Saturday Night Comic Diversion: The Email Thread That Set Off QE2

As a disgusted and powerless nation (save for a few irrelevant, ex-Enron consultants) is drowning its post-QE2 monetary sorrows in Blue Label courtesy of a recently, if very temporarily, discovered wealth effect, we present a comedic interlude which presents (in proper chronological order for facility of reading) the email chain that culminated with the decision to embark on the QE2.

 

From: TheElf [mailto:elfgeithner@us.treausry.gov]
Sent: Friday, August 20, 2010 9:05 AM
To: 'Bertwinkie'

Cc: 'Sack'
Subject: the econ0my

 

BB,

 

Okay, so, the Kenyan is like really getting pissed at me and Larry.  In fact, he’s been like riding the fat boy so hard, telling him he should just resign and stuff.  Chubby’s so depressed he won’t even go for ice cream with me anymore.  and he totally quit looking at his kiddie porn (!!?)

 

So anyway, we’ve got to do something to get this economy going so like people can get jobs and stuff.  I keep hearing how these Alvin Greene action figures could be a great stimulus idea (prototype) and was thinking that if we could just get that Billy Mays guy to like go on tv and stuff yelling really fucking loud for people to buy them and offering 2 for 1 if they call “right now”, it might just work.  CNBC’s ratings are so low they’re practically giving away ad time to magic jack and shit. 

Thoughts???

 

 T!

 

From: Bertwinkie [mailto:shalom.bertwinkie@federal.reserve.gov]
Sent: Friday, August 20, 2010 1:14 PM
To: 'Elf'

Cc: 'Sack'
Subject: RE: the econ0my

 

 Timothy,

 

In regards to your proposal, I’m afraid I have some very disappointing news.  Mr. Billy Mays unfortunately passed away (although the circumstances surrounding his demise are ‘unusually uncertain’, it appears that heart disease caused by extensive ingestion of cocaine was a contributing factor).

 

Furthermore, as it relates to the core idea of said action figure itself, I must point out that my previous academic study regarding the Federal Government’s attempt to produce political action figures during the 1930’s suggests that it was a less than successful plan.  It seems there were design flaws resulting in recalls, as well as production defects, cost overruns, vast finished goods inventory shrinkage, and most remarkably, a very low level of underlying demand.

 

I will take your dilemma under advisement and contact you at such time as I have developed a sufficient plan of action that can be tested and  verified with our ARIMA  models (which, since we outsourced our research department to India, are the same ARIMAs used by the estimable Moody’s Corp.).

 

Regards,

Ben

 

 

 From: Sack [mailto:my.sack@frbny.gov]
Sent: Friday, August 20, 2010 3:05 PM
To: 'Elf'

Cc: 'Bertwinkie'
Subject: RE: the econ0my

 

Jesus fucking Christ Tim.  Action figures?  Fuck

 

 

From: TheElf [mailto:elfgeithner@us.treausry.gov]
Sent: Friday, August 20, 2010 3:08 PM
To: 'Sack'

Cc: 'Bertwinkie'
Subject: the econ0my

 

Ok dude, chill.  This stuff isn’t easy, ok?  I mean, it’s not like I asked you and ben to get in a fucking helicopter and start dropping hundreds over SOHO and Little Italy and stuff.   I would never recommend something totally asinine - OMG, give me some credit.

 

I’m totally serious, though, the Chubster and I are really living on borrowed time here.  Someone on the muslim in chief’s staff recently had my access to elf porn terminated.

 

                T!

 

From: Bertwinkie [mailto:shalom.bertwinkie@federal.reserve.gov]
Sent: Wednesday, August 25, 2010 6:14 AM
To: 'Elf'

Cc: 'Sack'                                                                                                                                                                
Subject: RE: the econ0my

 

Timothy,

 

As you are aware, we often consult with and seek input from industry sources as a means of developing novel and creative solutions to the financial issues we face when governing the economy.  Consequently, I have reached out to multiple firms and individuals soliciting feedback around the idea of stimulus.  I requested specific action items, and that they not only consider fiscal stimulus actions, but monetary responses as well.  A sampling of ideas are summarized below:

 

Abbey Joseph Cohen, President of Global Markets – Goldman Sachs : “Whatever you do is great, and will just be incremental.  My 2011 earnings estimate for the S&P 500 is $1,300, so a normalized P/E with ten year Treasury yields of 2.5% puts fair value at 26,000.  Either way, the longer-term outlook for equities is very constructive in our view”

 

Bob Doll, Vice Chairman – Blackrock:  “We would recommend both fiscal and monetary resources be directed at shovel ready jobs, non-shovel ready jobs, undervalued commercial properties, overvalued commercial properties, stocks, bonds, commodities, currencies, rat’s asses, and pretty much anything which can be purchased on open or closed markets.  As long as prices go up, the long-term outcome is positive for everyone.  Jobs will be created as a result.  There may be short term pullbacks, but we remain very bullish on any items which have a molecular composition”

 

Mark Zandi, Chief Economist – Moody’s Corp. : “Any incremental stimulus at this point would be beneficial.  Our models suggest that for every $6.8 trillion dollars injected, GDP growth is enhanced by roughly 0.0015%.  Given the current level of inflation, it’s a no brainer at this point”

 

Robert Brusca, Chief Economist :  “I think you should ‘talk’ positively.  If everyone would stop putting negative spin on the numbers, and instead look at the positive side, the economy would begin to recover almost immediately.  Our only problem right now is the negative spin that is being put on the numbers by economists.  The Fed Governors could easily fix this by simply talking more positively”

 

Jim Cramer, Mad Money Host - CNBC:  “Okay, look.  It’s really simple.  Back when I was managing a hedge fund we’d see this aaaallll the time, okay.  All you have to do is the opposite of what I tell my viewers every night.  It’s really that simple.  When I tell them to do something, just do the opposite.  If the administrative branch or the federal reserve would set up a fund like this, there wouldn’t be an economic crisis”

 

Although most of the ideas were constructive (in fact, we only had one useless response – an email reply from a Mr. Rick Santelli which said simply            “disband.  now.”), by far the most interesting ideas were from a Mr. David Tepper, President and Founder of Appaloosa Management:

 

“it’s really simple.  Just announce that you’re going to provide a put.  Like the Greenspan put, but it applies to everything, not just the S&P 500. It would be a put on corporate debt, agency debt, convertibles, leveraged buy-writes, unicorns, Justin Beiber, everything.  As long as the street knows you’ll support the price, they’ll buy.  It’s really that simple.

 

And if you agree to do it, I’ll go on CNBC’s Squakbox next month and tell the world it’s that simple.  I’ll literally say that ‘it’s a win-win market and you can’t lose going balls to the wall’.  Trust me, you can’t lose with this”

 

So, after much rigorous analysis, it would appear our best approach at this point would be to construct a monetary policy which pursues this agenda via aggressive purchase of assets on the open market through our New York desk.  I look forward to your thoughts, analysis, and feedback regarding this plan.

 

Regards,

Ben

 

 

 

From: Sack [mailto:my.sack@frbny.gov]
Sent: Wednesday, August 25, 2010 6:21 AM
To: 'Bertwinkie'

Cc: 'Elf'
Subject: RE: the econ0my

 

Ben….WTF?  We’ve been doing that since August 2005.  It’s not new.  We just haven’t had a program in place recently.

 

 

From: TheElf [mailto:elfgeithner@us.treausry.gov]
Sent: Wednesday, August 25, 2010 9:27 AM
To: 'Bertwinkie'

Cc: 'Sack'
Subject: the econ0my

 

Bennie B,

 

What about that Bankfine guy at Goldmen.  He’s pretty sharp right?  Makes a lot of money and all.  Did you talk to him??

 

                T!

 

From: Bertwinkie [mailto:shalom.bertwinkie@federal.reserve.gov]
Sent: Wednesday, August 25, 2010 12:40 PM
To: 'Elf'

Cc: 'Sack'
Subject: RE: the econ0my

 

 

Timothy,

 

I believe you are referring to a Mr. Lloyd Blankfein.  I have lunch with him daily, so am fully up to speed on his thoughts.  He thinks it is a great idea, but that it will only work if we purchase the Treasuries from the primary dealers.  He says if we go directly to the Treasury auctions, there will be no benefit.  Our research team in India is using Moody’s latest models to determine the statistical validity of his claim.  Will advise.

 

Regards,

Ben

 

From: Sack [mailto:my.sack@frbny.gov]
Sent: Wednesday, August 25, 2010 4:17 PM
To: 'Bertwinkie'

Cc: 'Elf'
Subject: RE: the econ0my

 

Ben, I’m really not sure what the general population will think about ramping this plan up again.  They didn’t mind when we were in the depths of the crisis, but the fiscal and monetary policy responses to the meltdown seem to have achieved our goal of kicking the can down the road for a few more years.  Sure this will all collapse in a massive reset eventually (after our terms/careers have ended), but for now the perception at least is that things are improving.  A major purchase program at this juncture will merely invite outrage among the Jim Grants, Jim Rogers, and Jim Durdens of the world.  And their lunatic fringe followings will light up the internet comment boards with talk of ‘gold, guns, and ammo’.

 

 

From: TheElf [mailto:elfgeithner@us.treausry.gov]
Sent: Wednesday, August 25, 2010 6:05 PM

To: 'Sack'

Cc: 'Bertwinkie'
Subject: the econ0my

 

I think the last guy’s name is Tyler, not Jim.  I only know because some asshole got a screenshot of my computer and like this dick Durden guy posted it on the internet.  Now, people can’t even Google the first four letters of my name without it showing up.  OMFG!

 

 T!

 

From: Bertwinkie [mailto:shalom.bertwinkie@federal.reserve.gov]
Sent: Wednesday, August 25, 2010 7:55 PM
To: 'Sack'

Cc: 'Elf'
Subject: RE: the econ0my

 

Brian,

 

While I appreciate your concerns, I do not feel they are well founded given the recent work our research department has generated.  The Moody’s ARIMA models suggest that the housing downturn was a once in one hundred years event and that they will not decline ‘at the national level’ again until after 2100.  Even if a decline occurs before that, it is ‘likely to be contained’ according to Moody’s.

 

                Regards,

                Ben

 

 

 From: Sack [mailto:my.sack@frbny.gov]
Sent: Wednesday, August 25, 2010 9:17 PM
To: 'Bertwinkie'

Cc: 'Elf'
Subject: RE: the econ0my

 

 Alright Ben – since you’ve already discussed it with the other critical fomc members, I suggest you set the stage for it the day after tomorrow (Friday) at Jackson Hole.  Once it’s out there and priced in, Hoenig won’t be willing to call bullshit; he’ll have to stand down (aside from being a dissenting vote at future meetings) for fear of tanking the markets.  in the meantime, I suggest we kill this email thread and start anew.  If that ass Assange over at wikileaks ever got hold of this, all 3 of us would have to disappear.

 

To be continued

(Courtesy of John Lohman)