
DaMule's picture

Talk about a bubble, check out the homebuilders today. They are all exploding thru their 52 week highs?

Wed, 05/02/2012 - 12:25 | Link to Comment gangland
gangland's picture

40% of new mortgages are below 680 FICO....with 90-95% LTVs

Wed, 05/02/2012 - 12:38 | Link to Comment X86BSD
X86BSD's picture

What? Is that true? I thought credit was TIGHT and you had to have 800 to get a loan from a bank these days? I thought they really tightened up the credit loaning process. Thats what my bank told me anyway about a year ago. 40% below 680?

Wed, 05/02/2012 - 12:54 | Link to Comment EscapeKey
EscapeKey's picture

Don't be silly. You can't get a loan if you're creditworthy. Only if you're almost guaranteed to go broke immediately will the banks cut you a cheque, which they in turn will cash in on the taxpayers expense.

Wed, 05/02/2012 - 13:07 | Link to Comment carbonmutant
carbonmutant's picture

Having English as your secondary language helps too...

Wed, 05/02/2012 - 13:55 | Link to Comment surfsup
surfsup's picture

Bubble yes, due to what?   Interest.   

Interest does what?  Depletes over all circulation and central bankers respond with what?

 

ARTIFICIAL SUSTENTION 

 

http://www.perfecteconomy.com/pg-artificial-sustention.html

Wed, 05/02/2012 - 13:57 | Link to Comment surfsup
surfsup's picture

Keep your eyes on the real game not the side show antics and deflections...  

 

un earned gains will eventually come off the back of the population...  

Wed, 05/02/2012 - 17:01 | Link to Comment rumblefish
rumblefish's picture

Hardly.... A friend of my wife had a foreclosure in 08' a short sale on their primary in ''09 and did a bk.in '10. They just got a shiny new mortgage on a new house for$380,000 with little down. They are financial fucktards. I wouldn't lend them a nickel.

Also, my bank just roled out new mort program for low income borrowers with no Pmi, $500 or $1% down ( whichever is less), 640 credit score minimum and DTI of 43%.

The only question now is when will the housing blow up 2.0 begin?

Wed, 05/02/2012 - 12:40 | Link to Comment Oh regional Indian
Oh regional Indian's picture

My take, "truthiness" has now entered the inner circle. What would be blasphemy from a whisle-blowers mouth 5 years ag is now commonly spoken in very elite circles. Bill gross to wit. All as per script.

When Charredsatan Kickes his own ass, you know it's time.

As the FED approaches it's centenary......all done above ground and ready to implode?

ori

Wed, 05/02/2012 - 13:09 | Link to Comment blindfaith
blindfaith's picture

 

 

If no one is listening, does the 'speak' exist?

Now, this is a killer "A recession is still a low probability".  Mind you HE IS TALKING ABOUT WASHINGTON, D.C., the recession proof city.  Another clown that has no idea what is going on beyond the beltway, and how the recession never ended.

Wed, 05/02/2012 - 12:41 | Link to Comment ejmoosa
ejmoosa's picture

Complete a mere 8 houses per day and you are the biggest builder in the US.  

How low can we lower the bar?

 

Wed, 05/02/2012 - 11:54 | Link to Comment EscapeKey
EscapeKey's picture

Here's the front runner for the Federal Reserve chairman position when Bernanke steps down.

http://www.youtube.com/watch?v=q_d0ff-18E8

 

Wed, 05/02/2012 - 12:01 | Link to Comment Jason T
Jason T's picture

I remember him from the movie .. with Matt Damon narrating .. 

Wed, 05/02/2012 - 12:14 | Link to Comment I am a Man I am...
I am a Man I am Forty's picture

Inside Job

Wed, 05/02/2012 - 12:04 | Link to Comment Lost Wages
Lost Wages's picture

Finally someone with some talent to see us through this crisis.

Wed, 05/02/2012 - 12:12 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I loved the smoke filled soap bubbles.

Double the propaganda, double the fiat fun.

Wed, 05/02/2012 - 12:28 | Link to Comment The Limerick King
The Limerick King's picture

 

 

The recovery's simply a joke

Some Kleptocrat bubbles and smoke

They blow smokey bubbles

To postpone the troubles

New fiat will soon make us choke

 

Wed, 05/02/2012 - 12:16 | Link to Comment azzhatter
azzhatter's picture

Is that a young Timmy Geithner?

Wed, 05/02/2012 - 13:05 | Link to Comment blindfaith
blindfaith's picture

 

 

Lets NOT forget that the current administration was all ready to have a certain fellow that was ex-govorner of NJ, a lead candidate for the high chair at the squid's temple, and holly endorsed by the VP to be the Sec of the Treasury.  Now, Tim doesn't look so bad does he?

You are checkmated, never forget that.

Wed, 05/02/2012 - 11:59 | Link to Comment buzzsaw99
buzzsaw99's picture

why so serious it's only fedres clownbux.

Wed, 05/02/2012 - 12:02 | Link to Comment Zero Govt
Zero Govt's picture

the clowns (ivy league academics) have taken over the asylum

Wed, 05/02/2012 - 12:01 | Link to Comment achmachat
achmachat's picture

impossibrü!

Wed, 05/02/2012 - 12:01 | Link to Comment vintageyz
vintageyz's picture

No need to hang up your hat.  There are still plenty of douche bags to sniff out.

Wed, 05/02/2012 - 12:08 | Link to Comment cossack55
cossack55's picture

No shit.  WTF with the hat hanging crap.  ZH is SEC for real people. Oh, and CFTC, FDA, STATE, USDA, EPA, NRC, etc..etc..etc.

Wed, 05/02/2012 - 12:27 | Link to Comment gangland
gangland's picture

just lost zh chat

 

temp chat at ##zh

http://webchat.freenode.net/

edit: zh chat is back

Wed, 05/02/2012 - 12:06 | Link to Comment DormRoom
DormRoom's picture

Another transmission mechanism failure.  Financial markets aren't reflecting the underlying economic trend.  When it busts those still in the markets will lose big, like in 2008.

Wed, 05/02/2012 - 13:04 | Link to Comment Tramp Stamper
Tramp Stamper's picture

TZA

Wed, 05/02/2012 - 12:10 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"NBER's Martin Feldstein Bashes The Deplorable US Economy, Says Bernanke Has Engineered Another Stock Bubble"

Heretic! Off with his head.

Hey, it worked in the Middle Ages (through-out history in fact) so why not with the present day police state?

Wed, 05/02/2012 - 13:09 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Heretic! Off with his head.

Hey, it worked in the Middle Ages (through-out history in fact) so why not with the present day police state?

He'd need to fill out a form 27b-6 first, in triplicate, and file it with the proper ministry, along with the administrative fee.

We can't have people losing their heads all willy-nilly. Proper procedure has to be followed.

 

Wed, 05/02/2012 - 13:12 | Link to Comment blindfaith
blindfaith's picture

 

 

You left out the all important, then wait in line.

Wed, 05/02/2012 - 14:23 | Link to Comment sgt_doom
sgt_doom's picture

Marty Feldstein? ?

The legendary Martin Feldstein from Harvard?

A director at HCA when they were hit with the largest out-of-court settlement penalty for Medicare/Medicaid fraud?

A director at Eli Lilly when they were hit with the largest criminal penalty in US history for fraudulent marketing of a drug?

A director at AIG Financial Products group when they did the largest insurance swindle in US history (selling $460 billion worth of credit default swaps with no capital to back it up)?

And $1 billion of those TARP bailout funds when to AIG to John Paulson, and Paulson colluded with Goldman Sachs to create a faulty CDO which he profited from?

Oooooohhhh...that Martin Feldstein?

Yup, oodles and oodles of credibility with that crook and fraudster.

Thu, 05/03/2012 - 01:30 | Link to Comment RockyRacoon
RockyRacoon's picture

So, you're saying that this messenger needs shooting?   Could be.

Wed, 05/02/2012 - 12:09 | Link to Comment barliman
barliman's picture

 

Keep your hat(s) on!

What time is it?

Time to make sure you've got plenty of stout rope.

barliman

Wed, 05/02/2012 - 12:08 | Link to Comment Flounder
Flounder's picture

Nah, pls keep your hat (helmet) on and hang around long enough to tell us where the shit lands as things blow up.  That is as long as you can until your plug is pulled.

Wed, 05/02/2012 - 13:46 | Link to Comment Bizaro World
Bizaro World's picture

+100   SOPA, CISPA, all other "internet safeguarding, cyber-security, etc." legislation is merely an attempt to silence the damn liers that just don't get that we're happier than shit in our amazing economic recovery  [truth tellers] like ZH.

It will be a dull world when the opposition is silenced through legislation or too scared to speak.

BW

Wed, 05/02/2012 - 12:09 | Link to Comment AurorusBorealus
AurorusBorealus's picture

Certainly no time to hang up your hat.  At some point, the question will become, "who is responsible?"  The fascists will try to start WWIII, indeed they already are.  Responsible people of the world must halt fascism from annhililating humanity in the wake of the economic chaos that is to come.

Wed, 05/02/2012 - 12:09 | Link to Comment vmromk
vmromk's picture

Bernanke, you been a busy beaver.

Would happen to have some spare time to go and FUCK YOURSELF ?

Wed, 05/02/2012 - 12:15 | Link to Comment midgetrannyporn
midgetrannyporn's picture

This guy is Captain Obvious.

Wed, 05/02/2012 - 12:17 | Link to Comment Lost Wages
Lost Wages's picture

Except that despite some partial truths, he doesn't see the economy as presently in a recession.

Wed, 05/02/2012 - 13:21 | Link to Comment buzzsaw99
buzzsaw99's picture

He has a job, therefore no recession.

Wed, 05/02/2012 - 14:32 | Link to Comment Hohum
Hohum's picture

And, furthermore, Mr. Feldstein probably isn't aware that GDP/total credit market debt has been in recession for most of the past four decades.

Wed, 05/02/2012 - 12:26 | Link to Comment Dapper Dan
Dapper Dan's picture

Did you see the look on that little tarts face when he said stocks are in a bubble?

Let me translate:

"Really!! A bubble? Are you kidding me? I think I would have heard about that, you know I sleep with some really savvy people here, I would have heard something, really, I am shocked, tell us more about that bubblicious thing again."

 Most importantly !! She said "Whats the danger?"

Wed, 05/02/2012 - 12:36 | Link to Comment khakuda
khakuda's picture

Gotta love blonde chicks with journalism degrees authoritatively reporting on the markets with absolutely no understanding whatsoever.  "What did you say old man?  A bubble in the stock market?  Did Wrigley hand out gum to traders today or were these soap bubbles left from the Occupy Wall Street crowd after being hosed down yesterday???  OH, oh, oh, you mean that stocks have more than doubled over three years and NOW everyone is claiming they are cheap even as they rise on bad news daily?

Wed, 05/02/2012 - 13:51 | Link to Comment Temporalist
Temporalist's picture

She's also the one that laughs in Ron Paul's face.  She's as clueless as Krugman.

 

Notice how when she's describing "growth" that she corrects herself and refrains from saying "it's slowing" to "it is slower than forecast" because, well, of course her masters with their hand up her ass make her mouth move.

Wed, 05/02/2012 - 12:27 | Link to Comment Boilermaker
Boilermaker's picture

Yea, and who doesn't already know that?

NOBODY is going to stop them. 

Oh, and the REITS have been slammed upward non-stop, as usual, today.

This shit is not going to stop.  Period.

Wed, 05/02/2012 - 12:27 | Link to Comment tahoebumsmith
tahoebumsmith's picture

1.6% of the 2.2% GDP number was Automobile production... Find me a new car dealership where you can even park these days as Inventory is being stored in every square foot of space they have. Dealerships are leasing lots away from the Dealerships to store the excessive inventories. The vehicles that are leaving the lots are written primarily on subprime paper. Fighting a subprime crisis with another subprime crisis, solving a debt crisis with more debt, pretending things will eventually get better is absurd. When this keynesian experiment runs out of wanna be debt slaves to sell to, it's over...  This time for the count.  4 million foreclosures with another 5 million to go...There is not another 20 Trillion to conjure up for the next batch of kool aid. Essentially we were given time to prepare for the worst, enjoy the time you have left...the clock is ticking,tick,tock,tick,tock....

Wed, 05/02/2012 - 12:29 | Link to Comment DOGGONE
DOGGONE's picture

What ZeroHedge should do is show inflation-adjusted price histories, which show bubbles so well:
"Real Homes, Real Dow" at
http://homepage.mac.com/ttsmyf/RHandRD.html

Wed, 05/02/2012 - 12:32 | Link to Comment The worst trader
The worst trader's picture

The market will never go down, not even 50 points, let it be written let it be done................

Wed, 05/02/2012 - 12:36 | Link to Comment TheSilverJournal
TheSilverJournal's picture

He's got the wrong bubble. The bubble is in bonds, not stocks. As he say, the Fed is purchasing all of these bonds to push investors into stocks. Well, the Fed's not going to stop purchasing bonds, so stocks should continue to soar.

Stocks and commodities will soar so much as the continued purchasing of the bonds by the Fed causes the dollar to plummet. Since bonds are future promises to pay in dollars, it is the bond market that will get crushed.

Wed, 05/02/2012 - 13:01 | Link to Comment Dr. Engali
Dr. Engali's picture

All paper products are in a bubble. Granted the bond bubble is a much larger bubble, but stocks are way overvalued too.

Wed, 05/02/2012 - 14:58 | Link to Comment TheSilverJournal
TheSilverJournal's picture

I can't disagree with that. Bonds or paper are the absolute worst because the wealth will getting abosolutely destroyed. At least with stocks, some wealth will remain. Silver is the best and is set to increase in purchasing power at least 30X.

Wed, 05/02/2012 - 12:44 | Link to Comment Shizzmoney
Shizzmoney's picture

The market will never go down

Not yet, but it will...eventually.  3 triggers:

August: Ratings time; granted, they axed Egan Jones, but Fitch/SP/Moodys will gladly again, after another lame duck session for Congress, downgrade the US again so that the banker class can push harder for austerity.

November: After the election, that variable will trigger something in itself.

December: The Mayan Effect.  That, and when GDP finally goes negative.

The reason why the market is doing well now is because earnings are coming out for stocks.  Buy high to drive stock prices up, and then short before reality sets in. 

Wed, 05/02/2012 - 12:55 | Link to Comment Everybodys All ...
Everybodys All American's picture

Would not argue with much of what you say. I will add though that the earnings are mostly if not 100% inflation. Real growth is nada.

Wed, 05/02/2012 - 12:57 | Link to Comment The worst trader
The worst trader's picture

I keep hearing June will have a huge corection.............not sure what the catilist will be

Wed, 05/02/2012 - 12:48 | Link to Comment Doug Eberhardt
Doug Eberhardt's picture

This is the same Harvard Professor who said "gold is a high risk investment" in December of 2009 when gold closed the year at $1087.50 recording its 9th straight year (now 11th) of higher prices. http://buygoldandsilversafely.com/gold/why-does-harvard-economics-professor-call-gold-a-high-risk-highly-volatile-investment/

 

At least I agree with him on the economy this time...but my guess is he still doesn't like gold. 

 

Wed, 05/02/2012 - 12:58 | Link to Comment Dr. Engali
Dr. Engali's picture

None of the paper pushers like gold..... for you and me. They love it for themselves.

Wed, 05/02/2012 - 12:53 | Link to Comment Everybodys All ...
Everybodys All American's picture

The next logical step would be to ask for Bernanke's resignation. Would it not?

Wed, 05/02/2012 - 13:02 | Link to Comment Nobody For President
Nobody For President's picture

Don't you dare hang up the ZH hat. Where else can we get priceless lines like

... no surprising to anyone, at least not anyone who maintains a pretense of objectivity, is not desperate to sell a weekly newsletter, and has a frontal lobe.

Yah gotta love financial reporting with a bite.


Wed, 05/02/2012 - 13:09 | Link to Comment carbonmutant
carbonmutant's picture

Will the current administration sacrifice Bernanke for another 4 years?

Wed, 05/02/2012 - 13:35 | Link to Comment DavidC
DavidC's picture

Tyler(s)
"...does that mean it is time for Zero Hedge to hang up our hat?"

Well, only if you're a permabear, which I doubt!

If the news is good and not manipulated I'm sure you'll be among the first with the appropriate analysis! In the meantime, while the economy is bad and the stock market continues to be goosed then you are only voicing what needs to be said!

DavidC

Wed, 05/02/2012 - 14:21 | Link to Comment sgt_doom
sgt_doom's picture

Marty Feldstein? ?

The legendary Martin Feldstein from Harvard?

A director at HCA when they were hit with the largest out-of-court settlement penalty for Medicare/Medicaid fraud?

A director at Eli Lilly when they were hit with the largest criminal penalty in US history for fraudulent marketing of a drug?

A director at AIG Financial Products group when they did the largest insurance swindle in US history (selling $460 billion worth of credit default swaps with no capital to back it up)?

And $1 billion of those TARP bailout funds when to AIG to John Paulson, and Paulson colluded with Goldman Sachs to create a faulty CDO which he profited from?

Oooooohhhh...that Martin Feldstein?

Yup, oodles and oodles of creditability with that crook and fraudster.

Wed, 05/02/2012 - 15:34 | Link to Comment Dapper Dan
Dapper Dan's picture

This Marty is connected,

Martin Feldstein

AKA Martin Stuart Feldstein

Born: 25-Nov-1939
Birthplace: New York City

Gender: Male
Race or Ethnicity: White
Sexual orientation: Straight
Occupation: Economist, Government
Party Affiliation: Republican

Nationality: United States
Executive summary: Reagan economist

Father: Meyer Feldstein
Mother: Esther Gevarter
Wife: Kathleen Foley Feldstein (economist, m. 1965, two daughters)

University: BA, Harvard University (1961)
University: BA, Oxford University (1963)
University: MA, Oxford University (1964)
University: PhD, Oxford University (1967)
Professor: Harvard University (1969-)

John Bates Clark Medal 1977
US Council of Economic Advisers Chairman (1982-84)
Member of the Board of American International Group (1988-)
Member of the Board of Eli Lilly (2001-)
Member of the Board of HCA (1998-2006)
JP Morgan Chase International Council
The Wall Street Journal Board of Contributors
American Academy of Arts and Sciences
American Economic Association
American Philosophical Society 1989
Bilderberg Group
Bush-Cheney '04
Council on Foreign Relations 1980
Econometric Society
Fraser Institute
Group of Thirty
John McCain 2008
National Academy of Sciences 1971
National Association for Business Economics Fellow
National Bureau of Economic Research President and CEO (1997-82 and 1984-)
National Committee on US-China Relations Board of Directors
Trilateral Commission 1984
US Federal Reserve Governor (2002-)
Hoover Institution National Fellow (1982-83)
National Science Foundation Graduate Fellow (1975)

From my 3rd favorite site, http://www.nndb.com/people/448/000094166/

Wed, 05/02/2012 - 14:51 | Link to Comment John Law Lives
John Law Lives's picture

"The economy is just coming along at a snail's pace. The first quarter numbers that we just got last week were not very good at all. The GDP number was 2.2%. That was a disappointment, but you know, it was all automobiles. 1.6 out of the 2.2 was motor vehicle production. So, people were catching up after not being able to buy them the year before. So, this is a very weak economy."

Considering that Congress has tacked on ~$6 Trillion in new debt in the past 4 years and the Fed expanded its balance sheet by ~$2 Trillion in the past 4 years, that is a rather sorry result.

 

"Remember, Ben Bernanke told us in the summer of 2010 that he was going to do QE2 and then ultimately they did Operation Twist. The purpose of that was to make long-term bonds less attractive so that investors would buy into the stock market."

This clearly is not happening at the retail level.  In fact, the demand for muni bonds from various US States is extremely high.

Wed, 05/02/2012 - 15:31 | Link to Comment grekko
grekko's picture

I'd hang on to your hat Tyler, Feldstein is probably just another of those whacky conspiracy theorists spouting paranoia here.

Wed, 05/02/2012 - 15:42 | Link to Comment goldfreak
goldfreak's picture

why is what this clown says better than what anybody else says? What was he saying in 2008? Low risk of recession?

Thu, 05/03/2012 - 03:43 | Link to Comment cnhedge
cnhedge's picture

US Daily: 2012 US April Payroll Preview: Sluggish
http://www.cnhedge.com/thread-4078-1-1.html
http://www.jinrongbaike.com/

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