Author Topic: The Bernanke Brief  (Read 189836 times)

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Offline bigron

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Bernanke running out of ammo
« Reply #80 on: October 09, 2008, 08:58:21 am »
Bernanke running out of ammo

By Julian Delasantellis
 http://www.atimes.com/atimes/Global_Economy/JJ10Dj01.html

A well-worn bit of wisdom from rural America advises one that it is pointless to "close the barn door after the cows have escaped". By participating in yesterday's global round of short-term interest rate cuts, US Federal Reserve chairman Ben Bernanke cannot be said to have been guilty of this offense. Instead, what he has done is to close the barn door after the cows have escaped, been captured down the road by cattle rustlers, then sold, slaughtered and ground up into dog food chunks.

For the 10th time since August, 2007, the Federal Reserve has engineered an interest rate cut in order to counter the spreading effects of the now global financial and credit crisis. With twin 50 basis point cuts in both the Discount Rate, to 1.75%, and the Federal Funds Target Rate, to 1.5%, the Fed has now just about

 

emptied its magazine of possible interest rate cuts.

Yesterday's cuts, coordinated across the globe with the Bank of England, the European Central Bank, the Swiss Central Bank, and the Riksbank of Sweden, with the Bank of China participating independently with cuts of its own, are the latest policy initiatives employed by desperate and besieged world economic officials to contain a truly awesome fire-breathing ogre that goes by the name of deleveraging, a monster that seems to get worse, and more importantly, laugh away all attempts to contain it, with every passing day.

It's only natural to characterize the world financial crisis by what's happening in the world's stockmarkets. Wednesday was one of those days, when from the moment the sun burst across the horizon in the Western Pacific until it waned in New York about 21 hours later, there was nothing but pain and sorrow for those learning the painful lesson that yet another mortal deity constructed of man, in this case the religion of the God of Money, had failed.

Stocks opened in Tokyo, proceeded to fall by the greatest amount since the crash of 1987 and stock trading was halted in Indonesia (as it was in Russia, Ukraine, and Romania) after its benchmark stock index, the Jakarta Composite, dropped 10% early in the trading day. Most major European indices, even after the news of the coordinated rate cuts were announced, fell by between 4% and 7%.

In the United States, the Dow Jones Industrial Average, after making a feeble attempt at a rally in the first hours of trading, was back selling off in the afternoon, closing down a further 189 points. Just since mid-day last Friday, when Treasury Secretary "Hank" Paulson's bailout plan passed the US House of Representatives, the Dow has lost 1,500 points, 14%, of its value; just since September 1, it's off 2,500 points, or just over 21% of its value.

This week marks the first anniversary of the all time high of the Dow, at just under 14,300. Since then, the market has lost 35% of its value, over 5,000 points, or almost US$9 trillion of investor wealth. For those who like their karma extra sweet, it is also the first anniversary of the premiere of the Fox Business Network, specifically established by News Corp chairman Rupert Murdoch and his consigliore Roger Ailes, to tell the story of American business that they believed the rest of the financial media were not telling, namely, that all was right and that the future looked blindingly bright, for the unregulated private sector that was at the core of American capitalism.

But world equity's trials and tribulations are nothing compared to what's going on in the credit and short-term debt markets. This, much more than stocks' travails, was what drove the trembling hands of the central bankers on Wednesday morning.

If you're an American parent of a child past puberty, or maybe if you're just an American with a very good memory, you should remember your experiences at the uniquely American form of young adult socialization called the first boy/girl dance.

In a brightly lit and decorated middle school gymnasium, you would find the entirety of that year's class of 11- or 12-year-olds. On one side of the court would be the boys, all itchy and pimply and fidgety in their first woollen sports coat, long-sleeve dress-shirt buttoned up to the adam's apple, and a striped tie, whether real or clip on, around their necks. On the other side of the court would be the girls, anxious and nervous in their own right, in their first pair of heels and hose, wearing a party dress, trimmed with frilly lace, that they were under strict orders not to get dirty.

The adults, parents and teachers, prod the two sides to get together. That was usually accomplished by means of some brave little fellow crossing the no-man's land of mid-court to ask a girl to dance. Others follow, and with that the process of inter-gender acculturation that will culminate in marriage and family has commenced.

What's going today in the financial markets is like watching a tape of a boy/girl dance in reverse. Substitute boys for borrowers and girls for lenders, or vice versa. When the dance is in full flower, the boys/lenders are interacting with the girls/borrowers, and everybody's happy. However, run the dance backwards, and the results are a lot more problematical. Gradually you'll see fewer and fewer dancers on the floor, fewer and fewer interactions between borrowers and lenders. At the end of the backward-run tape, you see the two sides completely separate and alienated from each other - exactly the way the short-term credit markets are today.

From the sunup in Asia to sundown in New York of every business day, a multi-trillion dollar dance is conducted of short-term borrowing and lending, a key component of which is called the commercial paper market.

Say an aircraft manufacturer is receiving payment for a new aircraft delivery, but does not have to make payments for payroll or for raw materials for new aircraft until next week. In the system that was fully functioning until about 10 days ago, the company, acting through an investment bank, could invest, could "buy�, short-term interest-bearing debt of other banks called commercial paper. A company that had a similar short-term funding need could issue, could "sell" commercial paper for the duration of its shortage.

In essence, this process cuts out the role of the commercial banks, since the buyers of commercial paper receive a higher interest rate in this market than they would from the banks, and the sellers borrow more cheaply than what the banks would charge.

So when short-term instruments such as commercial paper can't get sold, it's like the air that the real economy depends on to breathe is getting sucked out. Even in the face of now sometimes daily multi-hundred billion dollar world central bank infusions in the short-term money markets, banks are hoarding what short-term reserves they have - it's not going back out into the commercial paper market.

This explains the incredible drop in yield of short-term interest rates, sometimes to under 0.25%, on US government guaranteed one-month Treasury bills. Even for a loan whose term may only be a few days or less, the brevity of the loan matters little if the borrower is not around, has declared bankruptcy, when the paper is due to be repaid.

Conversely, the demand for short-term still funding exists, even as the potential supply evaporates. The demand for money raises its price; interest rates are the price of money. The various interest rates that determine the health of the short term money market, namely, the London Interbank Offered Rate (LIBOR) and the Federal Funds Market Rate (as opposed to the rate at which the Fed wants these transactions to occur at, the Target Rate) are all trading well above where their historical relationships with other market rates say they should be. LIBOR, in particular, on grim days now sometimes trades higher than it was last year, although the US Fed has cut rates, including today, 3.75% since then.

Since late April, the Federal Funds Target rate has been at 2%, but on many days during the month-long financial pandemonium we know call September, 2008, it traded significantly above that rate, past 4% or more. Getting that rate down has been the core goal of the massive fire hose of liquidity, probably now closing in on $1 trillion by now, that the Fed and other central banks have poured on the money markets these past few weeks.

But if they could barely keep the Funds Rate at 2% after putting a trillion dollars in the fight, how much less likely is it that they're now going to be able to keep it even lower, at 1.5%?

Matter of confidence
But what Wednesday's co-ordinated rate cuts could do is to restore a bit of confidence in the markets. Don't knock that; when Bernanke and Co had a chance to do that in mid-September they took a pass, and a whole lot of the world financial system's pain can be traced to events that soon followed that decision, the decision they reversed today.

In September, following the no-cut decision of the previous day, I noted how Bernanke's decision had seemed to ignore the developing crisis of confidence and solvency in the financial markets (see Ben first, economy second, Asia Times Online, September 18, 2008).

"A Fed rate cut might not have done much; it might have only bolstered confidence a bit, but, to paraphrase Jackie DeShannon's 1965 pop song 'what the world needs now is love', what the financial system needs now is confidence, sweet confidence - it's the only thing that there's just too little of ... "

But on that day the Fed said no. Then came the Paulson Plan, the 12-day legislative kerfuffle over its passage, at the end of  which the financial system emerged in a far more dire state than it was in during mid-September. There's no guarantee that a cut back then would have staved off the current world catastrophe, but, with federal funds now trading so far above the target rate, Bernanke seems to think he can instill the confidence now, with the financial system much more fragile, that he didn't think all that necessary just over three weeks ago.

But it's a lot harder getting confidence back once its gone than to just maintain it. The markets are not at all certain the rate cuts will resuscitate the short-term credit markets-thus, the aggressively underwhelming response in the equity markets following the cuts.

If the markets are now saying that the Paulson Plan is too little (even at $700 billion) and too late, and the rate cuts are like

 

spitting on a forest fire, what's left? Amazingly, the solution may involve some manner or form of government nationalization of the financial sector, and that may be coming a lot faster than previously expected.

Last week, I speculated that all the various rescue proposals being tried and then failing might not be designed to ultimately save the system, just to keep it afloat until the inauguration of the next US president on January 20. (See Crisis control fit for the TV age, Asia Times Online, October 3, 2008). Now it is possible that the required time horizons for all these band-aids and palliatives is not January, but just four weeks away - until the day after the US elections.

What is that solution? Amazingly enough, and now almost 30 years after Margaret Thatcher commenced the capitalist revolution by selling off Britain's proudest heritage of socialism, its state-owned industries, talk is returning to the prospect of a partial, or nearly complete, nationalization of the financial system - the so called "Swedish solution".

Two weeks ago, University of California at Berkeley economics Professor Brad DeLong laid out this possible solution to the crisis.
Nationalization has the best chance of avoiding large losses and possibly even making money for the taxpayer. And it is the best way to deal with the moral hazard problem ... Congress grants the Federal Reserve Board the power to take any financial firm whatsoever with liabilities and capital of more than $25 billion that is not well capitalized into conservatorship ... requires the Federal Reserve Board to liquidate any financial firm in its conservatorship when it judges that the firm is insolvent.
Now it is revealed that the Paulson bailout plan passed last Friday has in its small print provisions giving the US Treasury Secretary the right to do just that, to "take" equity positions or warrants in the stock of financial companies.

And where can you hear sympathy for this Commie pinko Berkeley subversion? Believe it or not, it's on the editorial pages of the Wall Street Journal. Give this to them; they're not starting small, like proposing a partial nationalization of some small farm bank in Iowa or something. They're going for the gusto, with their eyes on the nation's largest financial institution - Citigroup.
If the feds want to prevent a full-scale rescue of Citigroup, now might be a good time to take Treasury Secretary Hank Paulson's new powers out for a spin. If Citi needs to raise capital, let the Treasury inject some, along with appropriate housecleaning on the management side and upside for taxpayers.
The Wall Street Journal advocating increased government intervention? What's next, pork sandwich recipes in the Jerusalem Post?

This approach is already under way in Britain, under the leadership of Prime Minister Gordon Brown's Chancellor of the Exchequer, Alistair Darling. The question then becomes, if the US and/or UK governments take a small ownership stake in the financial system, say 5%, and that is seen as a failure, wouldn't the natural tendency of government be then not to stop and reassess the policy, but to double down and go at it harder, say to 10%, 20 , or, finally, to 50%+1 - in other words, full control?

George Santayana once said that a fanatic is someone who redoubles his efforts as he loses sight of his goals, and, as George W Bush proved when initiating the Iraq surge, no animal on earth is as fanatical as a politician looking for alternatives to having to admit he was wrong.

In an editorial in the Wall Street Journal, Robert Pozen of MFS Investment Management suggested that, since the problem now seems to be centered in the commercial paper market, a solution specific to that sector's travails should be initiated, in that the US Treasury or Federal Reserve could guarantee transactions just in that sector.

The problem with this proposal is that it would either have to be authorized by the US Congress, which is in no way eager to take upon itself even more public displeasure with another move seen as a banker "bailout", or through another one of the Federal Reserve's remarkable unilateral interpretations and expansions of its authority.

The Fed has been doing so many of these this year, starting with Bear Stearns in March, then to the rescues of Fannie Mae and Freddie Mac and AIG, that one must wonder if Bernanke worries just how much firepower, both in terms of monetary reserves and credibility, he really has left.

Also, since the commercial paper market stretches across the globe, is the US Fed really going to backstop transactions between, say, an Icelandic bank and an Indian steel company? That's a tall order, indeed. Still, this could be a short-term strategy employed from now until the US election, after which, it is hoped, the adults might be in charge.

When the history books start to write of what has just happened in the world financial markets, I hope plenty of space is reserved for that cockeyed cowpuncher of capitalism, Mr All Hat and No Cattle himself, Dallas Federal Reserve Board president Richard Fisher.

All year long, Fisher has been warning that inflation was a bigger threat to the world economy than recession and unemployment, a contention that has now been proved spectacularly wrong. Up until very recently, he had been advocating higher, not lower, short-term interest rates, a policy recommendation that, had it been followed, and knowing what we know now about just how weak the economy actually is, would have been spectacularly harmful.

It was in September that Bernanke, evidently hoping to get Fisher back into his flock and stop his habitual dissents from the post-meeting Fed statements, agreed to the interest rate hold, when a cut could have provided far more benefit than the one we just saw.
Fisher joined in the majority with Wednesday's cut, proving, once again, that the best way to make a person see the light is to have him feel the heat. For many American senior citizens who had hoped to be able to live out their golden years gently drawing down their hard-earned stock wealth, these days they're doing both, feeling the heat and seeing the light. The heat is from the sizzling griddle at their new part-time job at a Florida McDonald's, and the light is what they see flicking off when the next basket of French fries in boiling oil is ready to be served.

Julian Delasantellis is a management consultant, private investor and educator in international business in the US state of Washington. He can be reached at juliandelasantellis@yahoo.com.




Offline Dig

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Paulson/Bernanke explaining why Bankers are justified in stealing your money
« Reply #81 on: October 14, 2008, 07:52:00 am »
These guys are beyond surreal.

Check out the criminals in living color blabbing as they reem the next 10 generations out of all remnants of liberty.
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 Kilika

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Forget something? ;)
"For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows."
1 Timothy 6:10 (KJB)

Offline Dig

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Forget something? ;)

Well Bush also spoke earlier and so did FDIC rep Blair.

In addition, the pundits are also assisting in this grand theft.
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 Kilika

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I thought maybe you intended to provide a link to something.
"For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows."
1 Timothy 6:10 (KJB)

Offline tritonman

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paulson was on c-span. That is what he was talking about.. You should be able to catch a rebroadcast later in the day several times.

Offline Dig

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I thought maybe you intended to provide a link to something.

sorry, it was live.

Can anyone post the transcript or rebroadcast link?

(Am I the only one watching CSPAN/CNBC 24/7? ;))
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 DCUBED

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Bernanke: Quick economic rebound not in cards
« Reply #87 on: October 15, 2008, 12:01:40 pm »
http://news.yahoo.com/s/ap/20081015/ap_on_bi_ge/bernanke

Bernanke: Quick economic rebound not in cards

 WASHINGTON - The country's economic health won't snap back quickly even if badly needed confidence in the U.S. financial system returns and roiled markets finally calm, Federal Reserve Chairman Ben Bernanke cautioned Wednesday.

"Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away," Bernanke said in a speech to the Economic Club of New York.

The government's new powers under the $700 billion financial bailout package signed into law two weeks ago should help reduce risks to the economy, Bernanke said.

Tapping that new authority, the Treasury Department announced Tuesday that it will inject up to $250 billion in U.S. banks in return for partial ownership. It is hoped that banks will use the cash infusion to rebuild their reserves and lend money more freely to businesses and consumers.

The government also plans to buy rotten mortgages and other bad debts held by banks, another new power granted by the bailout package.

The rationale behind capital injections and buying bad debts is to unclog credit. That should help financial markets function more normally again and — in time — help the wobbly economy get back on stronger footing.

"We now have the tools we need to respond with the necessary force to these challenges," Bernanke told the group. Still, he warned, "I am not suggesting the way forward will be easy."

In his speech, Bernanke did not give a fresh clue about the Fed's next move on interest rates.

In a coordinated assault on the global financial crisis last week, the Fed and other major central banks ordered hefty rate reductions. The Fed dropped its key rate to 1.50 percent, from 2 percent, in an emergency move.

Many economists said the Fed might cut rates again at its regularly scheduled meeting later this month, or may be later this year.

Bernanke said it is likely economic activity will "fall short of potential for a time."

A growing number of analysts predict the economy will actually shrink in the final three months of this year and the first three months of next year, meeting the classic definition of a recession.

"Ultimately, the trajectory of economic activity beyond the next few quarters will depend greatly on the extent to which financial and credit markets return to more normal functioning," Bernanke said.

Even with a flurry of radical steps recently taken by the Fed, the U.S. government and others around the world, "credit markets will take some time to unfreeze," Bernanke said.

The economy had been losing traction even before the financial crisis intensified last month. Fallout from the housing market's collapse continues to be the primary source of weakness for the economy and for financial markets.

All the problems have led to employers cutting jobs and other investments. Nervous consumers have hunkered down. Slowdowns overseas is sapping export growth, which had been a key source keeping the economy afloat.

"These restraining influences on economic activity, however, will be offset somewhat by the favorable effects of lower prices for oil and other commodities on household purchasing power," Bernanke said.

With the economy slowing, inflation should moderate, he added.

As with financial crises in the past, the root of the current debacle is a loss of confidence by investors and the public in the strength of key financial institutions and the overall financial markets.

"The crisis will end when comprehensive responses by political and financial leaders restore that trust, bringing investors back into the market and allowing the normal business of extending credit to households and firms to resume," Bernanke said.

Besides cutting rates, the Fed has, among other things, repeatedly tapped its Depression-era emergency lending powers to keep money flowing to squeezed institutions. It also has created new programs to provide cash loans to banks and has agreed to supply an unlimited amount of U.S. dollars to some major central banks to reduce pressures in key credit and funding markets.

The Fed also will begin buying vast amounts of short-term debt on Oct. 27. Specifically, the Fed will buy commercial paper — a crucial short-term funding that many companies rely on to pay their workers and buy supplies.

Bernanke pledged to use all available tools and will refine strategies as the Fed adapts "to new developments and the inevitable setbacks."
“Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.”  - Arthur Conan Doyle

"The individual is handicapped by coming face-to-face with a conspiracy so monstrous he cannot believe it exists." J. Edgar Hoover

Offline hellcatjr

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Re: Bernanke: Quick economic rebound not in cards
« Reply #88 on: October 15, 2008, 12:17:54 pm »
Look how nice of a meal they we were awarded for being criminals.(CNBC)... mmm I bet people in America dream of some meals such as that... what a joke! This country is now another Mexico! GG
'A Man can only become great, when he understands his place in time' - JPM Jr.

Offline hellcatjr

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Re: Bernanke: Quick economic rebound not in cards
« Reply #89 on: October 15, 2008, 12:22:59 pm »
Breaking News CNBC

'I liked when the two economists who questioned Bernanke,they were from two completely separate fields of strategies"

Right... a globalist is a globalist man... bankers = crooks!!

USURY WAS OUTLAWED BY GOD IN THE BIBLE! So why have we become pray to this device?
'A Man can only become great, when he understands his place in time' - JPM Jr.

Offline larsonstdoc

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Bernanke Hints At Another Rate Cut
« Reply #90 on: October 20, 2008, 11:40:48 am »
Bernanke is almost out of bullets.  Soon he will be shooting blanks!

http://news.yahoo.com/s/ap/20081020/ap_on_bi_ge/financial_meltdown

Bush, Bernanke say time is right for new stimulus

By JEANNINE AVERSA, AP Economics Writer


AP – House Budget Committee Chairman Rep. John Spratt, Jr., D-S.C., and the committee's ranking Republican, …
WASHINGTON – Momentum increased Monday for a new economic stimulus package to help cash-strapped Americans as President Bush and Federal Reserve Chairman Ben Bernanke threw their weight behind an idea they earlier opposed.
Press secretary Dana Perino told reporters on Air Force One as the president flew to Louisiana on Monday for an economic event that the White House will have to see what kind of package Congress crafts. Perino says the administration has concerns that what has been put forward so far by Democratic leaders in Congress would not actually stimulate the economy.
Earlier Monday, Bernanke told the House Budget Committee that country's economic weakness could last for some time and it was the right time for Congress to consider a new package. Earlier this year, most individuals and couples received tax rebate checks of $600-$1,200 through the $168 billion stimulus package enacted in February.
"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke said in prepared testimony to the panel.
Bernanke's remarks before the House Budget Committee marked his first endorsement of another round of government stimulus. Democrats on Capitol Hill have been pushing for another stimulus plan, but the Bush administration has been cool to the idea as the federal budget deficit explodes.
Bernake also appeared to open the door for further interest rate cuts. Wall Street stocks rose on the news and on signals that the important credit markets were loosening further.
House Speaker Nancy Pelosi chimed in on the stimulus idea. "I call on President Bush and congressional Republicans to once again heed Chairman Bernanke's advice and as they did in January, work with Democrats in Congress to enact a targeted, timely and fiscally responsible economic recovery and job creation package," Pelosi said in a statement Monday.
Pelosi has said an economic recovery bill could be as large as $150 billion. Economists have told leading Democrats the plan should be twice the size.
Bernanke suggested that Congress design the stimulus package so that it will be timely, well targeted and would limit the longer-term affects on the government's budget deficit, which hit a record high in the recently ended budget year.
The economy has been beaten down by housing, credit and financial crises. Its woes are likely to drag into next year, leaving more people out of work and more businesses wary of making big investments.
U.S. stocks surged in midday trading Monday. The Dow Jones industrials rose almost 2 percent and the Standard & Poor's 500 index jumped 2.1 percent.
Interbank lending rates fell for a sixth straight day Monday. The London interbank offered rate, or Libor, for three-month dollar loans fell 0.36 percent to 4.06 percent, the biggest daily drop since January.
Bernanke said the package also should include provisions that would help break through the stubborn credit clog that is playing a major role in the economy's slowdown.
"If the Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, home buyers, businesses and other borrowers," Bernanke said. "Such actions might be particularly effective at promoting economic growth and job creation," he added.
The Fed and the world's other major central banks recently joined forces to slice interest rates, the first coordinated action of that kind in the Fed's history. The central bank meets next on Oct. 28-29 and many economists believe Fed policymakers will again lower its key rate — now at 1.50 percent — to brace the wobbly economy.
Over time, "stimulus provided by monetary policy" along with the eventual stabilization in housing markets and improvements in credit markets will help the economy get back on firm footing, Bernanke said.
Dropping rates might induce consumers and businesses to boost their spending, an important ingredient to energize overall economic activity.
So far, though, a string of drastic actions by the Fed and the Bush administration has yet to turn around a bunker mentality. Banks fear lending money to each other and to their customers. Businesses are reluctant to hire and boost capital investments. Consumers have hunkered down. All the economy's problems are feeding off each other, creating a vicious cycle that Washington policymakers are finding difficult to break.
One-third of Americans are worried about losing their jobs, half fret they will be unable to keep up with mortgage and credit card payments, and seven in 10 are anxious that their stocks and retirement investments are losing value, according to an Associated Press-Yahoo News poll of likely voters released Monday.
Unemployment could hit 7.5 percent or higher by next year. Many analysts predict the economy will shrink later this year and early next year, meeting the classic definition of a recession. Some believe the economy already jolted into reverse during the July-to-September quarter.
Last week, the Treasury Department announced it would inject up to $250 billion in U.S. banks in return for partial ownership, something that hasn't been done since the Great Depression. The government hopes banks will use the capital infusions to rebuild their reserves and bolster lending to customers.
Treasury Secretary Henry Paulson said Monday that government purchases of stock in banks represent an investment that should eventually make money for the taxpayer.
So far this year, 15 banks have failed, including the largest U.S. bank failure in history, compared with three last year. And Wall Street's five biggest investment firms were swallowed by other companies, filed bankruptcy or converted themselves into commercial banks to weather the financial storm.
In other efforts to stem the crisis, the Federal Deposit Insurance Corp. is temporarily guaranteeing new issues of bank debt — fully protecting the money even if the institution fails.
The FDIC also said it would provide unlimited deposit insurance for non-interest bearing accounts, which small businesses often use to cover payrolls and other expenses. Frequently, these accounts exceed the current $250,000 insurance limit, so the expanded insurance should discourage nervous companies from pulling their money out.
The United States and other top economic powers also have adopted a five-point action plan and pledge to do all they can to provide relief.
__
Associated Press writers Pan Pylas in London, Tom Raum and Marting Crutsinger in Washington contributed to this report.
I'M A DEPLORABLE KNUCKLEHEAD THAT SUPPORTS PRESIDENT TRUMP.  MAY GOD BLESS HIM AND KEEP HIM SAFE.

Offline scoffer

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Re: Bernanke Hints At Another Rate Cut
« Reply #91 on: October 20, 2008, 12:09:20 pm »
Another interest rate cut? Bernanke's tool belt is getting pretty empty; he's not going to be able to do very much with two thumb tacks and a printing press.

It was my understanding that a significant portion of Pelosi's next proposed "stimulus package" would be used to extend unemployment benefits and augment food stamp availability. In that case wouldn't it be more appropriate to call it a "life boat" package?

Offline 7D7

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Re: Bernanke Hints At Another Rate Cut
« Reply #92 on: October 20, 2008, 05:53:18 pm »

Offline bigron

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$2 Trillion Handed out by Paulson and Bernanke, But Who Got It, Nobody Knows
« Reply #93 on: November 17, 2008, 04:32:25 am »
$2 Trillion Handed out by Paulson and Bernanke, But Who Got It, Nobody Knows

We have no idea who got this money or the conditions or collateral put up in return for the loans.


By Nicholas von Hoffman, The Nation
Posted on November 17, 2008, Printed on November 17, 2008
http://www.alternet.org/story/107340/

With his latest policy switch to buying stock in banks and other companies, Henry Paulson has more zigs and zags to his credit than a fox trying to escape a pack of hounds.

 

The fox and the hounds, of course, have a clear idea of what they want to do and how they want to do it, which is more than you can say of Paulson. Sums of incalculable size are being spent or pledged by Paulson and his playmate, Ben Bernanke, chairman of the Federal Reserve Board, and nobody outside their organizations, or maybe inside them either, knows who got what, how much they got, and under what conditions they got it.

 

In the past couple of months Bernanke has loaned out $2 trillion to unnamed companies under eleven different programs and all but three of them were slapped together in the past fifteen months of financial crisis.

 

To repeat, we do not know who got this money or what collateral was put up in return for the loans or what conditions were attached to them.

 

The sums involved are almost three times as large as Paulson's $700 billion muddled bailout efforts that Congress voted for last month. Bernanke does have the legal authority to pass out these trillions without Congressional authorization and without explanation, but secrecy breeds suspicion and loss of confidence.

 

These officials preface every speech by talking about "transparency," their favorite word, at the same time they are handing off $2 trillion and they won't say to whom, and leading Bloomberg News to file suit under the Freedom of Information Act.

 

Paulson has made off with $50 billion to give to AIG for the purpose of setting up a special entity by which the company's lousiest loans are to be kept off the books and the unknown debtors protected. When asked about this by the <i>New York Times<i>, Lynn E. Turner, who sits on the Treasury Department's Advisory Committee on the Auditing Profession, complained that "We've had way too many things here that nobody knows anything about…. That's why no one has faith in the capital markets."

 

Paulson appears to have given away, invested, loaned or lost about $300 billion of the first $700 billion Congress gave him. But he has lost more than money: Nobody believes him or Bernanke anymore.

 

Every day another company steps forward with its hand out -- American Express, Chrysler, GE Financial -- and every day it appears Paulson and Bernanke are prepared to accommodate these corporate mendicants.

 

Paulson left his job as CEO of Goldman Sachs to become treasury secretary, and by now it may be dawning on him that CEO-ship is no substitute for an apprenticeship in public service that might have given him the political skills he lacks. The same may be said of Bernanke, who spent much of his life as a harmless Princeton professor of economics.

 

Both of these men are convinced, doctrinaire free-marketeers. They hate supervising this intervention into American business. Paulson repeatedly bemoans what he is doing.

 

Hence, both the principals are trying to devise and carry out programs that they do not believe in. They cannot have spent any time thinking about how government might regulate and intervene successfully. It's as though one were to ask a couple of pro-life physicians to conduct a series of abortions. Should we be surprised they do not do it well?

 

With President Bush <i>hors de combat</i> and having rendered himself a nullity, we are reduced to Paulson and Bernanke to show us the way in this maelstrom. That may explain why criticism of their work has been so muted.

 

Two female officials, however, have conducted their offices with distinction. Sheila Bair, chair of the Federal Deposit Insurance Corporation, has moved heaven and earth to get Paulson and Bernanke to embrace a massive program to stop the housing foreclosures and take the first step toward ending the chaos. To say that she has had mixed success with the men is an understatement.

 

Less well known is Brooksley Born, who will be a major figure when the history of this Great Debacle is written. Born was the chair of the Commodity Futures Trading Commission from 1996 to 1999. She foresaw the calamity that runaway use of credit default swaps and other derivatives would cause, and battled to impose regulation on them. She was stopped by Alan Greenspan, Arthur Levitt and Robert Rubin, the major economic figures in the Clinton administration.

 

After a distinguished career in law, Brooksley Born has retired to watch birds and play with her grandchildren. Sheila Bair battles on against the dunderheads, and we are left helpless, waiting.



Nicholas von Hoffman writes regularly for The Nation. He is the author ofthirteen books, including Citizen Cohn, and he is a columnist for the New YorkObserver.

© 2008 The Nation All rights reserved.
View this story online at: http://www.alternet.org/story/107340/

Offline chris jones

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Hi Biggs, isn't there a congressional oversight committe digging into this?

Offline bigron

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Hi Chris

Apparently not.......

This whole mess is serrounded by Mistery


Offline releasethebonds

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I'm not saying how much Bernanke gave me.
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Offline larsonstdoc

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   I know the answer!  THEIR FRIENDS!
I'M A DEPLORABLE KNUCKLEHEAD THAT SUPPORTS PRESIDENT TRUMP.  MAY GOD BLESS HIM AND KEEP HIM SAFE.

Offline Catalina

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Bernanke, Paulson set for grilling on $700 billion financial bailout Tuesday
« Reply #98 on: November 18, 2008, 01:26:57 am »
http://biz.yahoo.com/ap/081118/financial_meltdown.html

The two top salesmen for a $700 billion financial bailout are in for a grilling by Capitol Hill lawmakers just one week after the administration officially ditched the original strategy behind the rescue.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson are expected to provide greater insights into the shift when they testify Tuesday before the House Financial Services Committee.

Paulson, who is overseeing the bailout program for the Bush administration, changed course and announced last week that the government would not use any of the money to buy rotten mortgages and other bad assets from banks. That had been the centerpiece of the plan when Paulson and Bernanke originally pitched it to lawmakers.

"Our assessment ... is that this is not the most effective way" to use the bailout money, Paulson said at that time.

Instead, Paulson said the department would focus on rolling out a capital injection program to pour $250 billion into banks in return for partial ownership stakes in them.

It would also search for new ways to boost the availability of auto loans, student loans and credit cards, which have been become harder to get due to the credit crisis, he said.

Specifically, the department, along with the Federal Reserve, is exploring using some of the bailout money to bankroll a new loan facility. The aim: helping companies that issue credit cards, make student loans and finance car purchases.

The idea behind the capital injection program is for banks to use the money to rebuild reserves and lend more freely to customers. However, banks do have the leeway to use the money for other things, such as buying other banks or paying dividends to investors. That has touched a nerve with some lawmakers.

Locked-up lending is a prime reason why the United States is suffering through the worst financial crisis since the 1930s. All the fallout from the housing, credit and financial crises have badly hurt the economy, which is almost certainly in recession, analysts say.

In an interview published Tuesday in The Washington Post, Paulson said he was also working on a proposal that would allow the government to take over a wide range of financial institutions -- not just banks -- that are in danger of collapse.

The administration, however, has remained opposed to using some of the bailout money to help troubled U.S. automakers or to provide guarantees for mortgages at risk of falling into foreclosure, another huge source of distress for the economy.

Rep. Barney Frank, D-Mass., chairman of the panel, has been tapped by House Speaker Nancy Pelosi to draft an aid package for Detroit. The auto companies are seeking $25 billion for emergency loans.

In a break with the administration stance, Sheila Bair, chairman of the Federal Deposit Insurance Corp., who also will testify Tuesday, recently proposed using $24 billion of the bailout money to help some American households avoid foreclosure.

So far, Treasury Department has pledged $250 billion for banks and has agreed to devote $40 billion to troubled insurer American International Group-- its first slice of funds going to a company other than a bank. That leaves just $60 billion available from Congress' first bailout installment of $350 billion.

Congressional officials said Paulson indicated he is unlikely to tap the remaining $350 billion before the administration leaves office on Jan. 20. That would mean the incoming Obama administration would decide whether and how the money should be spent. The congressional officials spoke on condition of anonymity, saying they were not authorized to disclose the developments.
Spare no cost for truth's sake, neither depart from it for any gain. -Proverbs 23:23

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deconstructmyhouse

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Bernanke to Congress: WE NEED MORE
« Reply #99 on: November 18, 2008, 11:35:12 am »
un
real

http://www.nytimes.com/2008/11/19/business/economy/19bailout.html?hp


Top financial officials warned Congress on Tuesday that the economy continued to need urgent attention, with the credit markets remaining tight, millions of homeowners sliding toward foreclosure and the government’s relief payments unlikely to flow into the markets for a few more months.
 
Ben S. Bernanke, chairman of the Federal Reserve, described signs of only modest improvement in the credit markets, warning that “overall, credit conditions are still far from normal, with risk spreads remaining very elevated.”

And, in a statement prepared for a hearing Tuesday morning before the House Committee on Financial Services, he strongly urged banks to improve the flow of loans to their most creditworthy borrowers.

“There are some signs that credit markets, while still quite strained, are improving,” Mr. Bernanke said. He pointed to some technical improvements: banks were charging one another less for short-term lending; money market mutual funds and the commercial paper market were stabilizing.

But now that banks’ access to capital had improved, he said, they must ease their grip on lending. “It is imperative that all banking organizations and their regulators work together to ensure that the needs of creditworthy borrowers are met in a manner consistent with safety and soundness,” Mr. Bernanke said.

At the same hearing, Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, said she planned to continue her campaign to get relief into the hands of troubled homeowners.

She said a program that her agency had proposed to the Treasury Department would modify mortgages and ease repayment terms, which could prevent “as many as 1.5 million avoidable foreclosures by the end of 2009.”

But, in her statement, she also projected a gloomy picture for foreclosures, saying that over the next two years, four million to five million mortgage loans will enter foreclosure if nothing is done.

That means that even with the approach she advocates, delinquencies would continue at about the same rate as in the last year or two.

Appearing along with Ms. Bair and Mr. Bernanke, Treasury Secretary Henry M. Paulson Jr. said in his prepared testimony that the Bush administration decided this week to defer reaching much more deeply into the $700 billion in bailout funds approved by Congress in October until the next administration takes over Jan. 20.

“If we have learned anything throughout this year,” Mr. Paulson said, “we have learned that this financial crisis is unpredictable and difficult to counteract.”

Having spent most of the money provided by Congress, which split the October package into two equal parts and told the Treasury to come back for renewed permission to spend the second half, Mr. Paulson said it would be “only prudent” to reserve the remainder until next year, in the interest of maintaining “not only our flexibility but that of the next administration.

Some lawmakers have suggested that some money might be diverted to the auto industry, an idea that Mr. Paulson has not supported.

Offline larsonstdoc

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Re: Bernanke to Congress: WE NEED MORE
« Reply #100 on: November 18, 2008, 11:38:43 am »



  This is unbelievable.  You would think all these RAT BASTARDS would all get together to get their story straight.  DEATH TO THE FED, THE NWO, THE IMF, AND THE WORLD BANK!
I'M A DEPLORABLE KNUCKLEHEAD THAT SUPPORTS PRESIDENT TRUMP.  MAY GOD BLESS HIM AND KEEP HIM SAFE.

Offline plantop14

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Re: Bernanke to Congress: WE NEED MORE
« Reply #101 on: November 18, 2008, 11:42:02 am »


  This is unbelievable.  You would think all these RAT BASTARDS would all get together to get their story straight.  DEATH TO THE FED, THE NWO, THE IMF, AND THE WORLD BANK!
Yep, un-f--king believeable! >:( There is no amount that will be enough or sufficient for these shithead scum bags!
AK47, Glock23 & Mossy590 is my family's Life Insurance policy, what is yours?

Offline NWOSCUM

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Re: Bernanke to Congress: WE NEED MORE
« Reply #102 on: November 18, 2008, 12:11:52 pm »
These scum aren't gonna be done until we are milked DRY!  And I don't mean the good way............... ;D
"The receptivity of the great masses is very limited, their intelligence is small, and their power of forgetting is enormous." --Adolph Hitler, "Mein Kampf"

Offline oyk152

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Economic situation assistance needet Bernanke pushes for more money
« Reply #103 on: December 02, 2008, 02:52:16 am »
In the USA the demands increase themselves after further economic situation assistance. Central bank head Ben Bernanke demanded decided measures for the protection of the fastened U.S. economy. “Our national economic policy must concern seriously the substantial risks for financial stability and the economic growth”, said Bernanke. Minister of Finance Henry Paulson announced to promote the granting of credit with further aid programmes.
 
Bernanke said, a further reduction of the rate of interest under a per cent was “surely possible”. Analysts expect that the Fed in the middle of will lower Decembers the interest on 0,5 per cent. In addition, unorthodox methods are conceivable, in order to seize the economy under the arms, said Bernanke. So the Fed securities could buy, which the Treasury spends, in order to affect net yields and stimulate the demand. The economy of the country is further at considerable pressure. The statements Bernankes accelerated on Monday driving downhill at the Wall Street: The Dow-Jones index of the default values closed 7.7 per cent in the minus.
 
Billions for renewable energies
 
Also Minister of Finance Paulson sees need for further assistance. One works on further programs, in order to set the granting of credit in motion, said Paulson. “If these programs are ready for application, we them with the congress and the next government will discuss.” Banks would have to assign again credits, independently of whether they would have received something from the 150 billion dollar, which had been pumped to the financial system demanded Paulson. It did not call details of the programs.
 
To an advisor of the democrats in the house of representatives according to the delegates of the party want to bring an economic situation package in January over presumably approximately 500 billion dollar on the way. The package is to contain the reduction of taxes for the middle class, aimed at by the future president Barack Obama, explained the advisor.
 
Besides billions should be spent on infrastructure programs and for the promotion of renewable energies. The U.S. economy is according to official data already since a whole year in the recession. How the responsible “national office explained OF Economic Research” (NBER), a approximately six-year upswing of the world largest national economy went to end in December 2007.

http://www.n-tv.de/1062200.html
http://babelfish.yahoo.com/translate_url?doit=done&tt=url&intl=1&fr=bf-home&trurl=http%3A%2F%2Fwww.n-tv.de%2F1062200.html&lp=de_en&btnTrUrl=Translate
http://www.freedomfiles.org/war/fema.htm
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Stone walls do not a prison make
Nor iron bars a cage
Minds innocent and quiet take
That for an hermitage

strgzr

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Re: Economic situation assistance needet Bernanke pushes for more money
« Reply #104 on: December 02, 2008, 04:45:25 am »
Billions? More like trillions. Will the Federal Reserve banker-thief that steals the last nickle turn out the lights. We won't be able to pay the utility bill.

Offline chris jones

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Re: Economic situation assistance needet Bernanke pushes for more money
« Reply #105 on: December 02, 2008, 05:19:07 am »
Billions? More like trillions. Will the Federal Reserve banker-thief that steals the last nickle turn out the lights. We won't be able to pay the utility bill.
Hi Gus
They have allready seen to that. imagine the power they weild of over the citizens of this nation.
Their gang needs a few trillion, no problem, the feds got the printing presses, we simply pay for it.
Then there are those who continue to say we are a the USA, the Republic of the the United States of America, the light of righteousnes to the world, the torch of liberty will not weaken. All men are created equal, they still push this on us Gus. The truly sad part is that many of our citizens continue to beleive this.
Keep up the wood pile. no matter what the price of oil.
 CJ

Offline larsonstdoc

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Bernanke Opposes Auto Aid Without Congressional Action
« Reply #106 on: December 09, 2008, 10:36:27 am »
http://www.bloomberg.com/apps/news?pid=20601087&sid=aTWTFX.9IPWc&refer=home


Dec. 9 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the central bank opposes lending to U.S. automakers without congressional action to aid the companies, and suggested options including a bankruptcy reorganization.

“The Federal Reserve would be extremely reluctant to extend credit where Congress has actively considered providing assistance but, after due consideration, has decided not to act,” Bernanke said in a Dec. 5 letter to Senate Banking Committee Chairman Christopher Dodd.

While the Fed has used emergency-lending authority over the past year to aid financial firms, short-term debt markets and mutual funds, those decisions were aimed at financial stability and the broader economy, Bernanke said. By contrast, Congress is “best suited” to determine whether to assist a specific U.S. industry, he said.

“Even if the companies have sufficient collateral, lending to an auto manufacturing company would represent a marked departure from that policy, and would take us into distinctly new realms of policymaking,” Bernanke said. “In particular, it would raise the question as to whether the Federal Reserve should be involved in industrial policy, which has traditionally been outside the range of our responsibilities.”

The letter, a copy of which was forwarded by the Senate banking panel, represents Bernanke’s first public comments on whether the Fed would extend credit to the beleaguered car industry.

General Motors Corp., Ford Motor Co. and Chrysler LLC have asked U.S. lawmakers for as much as $34 billion in aid. Congress is discussing a $15 billion rescue proposal where the Treasury would get warrants for stock equivalent to 20 percent of any government loans.

The Fed chief said Congress should also consider a “range of possible policy actions” besides direct aid, including a government-assisted “orderly bankruptcy r
I'M A DEPLORABLE KNUCKLEHEAD THAT SUPPORTS PRESIDENT TRUMP.  MAY GOD BLESS HIM AND KEEP HIM SAFE.

Offline Volitzar

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Bernanke ‘War Powers’ Undermine Fed Bank Presidents (Update1)
« Reply #107 on: December 12, 2008, 05:16:47 pm »
Bernanke ‘War Powers’ Undermine Fed Bank Presidents (Update1)
Email | Print | A A A

By Craig Torres and Steve Matthews

Dec. 9 (Bloomberg) -- The Federal Reserve’s interest-rate target is getting close to zero, and so is the power of the Fed’s regional bank presidents.

The district chiefs’ authority over borrowing costs has been marginalized in the past two months as Chairman Ben S. Bernanke and the Fed Board of Governors in Washington made their own decisions on emergency measures to flood the economy with cash.

“The Board has usurped authority,” said William Poole, former president of the St. Louis Fed and now a senior fellow at the Cato Institute in Washington. “This dramatic change in policy direction has not been announced or even acknowledged.”

Bernanke must now try to bring the Federal Open Market Committee, which includes district presidents and Fed governors, along as he turns to more radical strategies, such as buying Treasuries to drive down long-term rates. A lack of consensus at next week’s FOMC meeting could result in muddled communication that confuses investors and undermines confidence.

“Whatever our communications problems are now, they are going to be magnified in this new world we are going to be in,” James Bullard, Poole’s successor at the St. Louis Fed, said in an interview. “We have a bunch of analysis in the works right now. Frankly, I am mulling it over myself.”

Yields on 10-year Treasuries this month slid to the lowest level since at least 1962, in anticipation of Fed purchases and weaker growth. The notes yielded 2.73 percent at 10:32 a.m. in New York, compared with an average of 4.70 percent in the past decade.

Forgoing a Vote

A conference call last month showed how little say the central bank’s 12 regional presidents now have in some of the Fed’s biggest decisions.

The regional bank chiefs were invited to listen as officials in Washington outlined their decision on a new $600 billion program to help the housing market. The presidents weren’t asked to vote on the initiative, even though it aimed at cutting borrowing costs, something they vote on in regular FOMC meetings.

“If I am a regional Fed bank president, I have had my power diminished a lot,” said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York, who used to work at the New York Fed. “I think of it as war powers for the Board of Governors.”

Many of the new facilities have been studied and recommended by the New York Fed, whose president, Timothy Geithner, is the vice chairman of the FOMC. Geithner, President-elect Barack Obama’s nominee to be Treasury secretary, is leaving the FOMC and will be replaced at the Dec. 15-16 meeting by Christine Cumming, the New York Fed’s first vice president.

Emergency Powers

Regional bank presidents don’t have a vote when the Board uses emergency powers to lend to firms other than banks in “unusual and exigent circumstances,” as it’s done repeatedly this year.

The district-bank chiefs by design are supposed to offer a counterbalance to the Board, and in the past haven’t been shy about challenging chairmen. In February 1994, former chairman Alan Greenspan had to argue against four presidents who wanted to raise rates at least a half percentage point, compared with his own preference for a quarter-point move.

Greenspan worried about the effect on markets of an abrupt move, transcripts of FOMC discussions showed. He said he “also would be concerned if this committee were not in concert. If we are perceived to be split on an issue as significant as this, I think we’re risking some very serious problems in this organization.”

Fed’s Strategies

The Fed has deployed two main strategies during the current credit crisis. The FOMC, which currently includes five governors and five presidents, has lowered its benchmark federal funds rate target by 4.25 percentage points since September 2007.

Acting separately, the Board of Governors has provided emergency funding to gridlocked markets and troubled institutions such as American International Group Inc. that were on the brink of failure. Those actions have made the key rate less relevant as a tool of policy, because they’ve driven down the overnight lending rate between banks below the target set by the FOMC.

While the target is 1 percent, the effective federal funds rate averaged 0.33 percentage point in the past week.

“The federal funds rate is trading persistently below target,” said Poole, who is a contributor to Bloomberg News. “That can’t be an accident.”

With its new $600 billion program, the Fed has stepped out of its traditional role of backstop liquidity provider, making a direct effort to manipulate long-term mortgage rates. Some presidents are wary of any strategy that appears to subsidize debtors by pushing rates below yields set by the market.

Allocating Credit

“Central bank lending policies should avoid straying into the realm of allocating credit across firms or sectors of the economy,” Philadelphia Fed President Charles Plosser said Dec. 2.

Richmond Fed President Jeffrey Lacker warned last week that officials should avoid any plan that would have the central bank pay for a fiscal stimulus. Obama has put an economic recovery program at the top of his agenda when he takes office Jan. 20. Lawmakers in Congress have suggested that the size of such a program may be between $500 billion and $700 billion.

“I personally do not believe the Fed should tie asset purchases to any specific fiscal programs, whatever their merits,” Lacker said after a speech in Charlotte, North Carolina, Dec. 3. At the same time, he said he was open to purchasing U.S. government debt for the purpose of fighting the danger of deflation.

FOMC Meeting

At next week’s meeting, Board officials will likely propose ways to lower longer-term interest rates so mortgage and corporate borrowers can borrow more cheaply. Bernanke said in a Dec. 1 speech the Fed could purchase Treasury or agency securities in “substantial quantities.” District presidents may simply be asked to support and expand on what the Board has already done.

“The Board’s importance has grown at the expense of the FOMC,” said Dino Kos, former markets director at the New York Fed and now managing director of research firm Portales Partners LLC. “The FOMC meeting itself is going to become a very uncomfortable place if people don’t know what they are there for. Institutional issues are at stake.”

To contact the reporters on this story: Craig Torres in Washington at ctorres3@bloomberg.net; Steve Matthews in Atlanta at 1310 or smatthews@bloomberg.net.

Last Updated: December 9, 2008 10:34 EST

http://www.bloomberg.com/apps/news?pid=20601087&sid=aKba9P9q0Pgc&refer=home

Offline headwest

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Are Paulson and Bernanke Lying to Us?
« Reply #108 on: December 15, 2008, 09:36:02 pm »
A new report from financial consulting firm Celent argues that there is no credit crisis, and that the publicly available data from the Federal Reserve Bank directly contradicts the doom-and-gloom public statements made by its chairman Ben Bernanke and Treasury Secretary Henry Paulson.

http://www.portfolio.com/views/blogs/daily-brief/2008/12/15/are-paulson-and-bernanke-lying-to-us

Offline larsonstdoc

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Re: Are Paulson and Bernanke Lying to Us?
« Reply #109 on: December 15, 2008, 09:47:17 pm »




  Only when they are in front of a camera and their lips are moving.
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Offline Real Truth

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Re: Are Paulson and Bernanke Lying to Us?
« Reply #110 on: December 15, 2008, 09:48:25 pm »



  Only when they are in front of a camera and their lips are moving.
or whenever they quote "this is from a good source"
[98:5] And they have been commanded no more than this: To worship GOD, offering Him sincere devotion, being true (in faith); to establish regular prayer; and to practise regular charity; and that is the Religion Right and Straight."

Offline OldSchool

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Re: Are Paulson and Bernanke Lying to Us?
« Reply #111 on: December 15, 2008, 11:01:00 pm »
They pull publicity stunts like this to tell the sheep exactly whats going on, while they're 'sleeping'.
Life is like a box of chocolates.....until some Neocon clubs you with your own leg and steals it.

user111

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Re: Are Paulson and Bernanke Lying to Us?
« Reply #112 on: December 16, 2008, 12:04:11 am »
And again I say,,,,The only reason either of them are in thier present employment is because both were turned down at 7-11 because they failed the basic math and change counting pre employment tests.
So where do ya go when ya can't get a job anywhere else?,,,The Feds,,hell,,they'll hire anyone.

Offline Revolt426

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Re: Are Paulson and Bernanke Lying to Us?
« Reply #113 on: December 16, 2008, 12:22:01 am »
ok let me lay this out there. there is NO CREDIT crisis. there is a DERIVATIVE crisis. There is a 1.5 Quadrillion dollar derivative bubble and no banks no the other banks Derivative balance sheets because they are private so they refuse to lend to each other. Other than that, a consumer or anyone other than an acual bank CAN get loans, this is all BS to bail out part of the Derivative bubble, then let it implode and allow the biggest banks to eat / consolidate the smaller ones. Remember, this is a Derivative Blowout, has nothing to do with credit crunches or idiotic lending processes. it is 100% derivatives that are eating the banks balance sheets.
"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate … It will purge the rottenness out of the system..." - Andrew Mellon, Secretary of Treasury, 1929.

Offline Dig

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Re: Are Paulson and Bernanke Lying to Us?
« Reply #114 on: December 16, 2008, 12:34:37 am »
Does a bear shit in the woods?
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 cinsana88

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Re: Are Paulson and Bernanke Lying to Us?
« Reply #115 on: December 16, 2008, 12:38:26 am »
ok let me lay this out there. there is NO CREDIT crisis. there is a DERIVATIVE crisis.

sorry for being ignorant but what is a derivative in the first place?  I hear it all the time on the AJ show and from webster tarpley.  the other time i hear it is in calculus but i'm sure its a different type of derivative.


Offline Revolt426

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Re: Are Paulson and Bernanke Lying to Us?
« Reply #116 on: December 16, 2008, 12:41:22 am »
sorry for being ignorant but what is a derivative in the first place?  I hear it all the time on the AJ show and from webster tarpley.  the other time i hear it is in calculus but i'm sure its a different type of derivative.


A Derivative is a lump of subprime mortgages that are packaged up together, called an asset, stamped Triple AAA By the regulators and sold over and over again at interest. The idea is that the Derivative will keep generating money only if the housing market continues to go up, and housing prices have collapsed so the Derivatives are worthless. Then there are Credit Default Swaps, which are insurance derivatives that guard you against a company that defaults. There are 1.5 Quadrillion, (1500 trillion) of these in circulation and they are 100% unregulated. the housing derivatives are known as CDO's (Collaterized Debt Obligations)
"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate … It will purge the rottenness out of the system..." - Andrew Mellon, Secretary of Treasury, 1929.

deconstructmyhouse

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Re: Are Paulson and Bernanke Lying to Us?
« Reply #117 on: December 16, 2008, 12:42:15 am »
wiki:
Derivatives are financial contracts, or financial instruments, whose values are derived from the value of something else (known as the underlying). The underlying on which a derivative is based can be an asset (e.g., commodities, equities (stocks), residential mortgages, commercial real estate, loans, bonds), an index (e.g., interest rates, exchange rates, stock market indices, consumer price index (CPI) — see inflation derivatives), or other items (e.g., weather conditions, or other derivatives). Credit derivatives are based on loans, bonds or other forms of credit.

The main types of derivatives are: forwards (which if traded on an exchange are known as futures); options; and swaps.

Derivatives can be used to mitigate the risk of economic loss arising from changes in the value of the underlying. This activity is known as hedging. Alternatively, derivatives can be used by investors to increase the profit arising if the value of the underlying moves in the direction they expect. This activity is known as speculation.

Because the value of a derivative is contingent on the value of the underlying, the notional value of derivatives is recorded off the balance sheet of an institution, although the market value of derivatives is recorded on the balance sheet.

Offline Revolt426

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Re: Are Paulson and Bernanke Lying to Us?
« Reply #118 on: December 16, 2008, 12:43:49 am »
That is a text book explanation, for the current situation my explanation of derivatives are accurate. Techniquilly a derivative is anything of value derived from something else obviously but we are talking CDO's and CDS' that are wrecking the economy and financial system.
"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate … It will purge the rottenness out of the system..." - Andrew Mellon, Secretary of Treasury, 1929.

deconstructmyhouse

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Re: Are Paulson and Bernanke Lying to Us?
« Reply #119 on: December 16, 2008, 01:33:02 am »
Yeah, thanks, I posted the wiki definition before i saw yours.  yours is much more relevant and i finally understood more.

Sooooo, can you help me with backwardation and condango?
two relevant terms I'm struggling to understand at the moment, as they relate to gold.

I know we experienced a gold backwardation event on Dec 2, and I know it was hugely significant. 
I like to read Fekete, but I am working on groundlevel comprehension here.