Author Topic: The Bernanke Brief  (Read 184303 times)

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Offline Dig

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The Bernanke Brief
« on: November 30, 2007, 07:29:24 am »
Erin Burnett, the young new fresh "money honey" that spends weekends in Dubai has already been dropping the info.

This is the same Dubai that has just bailed out Citibank.

Rockefeller/Rothschild is going directly for the dollar - full steam ahead.

They have lost all sanity.

They are forcing the lower class into the gutters and the middle class into the streets.

This is a theft, there is nothing else about it.

Theft, raping and pilaging from the American Citizens.
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Offline websuspect

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Re: Bernanke has been given orders to drop the discount by 50 points!
« Reply #1 on: November 30, 2007, 07:56:41 am »
He will have to quadruple printing money.

It will be hard to force me out on the streets as I own my house, and the Ammo stockpile in it.

Offline Dig

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Re: Bernanke has been given orders to drop the discount by 50 points!
« Reply #2 on: November 30, 2007, 08:00:47 am »
He will have to quadruple printing money.

It will be hard to force me out on the streets as I own my house, and the Ammo stockpile in it.

say it loud, say it proud brother!
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline NOT A TERRORIST

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Re: Bernanke has been given orders to drop the discount by 50 points!
« Reply #3 on: November 30, 2007, 01:33:27 pm »
Americans have un-evolved to such a stupid sence of reality, theyre wayy to fearful of everything  and  way to dumbed down to survive without the convinence of their high standard of living

Offline Biggs

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Re: Bernanke has been given orders to drop the discount by 50 points!
« Reply #4 on: November 30, 2007, 03:43:00 pm »
they were saying too that traders expect a 162% chance of a 25bps cut in the headline rate at the December meeting of the FOMC, which means a chance of a 50bp cut (0.5%)

that would really tank the dollar.
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Offline sid

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Re: Bernanke has been given orders to drop the discount by 50 points!
« Reply #5 on: November 30, 2007, 06:19:10 pm »
Oh, don't concern yourself with it.

They're just bailing out the rich.

And enslaving the rest of us.

http://www.youtube.com/watch?v=yjnvSQuv-H4

Offline New Whirled Order

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Re: Bernanke has been given orders to drop the discount by 50 points!
« Reply #6 on: November 30, 2007, 10:05:59 pm »
Bernanke was on the new Fox Business channel yesterday evening giving a speech from Charlotte, NC.  I didn't catch all of it, but while he was speaking the caption on the screen said:

Greater Than Unusual Uncertainty For U.S. Economy

Gang, there's just no way to spin a phrase like that.  I believe we are in a whole LOT of trouble during the coming months/years.     

 

Offline Dig

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F**k you Bernanke!
« Reply #7 on: December 15, 2007, 01:36:16 am »
Ron Paul v. Bernanke Re-re-remix!

http://www.youtube.com/watch?v=9rtzRCthF_8
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline Dig

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Re: F**k you Bernanke!
« Reply #8 on: December 15, 2007, 01:42:31 am »
Chicago Traders Cheer Ron Paul On As He Tears Into Bernanke

http://www.youtube.com/watch?v=z8GtXKP6bmQ
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline NEPB

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Re: F**k you Bernanke!
« Reply #9 on: December 15, 2007, 06:11:41 am »
Ahh, sh!i!t yeah. TYTE POST.

Offline Sub-X

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Bernanke says 2008 outlook worse.
« Reply #10 on: January 10, 2008, 02:25:52 pm »
Bernanke says 2008 outlook worse.
http://news.bbc.co.uk/2/hi/business/7181922.stm
Thursday, 10 January 2008, 18:56 GMT

Federal Reserve chief Ben Bernanke has said that the outlook for the US economy in 2008 has worsened.
His comments in Washington come after leading investment banks warned that the US was heading for a recession.

However, Mr Bernanke said the central bank was willing to act in a decisive and timely manner to ensure the economy remained on an even keel.

The Fed has recently cut interest rates to counter slowing economic growth and problems in the housing market.

Substantive action

The bank has cut rates three times since last summer, most recently in December to 4.25% - the lowest level in two years.

During his speech on Thursday, Mr Bernanke said the Fed was prepared to "take substantive additional action as needed to support growth and to provide adequate insurance against downside risks".

Some analysts say this is tantamount to saying the bank is prepared to cut interest rates again when it next meets at the end of this month.

David Resler, chief economist at Nomura Securities International said Mr Bernanke's remarks came as little surprise.

"It is probably likely to solidify expectations...that the Fed will (cut rates by) 50 basis points...now more people will think that way."

US stocks rose on the news as investors were buoyed by the prospect of future interest rate cuts. The Dow Jones Industrial Average added 89 points, or 0.7%, at 12, 824.3 in afternoon trade in New York reversing its earlier fall at the start of the day.

Housing

The US is facing the twin threat of how to tackle a slowing housing market and lower consumer spending while at the same time addressing inflation as the rising oil price pushes energy prices up.

Mr Bernanke highlighted the effect the sub-prime mortgage crisis is having on the wider economy.

With banks having had to write off billions of dollars of investments linked to sub-prime debt - that taken out by people on low wages or with bad credit histories - so this has made them reluctant to lend, limiting the availability of credit, Mr Bernanke explained.

He added that the financial situation "remains fragile, and many markets remain impaired," adding that much uncertainty remained about the exposure of major banks to the credit crisis.

He also cited high oil prices as a problem and one that could further dent consumer spending.

Earlier this week, Merrill Lynch controversially said the US had already entered a recession, while Goldman Sachs has also suggested it is heading in that direction.

The problems began when the booming housing market began to cool about two years ago as a result of a rapid increase in interest rates to a six-year high of 5.25% last year, which made home loan repayments more expensive.

This hit sub-prime borrowers particularly hard and sparked a record number of late payments and mortgage defaults.
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Offline larsonstdoc

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Re: Bernanke says 2008 outlook worse.
« Reply #11 on: January 10, 2008, 02:39:31 pm »
   

        Bob Chapman on the Alex Jones Show today (1-10-08) (hrs 2 and 3) said that the financial people have lost control of the economy.

                        http://theinternationalforecaster.com/
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Offline Dig

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LIVE: Bernanke, Cox, Paulson on C-SPAN 3
« Reply #12 on: February 14, 2008, 09:50:38 am »
Here it is, the three lying traitors burning your dollars by the second...

http://c-span.org

C-SPAN3
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline hellcatjr

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Bernanke Says Economic Outlook Is Worse
« Reply #13 on: February 14, 2008, 10:39:01 am »
Bernanke Says Economic Outlook Is Worse
Thursday February 14, 11:25 am ET
By Jeannine Aversa, AP Economics Writer
Fed Chairman Bernanke Says Nation's Business Prospects Have Deteriorated

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke told Congress Thursday that the country's economic outlook has deteriorated and signaled that the central bank is ready to keep on lowering a key interest rate -- as needed -- to shore things up.

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In remarks to the Senate Banking Committee, Bernanke said the one-two punch of the housing and credit crises has greatly strained the economy. Hiring has slowed and people are likely to tighten their belts further, as they are pinched by high energy prices and watch the value of their single biggest asset -- their homes -- weaken, he warned.

"The outlook for the economy has worsened in recent months, and the downside risks to growth have increased," Bernanke said. "To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so." Bernanke also said that the "virtual shutdown" of the market for subprime mortgages -- given to people with blemished credit histories or low incomes -- and a reluctance by skittish lenders to make "jumbo" home loans exceeding $417,000 have aggravated problems in the housing market.

Unsold homes have piled up and foreclosures have climbed to record highs.

"Further cuts in homebuilding and in related activities are likely," Bernanke cautioned.

Given all the dangers facing the economy, the Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks," he said, indicating additional rate cuts were likely.

Bernanke appeared with Treasury Secretary Henry Paulson and Christopher Cox, chairman of the Security and Exchange Commission, amid increasing concerns that the economy may be drifting into recession.

The troubles in the housing and credit markets threaten to push the economy into its first recession since 2001 -- if it hasn't fallen into one already.

Bernanke and Paulson didn't speak of a recession, noting that their forecasts still call for growth, albeit slow growth. However, the Fed and the Bush administration are expected to downgrade their economic forecasts for this year, given all the troubles, Bernanke and Paulson said.

"It would be less, but I do believe we'll keep growing," Paulson told the panel. Bernanke said the Fed's new forecast out next week will "show lower projections of growth ....growth looks to be weak, but still positive."

On Wall Street, Bernanke's bearish assessment of the economy pulled stocks lower. The Dow Jones industrials lost nearly 100 points in morning trading.

The Federal Reserve, which started lowering a key interest rate in September, recently turned much more aggressive. Over the span of just eight days in January, it slashed rates by 1.25 percentage points -- the biggest one-month rate reduction in a quarter-century. Economists and Wall Street investors believe the Fed will cut rates even more at its next meeting in March and probably again in April.

"Our economy is clearly in trouble," said the committee's chairman, Sen. Christopher Dodd, D-Conn. Restoring investor and consumer confidence, he said, is critical "if we are going to get back on our feet again."

Bernanke said his forecast is for the economy to continue to endure a "period of sluggish growth." That would be "followed by a somewhat stronger pace of growth starting later this year" as the effects of the Fed's rate cuts and a newly enacted stimulus package begin to be felt. The $168 billion package, which includes rebates for people and tax breaks for businesses, was speedily passed by Congress last week and signed into law on Wednesday by President Bush.

Sen. Richard Shelby, R-Ala., though, believed the energizing impact of the rebates would be "negligible" and likened it to "pouring a glass of water into the ocean."

Even though Bernanke's forecast envisions an improving economic picture later this year, the Fed chief said it was nonetheless "important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated" or that credit will become even harder to secure.

That's why, for now, Bernanke indicated the Fed is still inclined to lower interest rates.

Yet, that could change, depending on how the economy and inflation unfold.

"A critical task for the Federal Reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives" of promoting healthy employment and economic growth while keeping inflation under control.

Inflation should moderate, Bernanke said. Yet last year's steep run-up in oil prices is a reminder that the Fed can't let down its inflation guard and must keep close tabs on the inflation expectations of investors, consumers and businesses. Those expectations can affect their behavior, which can affect the economy.

"Any tendency of inflation expectations to become unmoored or for the Fed's inflation-fighting credibility to be eroded could greatly complicate" the Fed's job, he said.

Stimulus from the new rescue package also should help the faltering jobs market, Paulson said. He estimated that it would create "more than half a million jobs by the end of this year."

Meanwhile, the Bush administration's efforts to help homeowners at risk of losing their homes is paying off.

In the final three months of last year, more than 470,000 received help from the company servicing their mortgages and almost 30 percent of those received a loan modification, Paulson said.

Still, the secretary said more needs to be done. He called on Congress to revamp mortgage giants Fannie Mae and Freddie Mac and modernize the Depression-era Federal Housing Administration. He also asked Congress to pass legislation that will allow states to issue tax-exempt bonds and use the proceeds to help struggling homeowners refinance into more affordable mortgages.

The SEC is exploring the role of ratings agencies in the meltdown of subprime mortgages, Cox said. Critics allege ratings agencies didn't adequately assess risk when assigning ratings to certain complex mortgage securities.

Cox said he expects to receive preliminary reports from the agency's examinations in the coming months and a final report in the early summer.

Bernanke and Paulson have been fighting to keep the economy afloat. Foreclosures have climbed to record highs, financial companies have racked up multibillion-dollar losses from soured mortgage investments, Wall Street has convulsed, and employers have turned cautious in their hiring. Payrolls in January fell by 17,000, the first nationwide job loss in more than four years.

Economic growth practically stalled in the final three months of last year, and some economists believe it may actually be contracting now. By one rough rule of thumb, a recession occurs when there are two consecutive quarters -- six straight months -- when the economy shrinks.

Federal Reserve: http://www.federalreserve.gov
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Offline DCUBED

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Bernanke Says Economic Outlook Is Worse
« Reply #14 on: February 14, 2008, 11:29:44 am »
http://biz.yahoo.com/ap/080214/congress_recession_threat.html?.v=28&printer=1

Bernanke Says Economic Outlook Is Worse

Fed Chairman Bernanke Says Nation's Business Prospects Have Deteriorated

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke told Congress Thursday the economic outlook has deteriorated and signaled a readiness to keep on lowering a key interest rate to shore things up.

Bernanke also told the Senate Banking Committee that the one-two punch of housing and credit crises has greatly strained the economy. And he forecast sluggish growth in the near term. Bernanke also noted that hiring has slowed and that people are likely to tighten their belts further because of high energy prices and plummeting home values.

"The outlook for the economy has worsened in recent months, and the downside risks to growth have increased," Bernanke said. "To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so."

Bernanke also told senators that the "virtual shutdown" of the market for subprime mortgages given to people with blemished credit histories or low incomes -- and a reluctance by skittish lenders to make "jumbo" home loans exceeding $417,000 -- have aggravated problems in the housing market.

Unsold homes have piled up and foreclosures have climbed to record highs.

"Further cuts in homebuilding and in related activities are likely," Bernanke cautioned.

Given all the dangers facing the economy, he said, the Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks." Bernanke indicated that additional rate cuts were likely. Still, he voiced hope that economic growth will improve later this year.

Bernanke's Hill appearance with Treasury Secretary Henry Paulson and Christopher Cox, chairman of the Security and Exchange Commission, came amid escalating worry that the economy may be drifting into recession. The troubles in the housing and credit markets alone threaten to push the economy into its first recession since 2001 -- if it hasn't fallen into one already.

Bernanke and Paulson don't believe the country will fall into a recession. Their forecasts still call for growth, albeit slow growth, they said. However, pair did say Thursday that the administration and the Fed are expected to downgrade their economic forecasts for this year.

"It would be less, but I do believe we'll keep growing," Paulson said. Bernanke said a new Fed new forecast due next week will "show lower projections of growth ....growth looks to be weak, but still positive."

On Wall Street, Bernanke's bearish assessment pulled stocks lower. The Dow Jones industrials lost more than 100 points in morning trading.

The Federal Reserve, which started lowering a key interest rate in September, has recently turned much more aggressive. Over the span of just eight days in January, it slashed rates by 1.25 percentage points -- the biggest one-month rate reduction in a quarter-century. Economists and Wall Street investors believe the Fed will cut rates even more at its next meeting in March and probably again in April.

"Our economy is clearly in trouble," said the committee's chairman, Sen. Christopher Dodd, D-Conn. Restoring investor and consumer confidence, he said, is critical "if we are going to get back on our feet again."

Bernanke said his forecast is for the economy to continue to endure a "period of sluggish growth." That would be "followed by a somewhat stronger pace of growth starting later this year" as the effects of the Fed's rate cuts and a newly enacted stimulus package begin to be felt. The $168 billion package, which includes rebates for people and tax breaks for businesses, was speedily passed by Congress last week and signed into law on Wednesday by President Bush.

Sen. Richard Shelby, R-Ala., was skeptical, saying he thought the energizing impact of rebates would be "negligible" and likened the action to "pouring a glass of water into the ocean."

Even though Bernanke's forecast envisions an improving economic picture later this year, the Fed chief said it was nonetheless "important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated" or that credit will become even harder to secure.

That's why, for now, Bernanke indicated the Fed is still inclined to lower interest rates.

Yet, that could change, depending on how the economy and inflation unfold.

"A critical task for the Federal Reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives" of promoting healthy employment and economic growth while keeping inflation under control.

Sen. Robert Menendez, D-N.J., criticized policymakers for what he believed was a too slow response to the housing crisis. "We count on those at the top ... to sound an alarm," during a crisis, he said. Instead, "what we got was a snooze button ... we've been behind the curve."

Noting spreading credit problems, Sen. Charles Schumer, D-N.Y., asked whether policymakers underestimated the severity of the situation.

Replied Paulson: "It's one thing to identify a problem. It's another thing to know exactly what to do about it."

Meanwhile, the administration's efforts to help homeowners at risk of losing their homes is paying off.

Paulson said that in the final three months of last year, more than 470,000 homeowners got help from companies servicing their mortgages and almost 30 percent of those received a loan modification.
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Offline 2Revolutions

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Re: Bernanke Says Economic Outlook Is Worse
« Reply #15 on: February 14, 2008, 12:01:21 pm »
The Federal Reserve Chairman Says the Fed is Prepared to Cut Interest Rates Again

http://abcnews.go.com/Business/Economy/wireStory?id=4290447
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Offline sid

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Re: Bernanke Says Economic Outlook Is Worse
« Reply #16 on: February 14, 2008, 02:45:15 pm »
The Federal Reserve Chairman Says the Fed is Prepared to Cut Interest Rates Again

http://abcnews.go.com/Business/Economy/wireStory?id=4290447
Worked well for the Japanese, now didn't it?

Offline bigron

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Bernanke's State of the Economy Speech: "You are all Dead Ducks"
« Reply #17 on: February 17, 2008, 06:31:27 am »
Bernanke's State of the Economy Speech:

"You are all Dead Ducks" 

By Mike Whitney

http://www.informationclearinghouse.info/article19365.htm

16/02/08 "ICH" -- - Even veteran Fed-watchers were caught off-guard by Chairman Bernanke's performance before the Senate Banking Committee on Thursday. Bernanke was expected to make routine comments on the state of the economy but, instead, delivered a 45 minute sermon detailing the afflictions of the foundering financial system. The Senate chamber was stone-silent throughout. The gravity of the situation is finally beginning to sink in.

 For the most part, the pedantic Bernanke looked uneasy; alternately biting his lower lip or staring ahead blankly like a man who just watched his poodle get run over by a Mack truck. As it turns out, Bernanke has plenty to worry about, too. Consumer confidence has dropped to levels not seen since the 1970s recession, real estate has gone off a cliff, credit-brushfires are breaking out everywhere, and the stock market continues to gyrate erratically. No wonder the Fed-chief looked more like a deck-hand on the Lusitania than the monetary-czar of the most powerful country on earth.

   Bernanke's prepared remarks were delivered with the solemnity of a priest performing Vespers. But he was clear, unlike his predecessor, Greenspan, who loved speaking in hieroglyphics.

Bernanke: "As you know, financial markets in the United States and in a number of other industrialized countries have been under considerable strain since late last summer. Heightened investor concerns about the credit quality of mortgages, especially subprime mortgages with adjustable interest rates, triggered the financial turmoil. However, other factors, including a broader retrenchment in the willingness of investors to bear risk, difficulties in valuing complex or illiquid financial products, uncertainties about the exposures of major financial institutions to credit losses, and concerns about the weaker outlook for the economy, have also roiled the financial markets in recent months.”

   Yes, of course. The banks are ailing from their subprime investments while Europe is sinking fast from $500 billion in unsellable asset-backed garbage. The whole system is clogged with crappy paper and deteriorating collateral. Now there are problems popping up in auction rate sales and the normally-safe municipal bonds. The whole financial Tower of Babel is cracking at the foundation. 

  Bernanke continues:  "Money center banks and other large financial institutions have come under significant pressure to take onto their own balance sheets the assets of some of the off-balance-sheet investment vehicles that they had sponsored. Bank balance sheets have swollen further as a consequence of the sharp reduction in investor willingness to buy securitized credits, which has forced banks to retain a substantially higher share of previously committed and new loans in their own portfolios. Banks have also reported large losses, reflecting marked declines in the market prices of mortgages and other assets that they hold. Recently, deterioration in the financial condition of some bond insurers has led some commercial and investment banks to take further markdowns and has added to strains in the financial markets."

Bernanke sounds more like an Old Testament prophet reading passages from the Book of Revelations than a Central Banker. But what he says is true; even without the hair-shirt. The humongous losses at the investment banks have forced them to go trolling for capital in Asia and the Middle East just to stay afloat. And, when they succeed, they're forced to pay excessively high rates of interest. The true cost of capital is skyrocketing. That's why the banks are protecting their liquidity and cutting back on new loans. Most of the banks have also tightened lending standards which is slowing down the issuance of credit and threatens to push the economy into a deep recession. When banks cramp-up; the overall economy shrinks. It's just that simple; no credit, no growth. Credit is the lubricant that keeps the capitalist locomotive chugging-along. When it dwindles, the system screeches to a halt.

 

"DOWNSIDE RISKS TO GROWTH HAVE INCREASED"

 

  Bernanke again: "In part as the result of the developments in financial markets, the outlook for the economy has worsened in recent months, and the downside risks to growth have increased. To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so. The virtual shutdown of the subprime mortgage market and a widening of spreads on jumbo mortgage loans have further reduced the demand for housing, while foreclosures are adding to the already-elevated inventory of unsold homes. Further cuts in homebuilding and in related activities are likely.....Conditions in the labor market have also softened. Payroll employment, after increasing about 95,000 per month on average in the fourth quarter, declined by an estimated 17,000 jobs in January. Employment in the construction and manufacturing sectors has continued to fall, while the pace of job gains in the services industries has slowed. The softer labor market, together with factors including higher energy prices, lower equity prices, and declining home values, seem likely to weigh on consumer spending in the near term."

 

So, let's summarize. The banks are battered by their massive subprime liabilities. Housing is in the tank. Manufacturing is down. Food and energy are up. Unemployment is rising. And consumer spending has shriveled to the size of an acorn. All that's missing is a trumpet blast and the arrival of the Four Horseman.

 How is it that Bernanke's economic post-mortem never made its way into the major media? Is there some reason the real state of the economy is being concealed from 'we the people'? 

Bernanke continues: "On the inflation front, a key development over the past year has been the steep run-up in the price of oil. Last year, food prices also increased exceptionally rapidly by recent standards, and the foreign exchange value of the dollar weakened. ...(If) inflation expectations to become unmoored or for the Fed's inflation-fighting credibility to be eroded could greatly complicate the task of sustaining price stability and reduce the central bank's policy flexibility to counter shortfalls in growth in the future."

  Right. So, if the Fed's rate-cutting strategy doesn't work and the economic troubles persist (and prices continue to go through the roof) then we're S.O.L. (sh** out of luck)  because the Fed has no more arrows in its quiver. It's rate cuts or death. Great. So, we can expect Bernanke to hack away at rates until they're down to 1% or lower (duplicating the downturn in Japan) hoping that the economy shows some sign of life before it takes two full wheelbarrows of greenbacks to buy a quart of milk and a few seed-potatoes.

 Sounds like a plan!

  We don't blame Bernanke. He's been remarkably straightforward from the very beginning and deserves credit. He's simply left with the thankless task of mopping up the ocean of red ink left behind by Greenspan. It's not his fault. He should be applauded for dispelling the decades-long illusion that a nation can borrow its way to prosperity or that chronic indebtedness is the same as real wealth. It's not; and the bill has finally come due.

 Of course, now that the low-interest speculative orgy is over; there's bound to be a painful unwind of hyper-inflated assets, falling home prices, tumbling stock markets, increased unemployment, and a generalized credit-contraction throughout the real economy. Ouch.  Who said it was going to be easy?

Bernanke's summation:

  "At present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt....It is important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated, or that credit conditions may tighten substantially further."

  (Editor's translation) "Discount everything I've said here today if the economy blows up---as I fully-expect it will---from decades of regulatory neglect and the myriad multi-trillion dollar Ponzi-schemes which have put the entire financial system at risk of a major heart attack".

   Bernanke's candor is admirable, but it is little relief for the people who will have to soldier-on through the hard times ahead. Perhaps, next time he could spare us all the lengthly oratory and just forward a brief cablegram to Congress saying something like this: 

  "We are deeply sorry, but we have totally fu**ed up your economy with our monetary hanky-panky. You are all in very deep Doo-doo. Prepare for the worst."

     our sincerest regrets, 

                  the Fed


Offline DCUBED

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McCain Says Bernanke Should Have Reduced Interest Rates Faster
« Reply #18 on: February 17, 2008, 01:30:11 pm »
 http://news.yahoo.com/s/bloomberg/20080217/pl_bloomberg/anqlpebuvhau

McCain Says Bernanke Should Have Reduced Interest Rates Faster

 Feb. 17 (Bloomberg) -- Republican presidential candidate John McCain said Federal Reserve Chairman Ben S. Bernanke should have been quicker to cut interest rates to try to avert a recession.

``I personally would have liked to have seen those rate cuts earlier,'' McCain said today on ABC's ``This Week with George Stephanopoulos.'' ``That doesn't mean I want him fired, it doesn't mean I've lost confidence,'' McCain said.

McCain, the Republican front-runner for the party's nomination, said that if elected, he would consider Bernanke's reappointment when his term is up in 2010.

Traders anticipate the Fed will cut rates a further half- point by March 18, after 2.25 percentage points of reductions since September. Fed officials lowered the overnight lending rate between banks by a half-point to 3 percent Jan. 30, after an emergency 75 basis-point reduction Jan. 22.

McCain, an Arizona senator, said the U.S. economy is ``very close'' to a recession.

Asked how his administration would differ from President George W. Bush's, McCain said he would do more to eliminate earmarks proposed by Congress, and he supports mandatory limits on greenhouse gas emissions through a cap-and-trade system, which Bush opposes.

$35 Billion

He said Bush allowed $35 billion in funding for pet projects, called earmarks, to be included in the budget over the last two year, money McCain said he would have cut.

McCain also pledged not to raise taxes if elected.

``No new taxes,'' McCain said. ``I could see an argument, if our economy continues to deteriorate, for lower interest rates, lower tax rates, and certainly decreasing corporate tax rates, which are the second-highest in the world.''

McCain said he also supports reducing government spending.

``Spending restraint is why our base is not energized,'' he said. ``Spending restraint is why we are having to borrow money from China.''

McCain said that as president he would seek congressional approval for any long-term accord to keep U.S. troops in Iraq. He also promised to consult with Congress before launching an attack on Iran, except in a ``dire emergency'' that would require immediate action.

``We have to have more of a partnership with the Congress. We have to have more consultation,'' McCain said.

Bush is negotiating a long-term military peacekeeping agreement with Iraq. The White House has said such status-of- forces agreements do not require congressional approval.

``It wouldn't bother me to bring it to the Congress,'' McCain said, taking aim at Democrats' efforts to set a timetable for withdrawal of troops. ``The issue takes care of itself when we succeed. I still say setting a date for withdrawal is chaos, genocide, and we'll be back, because al-Qaeda will then succeed.''
“Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.”  - Arthur Conan Doyle

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Offline Noel Degrassi

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Re: McCain Says Bernanke Should Have Reduced Interest Rates Faster
« Reply #19 on: February 17, 2008, 02:02:02 pm »
McCain couldn't balance his checkbook. :-\

Offline hellcatjr

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Bernanke signals another rate cut
« Reply #20 on: February 27, 2008, 01:49:10 pm »
Bernanke signals another rate cut
By JEANNINE AVERSA,
AP Economics Writer 
1 hour, 40 minutes ago 
http://news.yahoo.com/s/ap/20080227/ap_on_bi_ge/bernanke_congress

By JEANNINE AVERSA, AP Economics Writer 1 hour, 40 minutes ago

WASHINGTON - Federal Reserve Chairman Ben Bernanke warned Congress that the nation is in for a period of sluggish business growth and sent a fresh signal Wednesday that interest rates will again be lowered to steady the teetering economy.

"The economic situation has become distinctly less favorable" since the summer, the Fed chief told the House Financial Services Committee.

Since Bernanke's last such comprehensive assessment last summer, the housing slump has worsened, credit problems have intensified and the job market has deteriorated. Bernanke said the confluence of these events has turned people and businesses alike toward a more cautious attitude about spending and investment. This, he said, has further weakened the economy.

Incoming barometers continue to "suggest sluggish economic activity in the near term," Bernanke told lawmakers. At the same time, he added, the Fed must keep a close eye on inflation given the recent run-up in energy and other prices paid by consumers and businesses.

Were energy prices to continue to rise at a sharp clip — which the Fed doesn't anticipate — it would "create a very difficult problem" for the economy. It would spread inflation and would put another damper on growth, Bernanke said. If that happened, he added, it would be a "very tough situation."

For now though, the No. 1 battle is shoring up the economy, and Bernanke pledged anew to slice a key interest rate to help a struggling economy that many fear is on the verge of a recession — or possibly already in one.

The Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks," Bernanke said, hewing closely to assurances he offered earlier this month.

The central bank, which started lowering a key interest rate in September, has recently turned much more aggressive. Over the span of just eight days in January, it slashed rates by 1.25 percentage points — the biggest one-month reduction in a quarter century. Economists and Wall Street investors predict the Fed will cut rates again at its next meeting on March 18.

As Bernanke began his first day of back-to-back appearances on Capitol Hill to discuss the economy, there was more bad news on the housing and manufacturing fronts. Sales of new homes fell in January for a third straight month and orders to factories for big-ticket manufactured goods dropped in January by the largest amount in five months.

On Wall Street, stocks fluctuated at first, then moved higher after the release of Bernanke's prepared comments.

Bernanke was hopeful that previous rate reductions along with a $168 billion stimulus package of tax rebates for people and tax breaks for business would energize the economy in the second half of this year.

Bernanke has come under some criticism for not acting sooner in cutting rates to respond to the economy's problems. However, Rep. Spencer Bachus, R-Ala., offered the Fed chief some sympathy. "There is perhaps no other public figure in American who has been subjected to as much Monday morning quarterbacking as you have over the past six months," Bachus said.

The panel's chairman, Rep. Barney Frank, D-Mass., suggested that the economy is not suffering through a garden-variety slowdown.

"I don't want to appeal to you to use the word recession, because I'm not going to be responsible for the nervous people at the stock market who overreact when you twitch your nose," Frank told Bernanke. "But the problems we now have are different."

Much of the current problems can be traced to the housing meltdown. Asked when the housing market might stabilize, Bernanke thought it possible that by "later this year it will stop being such a big drag directly" on the economy. However, house prices probably will decline into next year, he added.

"It is very difficult to know, and we've been wrong before," Bernanke said.

Even as the Fed tries to shore up the economy, it must remain mindful of inflation pressures, Bernanke said.

Record high oil prices — topping $100 a barrel — are pushing consumer prices upward. That's shrinking paychecks, and with people feeling less well off because the values of their homes have dropped, consumer spending "slowed significantly" toward the end of the year, he said.

The Fed forecasts that inflation will moderate this year compared with last year. But the Fed's recently revised inflation projection of an increase between 2.1 percent and 2.4 percent is higher than its old forecast from the fall.

"Should high rates of overall inflation persist," Bernanke said, "the possibility also exists that inflation expectations could become less well anchored." If people think inflation is escalating, they'll act in ways that could make things even worse, a sort of self-fulfilling prophecy. And Bernanke said that could complicate the Fed's job of trying to nurture economic growth while also keeping inflation under control.

If oil prices continue to skyrocket this year, it would be "hard to maintain low inflation," Bernanke acknowledged.

With the economy slowing and prices rising, fears are growing that the country could be headed for a bout of stagflation, a dangerous economic brew not seen since the 1970s.

Bernanke said that at some point over the course of this year, the Fed will need to "assess whether the stance of monetary policy is properly calibrated" to foster the Fed's objectives of price stability "in an environment of downside risks to growth."

With home foreclosures at record highs, the Fed has proposed rules to crack down on a range of shady lending practices that has burned many of the nation's riskiest "subprime" borrowers — those with spotty credit or low incomes — who have been hardest hit by the housing and credit debacles. The rules also would curtail misleading ads for many types of mortgages and bolster financial disclosures to borrowers.

The effectiveness of the regulations will depend on strong enforcement, Bernanke said. To that end, the Fed is working with other federal and state regulators.

A legislative proposal that would, among other things, change bankruptcy laws to allow judges to cut interest rates and reduce what's owed on troubled borrowers' mortgages could have some "conflicting effects," Bernanke warned. It could help some homeowners and hurt others because it could lead to higher interest rates in the future, he said.

Bernanke said consumers need to be financially savvy — understanding mortgages, credit cards and other financial products.

"Well they certainly need to know the interest rate and how it varies over time and what that means to them in terms of payments," Bernanke said.
'A Man can only become great, when he understands his place in time' - JPM Jr.

Offline sid

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Re: Bernanke signals another rate cut
« Reply #21 on: February 27, 2008, 03:08:44 pm »
Quote
With home foreclosures at record highs, the Fed has proposed rules to crack down on a range of shady lending practices that has burned many of the nation's riskiest "subprime" borrowers — those with spotty credit or low incomes — who have been hardest hit by the housing and credit debacles. The rules also would curtail misleading ads for many types of mortgages and bolster financial disclosures to borrowers.

There's an old saying that "you can't cheat an honest man".

These people, with the exception a a few totally stupid ones I'm sure, knew they couldn't afford the houses they were buying and just let their own greed convince them they actually deserved that "shady" loan they got.

Offline Nailer

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Re: Bernanke signals another rate cut
« Reply #22 on: February 27, 2008, 07:14:41 pm »
I just found out today that my brothers house is going through the forclosure process..
I am a realist that is slightly conservative yet I have some republican demeanor that can turn democrat when I feel the urge to flip independant.
 
The truth shall set you free, if not a 45ACP round will do the trick.. HEHE

Offline Dig

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Bernanke gets blasted at Senate Hearing!!!!!!!!!!!
« Reply #23 on: February 28, 2008, 10:56:06 am »
"Was the economy indicating the need for the drastic rate cut and devaluation of the dollar?"

Bernanke: "I think so."


You f**king think so?


You have stolen trillions from the middle class because of a hunch?


You gotta be f**king kidding me!
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline EchelonMonitor

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Bernanke is a moron
« Reply #24 on: March 14, 2008, 04:41:04 am »
Bernanke sees the Euro/Dollar going from 1.55 to 1.56 and says "See, the dollar is going up!"

Offline MikiQuick123

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Re: Bernanke is a moron
« Reply #25 on: March 14, 2008, 04:53:35 am »
Ron Paul made him squirm.


http://www.ronpaulwarroom.com/?p=7534
"All that is necessary for the triumph of evil is for good men to do nothing"-Edmund Burke

Offline EchelonMonitor

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Re: Bernanke is a moron
« Reply #26 on: March 14, 2008, 05:29:49 am »
Omg, just found this music video about Bernanke from Columbia Business School--made in spring 2006 and very relevant to now.

http://uk.youtube.com/watch?v=ipJTqCbETog

Offline MikiQuick123

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Re: Bernanke is a moron
« Reply #27 on: March 14, 2008, 05:39:36 am »
I want to laugh and cry at the same time. Cool video Echelon!
"All that is necessary for the triumph of evil is for good men to do nothing"-Edmund Burke

Offline EchelonMonitor

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Re: Bernanke is a moron
« Reply #28 on: March 14, 2008, 05:44:35 am »
Jim Rogers says Bernanke should resign and the Federal Reserve should be abolished.

He says Bernanke is throwing gasoline on a raging fire.

He also says that while other central banks around the world, including China, Europe, Norway, etc., are being honest about the situation, the Federal Reserve and US government are lying to the people.

http://uk.youtube.com/watch?v=lTXEWh2yT_g

Offline MikiQuick123

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Re: Bernanke is a moron
« Reply #29 on: March 14, 2008, 05:50:34 am »
Saw this yesterday, the reporters got on my nerves with their jabs. They were clearly irritated by him. He is of the same opinion as Ron Paul.
"All that is necessary for the triumph of evil is for good men to do nothing"-Edmund Burke

Offline Optimus

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Bernanke: Federal Reserve caused Great Depression
« Reply #30 on: March 20, 2008, 04:49:03 pm »
Bernanke: Federal Reserve caused Great Depression
Fed chief says, 'We did it. …very sorry, won't do it again'

Posted: March 19, 2008 9:02 pm Eastern
http://www.worldnetdaily.com/index.php?pageId=59405
By David Kupelian

“The Constitution is not an instrument for the government to restrain the people,
it's an instrument for the people to restrain the government.” – Patrick Henry

>>> Global Gulag Media & Forum <<<

Offline vlunkk

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Re: Bernanke: Federal Reserve caused Great Depression
« Reply #31 on: March 20, 2008, 05:18:06 pm »
Bernanke: Federal Reserve caused Great Depression
Fed chief says, 'We did it. …very sorry, won't do it again'

Posted: March 19, 2008 9:02 pm Eastern
http://www.worldnetdaily.com/index.php?pageId=59405
By David Kupelian


great post, i posted the link to all my disbelieving friends.
Monitor "our" representatives 24/7, not the common man.

Offline Mr Grinch

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Re: Bernanke: Federal Reserve caused Great Depression
« Reply #32 on: March 20, 2008, 08:53:28 pm »
    


WND Exclusive MONEYNETDAILY
Bernanke: Federal Reserve
caused Great Depression
Fed chief says, 'We did it. …
very sorry, won't do it again'
Posted: March 19, 2008
9:02 pm Eastern

By David Kupelian
© 2008 WorldNetDaily

Despite the varied theories espoused by many establishment economists, it was none other than the Federal Reserve that caused the Great Depression and the horrific suffering, deprivation and dislocation America and the world experienced in its wake. At least, that's the clearly stated view of current Fed Chairman Ben Bernanke.

The worldwide economic downturn called the Great Depression, which persisted from 1929 until about 1939, was the longest and worst depression ever experienced by the industrialized Western world. While originating in the U.S., it ended up causing drastic declines in output, severe unemployment, and acute deflation in virtually every country on earth. According to the Encyclopedia Britannica, "the Great Depression ranks second only to the Civil War as the gravest crisis in American history."

What exactly caused this economic tsunami that devastated the U.S. and much of the world?

In "A Monetary History of the United States," Nobel Prize-winning economist Milton Friedman along with coauthor Anna J. Schwartz lay the mega-catastrophe of the Great Depression squarely at the feet of the Federal Reserve.


Here's how Friedman summed up his views on the Fed and the Depression in an Oct. 1, 2000, interview with PBS:

 

    PBS: You've written that what really caused the Depression was mistakes by the government. Looking back now, what in your view was the actual cause?

    Friedman: Well, we have to distinguish between the recession of 1929, the early stages, and the conversion of that recession into a major catastrophe.

    The recession was an ordinary business cycle. We had repeated recessions over hundreds of years, but what converted [this one] into a major depression was bad monetary policy.

    The Federal Reserve System had been established to prevent what actually happened. It was set up to avoid a situation in which you would have to close down banks, in which you would have a banking crisis. And yet, under the Federal Reserve System, you had the worst banking crisis in the history of the United States. There's no other example I can think of, of a government measure which produced so clearly the opposite of the results that were intended.

    And what happened is that [the Federal Reserve] followed policies which led to a decline in the quantity of money by a third. For every $100 in paper money, in deposits, in cash, in currency, in existence in 1929, by the time you got to 1933 there was only about $65, $66 left. And that extraordinary collapse in the banking system, with about a third of the banks failing from beginning to end, with millions of people having their savings essentially washed out, that decline was utterly unnecessary.

    At all times, the Federal Reserve had the power and the knowledge to have stopped that. And there were people at the time who were all the time urging them to do that. So it was, in my opinion, clearly a mistake of policy that led to the Great Depression.

Although economists have pontificated over the decades about this or that cause of the Great Depression, even the current Fed chairman Ben S. Bernanke, agrees with Friedman's assessment that the Fed caused the Great Depression.

At a Nov. 8, 2002, conference to honor Friedman's 90th birthday, Bernanke, then a Federal Reserve governor, gave a speech at Friedman's old home base, the University of Chicago. Here's a bit of what Bernanke, the man who now runs the Fed – and thus, one of the most powerful people in the world – had to say that day:

 

    I can think of no greater honor than being invited to speak on the occasion of Milton Friedman's ninetieth birthday. Among economic scholars, Friedman has no peer. …

    Today I'd like to honor Milton Friedman by talking about one of his greatest contributions to economics, made in close collaboration with his distinguished coauthor, Anna J. Schwartz. This achievement is nothing less than to provide what has become the leading and most persuasive explanation of the worst economic disaster in American history, the onset of the Great Depression – or, as Friedman and Schwartz dubbed it, the Great Contraction of 1929-33.

    … As everyone here knows, in their "Monetary History" Friedman and Schwartz made the case that the economic collapse of 1929-33 was the product of the nation's monetary mechanism gone wrong. Contradicting the received wisdom at the time that they wrote, which held that money was a passive player in the events of the 1930s, Friedman and Schwartz argued that "the contraction is in fact a tragic testimonial to the importance of monetary forces."

After citing how Friedman and Schwartz documented the Fed's continual contraction of the money supply during the Depression and its aftermath – and the subsequent abandonment of the gold standard by many nations in order to stop the devastating monetary contraction – Bernanke adds:

 

    … Before the creation of the Federal Reserve, Friedman and Schwartz noted, bank panics were typically handled by banks themselves – for example, through urban consortiums of private banks called clearinghouses. If a run on one or more banks in a city began, the clearinghouse might declare a suspension of payments, meaning that, temporarily, deposits would not be convertible into cash. Larger, stronger banks would then take the lead, first, in determining that the banks under attack were in fact fundamentally solvent, and second, in lending cash to those banks that needed to meet withdrawals. Though not an entirely satisfactory solution – the suspension of payments for several weeks was a significant hardship for the public – the system of suspension of payments usually prevented local banking panics from spreading or persisting. Large, solvent banks had an incentive to participate in curing panics because they knew that an unchecked panic might ultimately threaten their own deposits.

    It was in large part to improve the management of banking panics that the Federal Reserve was created in 1913. However, as Friedman and Schwartz discuss in some detail, in the early 1930s the Federal Reserve did not serve that function. The problem within the Fed was largely doctrinal: Fed officials appeared to subscribe to Treasury Secretary Andrew Mellon's infamous 'liquidationist' thesis, that weeding out "weak" banks was a harsh but necessary prerequisite to the recovery of the banking system. Moreover, most of the failing banks were small banks (as opposed to what we would now call money-center banks) and not members of the Federal Reserve System. Thus the Fed saw no particular need to try to stem the panics. At the same time, the large banks – which would have intervened before the founding of the Fed – felt that protecting their smaller brethren was no longer their responsibility. Indeed, since the large banks felt confident that the Fed would protect them if necessary, the weeding out of small competitors was a positive good, from their point of view.

    In short, according to Friedman and Schwartz, because of institutional changes and misguided doctrines, the banking panics of the Great Contraction were much more severe and widespread than would have normally occurred during a downturn. …

    Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

    Best wishes for your next ninety years.

Today, the entire Western financial world holds its breath every time the Fed chairman speaks, so influential are the central bank's decisions on markets, interest rates and the economy in general. Yet the Fed, supposedly created to smooth out business cycles and prevent disruptive economic downswings like the Great Depression, has actually done the opposite.

The History Of Political Correctness or: Why have things gotten so crazy?

Common sense is not so common.

I do not agree with what you have to say, but I'll defend to the death your right to say it.
Voltaire

Offline yanaar

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Re: Bernanke: Federal Reserve caused Great Depression
« Reply #33 on: March 20, 2008, 09:59:46 pm »
Guess Ron Paul's been getting to him (Bernanke).
"The man who dies wealthy dies in disgrace." 
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Offline bigron

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Reviving the R.T.C. : The Next Big Plan From The Bernanke Politburo
« Reply #34 on: March 29, 2008, 07:56:33 am »
Reviving the R.T.C.

The Next Big Plan From The Bernanke Politburo

By Mike Whitney

 http://www.informationclearinghouse.info/article19632.htm

"Instead of just propping up bankrupt banks, the governments should be democratising them - mobilising their assets to stimulate the productive economy, repairing infrastructure, researching and developing new markets, and refitting western economies to combat climate change." Iain MacWhirter, "The Red Menace"   

28/03/08 "ICH' -- - The Federal Reserve is presently considering an emergency operation that is so risky it could send the dollar slip-sliding over the cliff. The story appeared in the Financial Times earlier this week and claimed that the Fed was examining the feasibility of buying back hundreds of billions of dollars of mortgage-backed securities (MBS) with public money to restore investor confidence and clear the struggling banks' balance sheets. The Fed, of course, denied the allegations, but the rumors abound. Currently the banking system is so clogged with exotic investments, for which there is no market, they can't perform their main task of providing credit to businesses and consumers. Bernanke's job is to clear the credit logjam so the broader economy can begin to grow again. So far, he has failed to achieve his objectives.

Since September, Bernanke has slashed interest rates by 3 percent and opened various auction facilities (Term Securities Lending Facility, the Term Auction Facility, the Primary Dealer Credit Facility, and the new Term Securities Lending Facility) which have made $400 billion available in low-interest loans to banks and non banks. He has also accepted a “wide range” of collateral for Fed repos including mortgage-backed securities and collateralized debt obligations (CDOs) which are worth considerably less than what the Fed is offering in exchange. But the Fed's injections of liquidity have not solved the basic problem which is the fall in housing prices and the persistent downgrading of mortgage-backed assets that investors refuse to buy at any price. In fact, the troubles are gradually getting worse and spreading to areas of the financial markets that were previously thought to be risk-free. The credit slowdown has also put additional pressure on hedge funds and other financial institutions forcing them to quickly deleverage to meet margin calls by dumping illiquid assets into a saturated market at fire-sale prices. This process has been dubbed the “great unwind”.

In the last six years, the mortgage-backed securities market has ballooned to a $4.5 trillion dollar industry. The investment banks are presently holding about $600 billion of these complex debt instruments. So far, the banks have written-down $125 billion in losses, but there's a lot more carnage to come. Goldman Sachs estimates that banks, brokerages and hedge funds will eventually sustain $460 billion in losses, three times greater than today. Even so, those figures are bound to increase as the housing market continues to deteriorate and capital is drained from the system.

The Fed has neither the resources nor the inclination to scoop up all the junk bonds the banks have on their books. Bernanke has already exposed about half of the Central Bank's balance sheet to credit risk. ($400 billion) But what is the alternative? If the Fed doesn't intervene, then many of country's largest investment banks will wind up like Bear Stearns; DOA. After all, Bear is not an isolated case; most of the banks are similarly leveraged at 25 or 35 to 1. They are also losing more and more capital each month from downgrades, and their main streams of revenue have been cut off. In fact, many of Wall Street's financial titans are technically insolvent already. The generosity of the Fed is the only thing that keeps them from bankruptcy. 

It's generally accepted that the market for MBS will not improve until housing prices stabilize, but that's a long way off. Mortgages are the cornerstone upon which the multi-trillion dollar structured investment market rests, and that cornerstone is crumbling. If housing prices continue to fall, the MBS market will remain frozen and banks will fail; it is as simple as that. No one is going to purchase derivatives when the underlying asset is losing value. The Bush administration is pushing for a “rate freeze” and other clever ways to keep homeowners from defaulting on their mortgages, but its a hopeless cause. The clerical work needed to change these complex mortgages is already proving to be a daunting task. Plus, since 60 percent of these mortgages were securitized, it is nearly impossible to change the terms of the contracts without first getting investor approval; another fly in the ointment.

Also, the tentative plans to expand Fannie Mae and Freddie Mac, so they can absorb larger mortgages (up to $729,000 jumbo loans) is putting an enormous strain on the already-overextended GSE's. By attempting to reflate the housing bubble, the administration will only increase the rate of foreclosures and put the two mortgage behemoths at risk of default without any clear sign that it will help.

Yesterday's release of the Case/Schiller Index of the 20 largest cities in the country, shows that housing prices have slipped 10.7 percent in the last year while sales were down 23 percent year over year. That means that retail equity of US homes just took a $2 trillion haircut. Still, prices have a long way to go before they catch up to the 50 percent decline in sales from the peak in 2005. From this point on, prices should fall and fall fast; following a trajectory as steep as sales. Many economist expect housing prices to drop at least 30% (Paul Krugman and G-Sax) which means that $6 trillion will be shaved from aggregate home equity. In a slumping market, many homeowners will be better off just “walking away” from their mortgage instead of making payments on an asset of steadily decreasing value. Who wants to make monthly payments on a $500,000 mortgage when the current value of the house is $350,000? It's easier to pack the kids and vamoose then waste a lifetime as a mortgage slave. Besides, the Bush administration has no interest in helping the little guy stay out of foreclosure. Its a joke. All of the rescue plans are designed with just one purpose in mind; to save Wall Street and the banking establishment. Period.

There is a widespread belief that Bernanke has been proactive in addressing the turmoil in the credit markets. But it's not true. The Fed chairman has simply responded to events as they unfold. The collapse of Bears Stearns came just weeks after the SEC had checked the bank's reserves and decided that they had sufficient capital to weather the storm ahead. But they were wrong. The bank's capital ($17 billion) vanished in a matter of days after word got out that Bear was in trouble. The sudden run on the bank created a risk to other banks and brokerages that held derivatives contracts with Bear. Something had to be done; Rome was burning and Bernanke was the only man with a hose.

According to the UK Telegraph: “Bear Stearns had total (derivatives) positions of $13.4 trillion. This is greater than the US national income, or equal to a quarter of world GDP - at least in "notional" terms. The contracts were described as "swaps", "swaptions", "caps", "collars" and "floors". This heady edifice of new-fangled instruments was built on an asset base of $80bn at best.

On the other side of these contracts are banks, brokers, and hedge funds, linked in destiny by a nexus of interlocking claims. This is counterparty spaghetti. To make matters worse, Lehman Brothers, UBS, and Citigroup were all wobbling on the back foot as the hurricane hit.

"Twenty years ago the Fed would have let Bear Stearns go bust," said Willem Sels, a credit specialist at Dresdner Kleinwort. "Now it is too interlinked to fail." (Ambrose Evans-Pritchard, UK Telegraph)

Bernanke felt he had no choice but to step in and try to minimize the damage, but the outcome was disappointing. Bernanke and Secretary of the Treasury Henry Paulson worked out a deal with JP Morgan that committed $30 billion of taxpayer money, without congressional authority, to buy toxic mortgage-backed securities from a privately-owned business that was failing because of its own speculative bets on dodgy investments. Wow. The transaction turned out to be bad for shareholders, bad for employees and bad for taxpayers. It made the Federal Reserve look like the unelected and unaccountable oligarchy of bankster sharpies they really are. The only people who made out were the investors who were holding derivatives contracts that would have been worthless if Bear went toes up.

Still,the prospect of a system-wide derivatives meltdown left Bernanke with few good options, notwithstanding the moral hazard of bailing out a maxed-out, capital impaired investment bank that should have been fed to the wolves.

It is worth noting that derivatives contracts are a fairly recent addition to US financial markets. In 2000, derivatives trading accounted for less than $1 trillion. By 2006 that figure had mushroomed to over $500 trillion. And it all can be traced back to legislation that was passed during the Clinton administration.

“A milestone in the deregulation effort came in the fall of 2000, when a lame-duck session of Congress passed a little-noticed piece of legislation called the Commodity Futures Modernization Act. The bill effectively kept much of the market for derivatives and other exotic instruments off-limits to agencies that regulate more conventional assets like stocks, bonds and futures contracts.

Supported by Phil Gramm, then a Republican senator from Texas and chairman of the Senate Banking Committee, the legislation was a 262-page amendment to a far larger appropriations bill. It was signed into law by President Bill Clinton that December.” (“What Created this Monster” Nelson Schwartz, New York Times)

Now the investment giants are lashed together by trillions of dollars of unregulated counterparty swaps. If one bank fails, it could domino through the whole system. Bernanke now finds himself in the unenviable position of having to make sure that all the equity bubbles are properly inflated so the banking system doesn't suddenly come crashing to earth. Meanwhile, the tumbling housing market has paralyzed the corporate bond and structured investment markets which means that Bernanke's job will get much harder, if not impossible.

The Fed chief is now facing a number of brushfires that will have to be put out immediately. The first of these is short term lending rates, which have stubbornly ignored Bernanke's massive liquidity injections and continued to rise. The banks are increasingly afraid to lend to each other because they don't really know how much exposure the other banks have to risky MBS. This distrust has sent interbank lending rates soaring above the Fed funds rate to more than double in the past month alone. So far, the Fed's TAF hasn't helped to lower rates, which means that Bernanke will have to take more extreme measures to rev up bank lending again. That's why many Fed-watchers believe that Bernanke will ultimately coordinate a $500 billion to $1 trillion taxpayer-funded bailout to buy up all the MBSs from the banks so they can resume normal operations. Of course, any Fed-generated scheme will have to be dolled up with populous rhetoric so that welfare for banking tycoons looks like a selfless act of compassion for struggling homeowners. That shouldn't be a problem for the Bush public relations team.

The probable solution to the MBS mess is the restoration of the Resolution Trust Corp., which was created in 1989 to dispose of assets of insolvent savings and loan banks. The RTC would create a government-owned management company that would buy distressed MBS from banks and liquidate them via auction. The state would pay less than full-value for the bonds (The Fed currently pays 85% face-value on MBS) and then take a loss on their liquidation. “According to Joseph Stiglitz in his book, Towards a New Paradigm in Monetary Economics, the real reason behind the need of this company was to allow the US government to subsidize the banking sector in a way that wasn't very transparent and therefore avoid the possible resistance.”

The same strategy will be used again. Now that Bernanke's liquidity operations have flopped, we can expect that some RTC-type agency will be promoted as a prudent way to fix the mortgage securities market. The banks will get their bailout and the taxpayer will foot the bill.

The problem, however, is that the dollar is already falling against every other currency. (On Wednesday, the dollar plunged to $1.58 per euro, a new record) If Bernanke throws his support behind an RTC-type plan; it will be seen by foreign investors as a hyper-inflationary government bailout, which could precipitate a global sell-off of US debt and trigger a dollar crisis.

Reuters James Saft puts it like this:

“It is also hugely risky in terms of the Fed's obligation to maintain stable prices.... it could stoke inflation to levels intolerable to foreign creditors, provoking a sharp fall in the dollar as they sought safety elsewhere.” (Reuters)

Saft is right; foreign creditors will see it as an indication that the Fed has abandoned standard operating procedures so it can inflate its way out of a jam. According to Saft, the estimated price for this folly could be as high as $1 trillion dollars. Foreign investors would have no choice except to withdraw their funds from US markets and move them overseas. In fact, that appears to be happening already. According to the Wall Street Journal:

"While cash continues to pour into the U.S. from abroad, this flow has been slowing. In 2007, foreigners' net acquisition of long-term bonds and stocks in the U.S. was $596 billion, down from $722 billion in 2006, according to Treasury Department data. From July to December as jitters about securities linked to US subprime mortgages spread, net purchases were just $121 billion, a 65% decrease from the same period a year earlier. Americans, meanwhile, are investing more of their own money abroad.” ("A US Debt Reckoning" Wall Street Journal)

$121 billion does not even put a dent the $700 billion the US needs to pay its current account deficit. When foreign investment drops off, the currency weakens. Its no wonder the dollar is falling like a stone.

Bernanke should seriously consider the consequences of his next move before he acts. Once the dollar starts to free-fall, there's no telling where it will land.
 

Offline hellcatjr

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Bernanke Warns of Possible Recession (well fcking DUH, thanks Ben)
« Reply #35 on: April 02, 2008, 10:31:49 am »
Bernanke Warns of Possible Recession
Wednesday April 2, 11:21 am ET
By Jeannine Aversa, AP Economics Writer

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke warned Wednesday the economy may shrink over the first half of this year and that "a recession is possible." Yet, he didn't offer any assurances of further interest rate cuts.


Bernanke's testimony to the Joint Economic Committee was a much more pessimistic assessment of the economy's immediate prospects amid a trio of crises -- housing, credit and financial.

"It now appears likely that gross domestic product (GDP) will not grow much, if at all, over the first half of 2008 and could even contract slightly," Bernanke told lawmakers. (O rly? When our GDP for Q4 was what 0.6%? And a 'slight' contraction? We don't have 'room' for slight contractions.)

GDP measures the value of all goods and services produced within the United States and is the best barometer of the United States' economic health. Under one rule, six straight months of declining GDP, would constitute a recession.

Still, Bernanke said that he expects more economic growth in the second half of this year and into 2009, helped by the government's $168 billion stimulus package of tax rebates for people and tax breaks for businesses as well as the Fed's aggressive reductions to a key interest rate. Nevertheless, the chairman acknowledged uncertainty about the Fed's next steps, notwithstanding the mounting economic woes.

"Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year," Bernanke said.

To try to limit the damage, the Federal Reserve has aggressively cut a key interest rate, now at 2.25 percent, to spur buying and investing by individuals and businesses. At the Fed's last meeting in March, however, two members dissented from the Fed's decision to sharply cut rates, showing a rare division in the often unified front the Fed shows the public. The dissenting officials, who had reputations for being extra concerned about inflation, favored a smaller reduction. Although Bernanke said he hopes inflation will moderate in coming quarters, he acknowledged that high energy prices have clouded the inflation outlook.

Many economists had predicted the Fed might drop it key that rate again when it next meets April 29-30, although Bernanke's remarks cast some doubt on that scenario.

On Wall Street, stocks initially dropped after the Fed chief's remarks but later turned slightly positive.

Housing, credit and financial woes are threatening to push the country into a deep recession. The situation has emerged as a top concern for presidential contenders and a hot-button issue for Congress. It has thrust the White House and the Fed in crisis-management mode.

Faced with mounting home foreclosures and job losses, Bernanke has been under immense political and public pressure to provide relief and help turn around a faltering economy.

Committee Chairman Sen. Charles Schumer, D-N.Y., peppered Bernanke with questions about the Fed's moves to aid once mighty Wall Street firm Bears Stearns and then juxtaposed that with -- what he believed was a lack of help -- to millions of people at risk of losing their homes.

"I hope that you will use your position to jawbone this administration to get behind the housing relief effort before Congress." Schumer said. "Addressing the housing crisis head-on will do as much to instill confidence in the markets as lowering interest rates or bolstering regulatory oversight of wayward mortgage lenders and financial institutions. We need to do all of it."

"Wall Street has been helped. Now it's time to help Main Street," added Rep. Carolyn Maloney, D-N.Y.

Many private analysts believe the economy contracted in the first three months of this year, signaling the start of a recession. The government releases first-quarter results later this month. The economy lost jobs in January and February, with many economists bracing for more losses when the report for March is released on Friday. Bernanke said he expected unemployment to move "somewhat higher in coming months."

"Clearly, the U.S. economy is going through a very difficult period," he told lawmakers, adding that all the problems have weighed heavily on consumers whose spending is indispensable to economic vitality.

The Fed also has taken a series of extraordinary steps in recent weeks and months to prop up the nation's financial system, which has been in state of high jeopardy.

In a controversial move, the Fed backed a $29 billion lifeline as part of JP Morgan's deal to take over the troubled Bear Stearns, the nation's fifth largest investment house, which was on the brink of bankruptcy. Bear Stearns had invested heavily in risky mortgage-backed securities that eventually soured with the collapse of the housing market.

Bernanke defended the move. "With financial conditions fragile, the sudden failure of Bear Stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence," he said. "The damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain."

Although the taxpayers are on the hook for the $29 billion, Bernanke said he was "reasonably confident we'll be able to recover the full amount." He also said that Bear Stearns' investments that the Fed took control of "are entirely investment grade."

In addition, the Fed -- in the broadest use of its credit authority since the 1930s -- agreed to temporarily let big investment firms obtain emergency financing from the Fed, a privilege that previously had been granted only to commercial banks.

Those actions have prompted criticism from Democrats and others who contend that the Fed is bailing out Wall Street and putting billions of taxpayers' dollars at potential risk. Bernanke and the Bush administration argued that the actions were warranted to avert a potential meltdown in the entire financial system, something that would have devastating consequences for the overall economy.

Asked about the Bush administration's plan to revamp the country's creaking financial system, Bernanke said it was vital for the Fed to have sufficient enforcement powers. Under the plan, the Fed would become a top cop in charge of financial market stability but would lose its day-to-day supervision of U.S. banks.
'A Man can only become great, when he understands his place in time' - JPM Jr.

Offline Nailer

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Re: Bernanke Warns of Possible Recession (well fcking DUH, thanks Ben)
« Reply #36 on: April 02, 2008, 10:34:46 am »
I believe he is a little behind the times.. He must have taken the special kids schoolbus
I am a realist that is slightly conservative yet I have some republican demeanor that can turn democrat when I feel the urge to flip independant.
 
The truth shall set you free, if not a 45ACP round will do the trick.. HEHE

Offline andy1033

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Re: Bernanke Warns of Possible Recession (well fcking DUH, thanks Ben)
« Reply #37 on: April 02, 2008, 10:48:03 am »
He knows, being a supposed historian on the 29 crash he knows what history shows him.

Offline boomerkel

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Bernanke, J.P. Morgan (Jamie Diamond) and Bear Stearns (Allen Schwartz) testifying Senate Finance Committee

Tune into CNBC to hear Bernanke, Jamie Diamond and Allen Schwartz explain away why our money is being used to bailout Bear Stearns and J.P. Morgan.  The reality is that it’s not just a bailout it a HUGE COVERUP.  They could not afford to see Bears Stearns go into bankruptcy and have all Bear's documents accessible in the public domain.  But, then again, some judge would have sealed the records like they did with REFCO.

The only thing that Senator Christopher Dodd and a majority of Congress  are trying to do here is convince the dumb ass public that they have thoroughly looked into this transaction, but I will guarantee you that you will hear nothing about all the skeletons in Bear and Morgan's closets, that being thousands of companies destroyed by Naked Short Selling.

I can’t wait to hear what  Ron Paul has to say!

For a more detail explanation click on the following links:

Which Bear Stearns Story Do You Think is the Truth?

This Absolutely Amazes Me! … Several Forum Members Made Excellent

NAKED SHORT SELLING ... What is That?


Cox is so full of POOP!

This Should Be A History Making Cover Up!


Senate Panel Chief Questions Dimon's Fed Seat
http://www.reuters.com/article/politicsNews/idUSN2645506520080326?feedType=RSS&feedName=politicsNews&rpc=22&sp=true

"The chairman of the U.S. Senate Banking Committee on Wednesday expressed concern that JPMorgan Chase & Co head Jamie Dimon held a Federal Reserve Bank of New York board seat while his bank was in talks with the Federal Reserve over a deal to acquire Bear Stearns." ... Sounds like a conflict of interest to me!

FINANCE LEADERS QUESTION PLAYERS IN BEAR STEARNS DEAL
Baucus-Grassley letter asks Fed, Treasury Secretary, and CEOs to detail agreement
http://finance.senate.gov/press/Bpress/2008press/prb032608.pdf


"I believe that banking institutions are more dangerous to our liberties than standing armies." ... Thomas Jefferson

Offline boomerkel

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I left something out ... Who bought all those PUTS? ??? ... We still don't have an answer! 8)

"Who Traded 55,000 Bear $30 Puts Tuesday?"

"I believe that banking institutions are more dangerous to our liberties than standing armies." ... Thomas Jefferson