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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DaMule's picture

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

gangland's picture

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

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?

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.

carbonmutant's picture

Having English as your secondary language helps too...

surfsup's picture

Bubble yes, due to what?   Interest.   

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





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...  

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?

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?


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.

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?


EscapeKey's picture

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



Jason T's picture

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

Lost Wages's picture

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

Cognitive Dissonance's picture

I loved the smoke filled soap bubbles.

Double the propaganda, double the fiat fun.

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


azzhatter's picture

Is that a young Timmy Geithner?

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.

buzzsaw99's picture

why so serious it's only fedres clownbux.

Zero Govt's picture

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

vintageyz's picture

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

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.

gangland's picture

just lost zh chat


temp chat at ##zh


edit: zh chat is back

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.

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?

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.


blindfaith's picture



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

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.

RockyRacoon's picture

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

barliman's picture


Keep your hat(s) on!

What time is it?

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


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.

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.


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.

vmromk's picture

Bernanke, you been a busy beaver.

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

midgetrannyporn's picture

This guy is Captain Obvious.

Lost Wages's picture

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

buzzsaw99's picture

He has a job, therefore no recession.

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.

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?"

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?

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.

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.

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....

DOGGONE's picture

What ZeroHedge should do is show inflation-adjusted price histories, which show bubbles so well:
"Real Homes, Real Dow" at

The worst trader's picture

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

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.

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.