Guest Post: Bernanke's Press Conference, August 1, 2012

Submitted by Charles Hugh Smith from Of Two Minds

Bernanke's Press Conference, August 1, 2012

In which a parrot replaces Ben Bernanke, who shows up late looking OD'ed on Ibogaine.

August 1, 2012: Federal Reserve Chairman Ben Bernanke once again defended the Fed's accommodative monetary policy at today's press conference. Mr. Bernanke was late to the conference, which was shielded from protesters by riot police.

In his absence, a pet parrot was brought out to amuse the waiting journalists, who had been carefully vetted by the Fed to "represent the nation's media." The parrot had apparently occupied a perch in the Fed's conference room, for it repeatedly squawked, "Stocks are up, stocks are up."

The Fed chairman finally emerged sometime later, looking somewhat distracted. Recent developments in the global economy have cast a shadow on the Fed's continuation of zero interest rates and quantitative easing, the term describing direct purchases of assets such as mortgages, Treasury bonds and stocks.

As the dollar continued its slide, unemployed German workers shouted "Death to America" in mass protests in Germany's industrial heartland. With the euro worth $2, German exports to the U.S. have shriveled, causing a sharp contraction in the once robust German economy.

In Japan, the 7th government in six months took power, vowing to continue fiscal stimulus, despite the failure of the policy. The dollar's decline has crushed Japanese exports to the U.S., as the dollar fetches only 55 yen, far below the breakeven point for Japanese exporters.

Japan's new prime minister voiced support for the quatloo, the new petroleum-backed currency being touted by Saudi Arabia, China and PIMCO as a global alternative to the U.S. dollar.

China's military deployed to 15 additional cities to quell the protests over rising food and energy prices. As the Chinese economy spiraled into that nation's first deep contraction, China's leadership continued to blame the Fed's policies for crushing the dollar and driving up commodity prices.

Since the Chinese currency is linked to the dollar, then skyrocketing commodity costs caused by the sinking dollar are also affecting the Chinese economy.

Just before the Fed press conference, President Obama announced that he was closing the commodity futures exchanges "to eliminate these speculators once and for all." He also announced that any farmer caught "hoarding grain" would face confiscation of the grain by Federal authorities.

"We have to stamp out these evil speculators, whatever it takes," the President said from the safety of the White House, which has been surrounded by angry mobs protesting $10 per gallon gasoline.

Gasoline suppliers responded to the closing of the futures exchange by raising the cost of fuel from $10 per gallon to $11 per gallon.

Sweating profusely, Mr. Bernanke repeated the same message he's been giving the nation for over a year: zero interest rates and Fed purchases of assets to keep interest rates low would eventually create more jobs in the U.S., and the dollar would strengthen as foreign investors flocked to the U.S.

Some observers have noted that this is at odds with the government's restrictions of foreign ownership of U.S. assets, following China's attempt to buy the bankrupt state of California earlier this summer.

The Fed chairman also pointed to the Dow Jones Industrial Average surpassing 20,000 as evidence that the Fed's policies were "working as planned." A recent Bloomberg analysis of the low-volume market meltup found that most of the volume on recent trading days resulted from the trading of a single block of SPX shares, which were traded 4,200 times by primary dealers and then purchased by the Fed at the top tick of the day.

Ignoring questions from financial media outlets, Mr. Bernanke took a question from the UFO Weekly representative on the Fed's views about Area 51 and alien spacecraft. Mr. Bernanke replied that alien spacecraft could handle the job of dropping money as well as helicopters, and then veered into a rambling discussion of the importance of managing perceptions, at one point shaking his fist and saying, "If only they knew the power of the Dark Side."

To the consternation of onlookers, the chairman then vowed to "crush the bears, all of them" and said "you will see Dow 36,000 sooner than you can possibly imagine."

When a heckler asked about rising grain prices, Mr. Bernanke shot back, "Let them eat stocks."

After the chairman was led away by aides, some who had witnessed his erratic behavior and tirade noted an uncanny resemblance to those suffering from overdoses of the illegal drug Ibogaine.

In other news, President Obama continues to poll well in Washington, D.C. just a few months before the 2012 presidential election, but is trailing comic character Alfred E. Neuman in the rest of the country. Republican candidate Donald Trump's campaign declared bankruptcy, which Mr. Trump characterized as "a necessary step to greatness. Bankruptcy is the basis of any great business."

Long-term Treasury yields shot up to 18% as the market absorbed the possibility that once in office, Mr, Trump would pursue bankruptcy as a national policy.


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