A single-man operation has stolen US$ 60 billion, says the U.S. District Court in Manhattan before giving Madoff 150 years.
Billionaire Madoff tied to intelligence agencies No conspiracy charge by feds against Madoff is covering up links to domestic and foreign intelligence.
16 June, 2009, 21:16
The failure of federal prosecutors to bring conspiracy charges against Bernard Madoff, the mega-billion dollar Ponzi scammer who pleaded guilty March 12 to eleven counts of fraud and other crimes in U.S. District Court in Manhattan, is providing cover to those who pulled the strings on Madoff's illegal operation.
WMR spoke to a former close aide to Madoff who related how he handled a number of transactions personally for Madoff. The source said that Madoff was running a special type of "pump and dump" scheme. The source said Madoff would "pump money out of the system and dump it out to another place." When asked what that "other place" was, the source replied, "Israel."
His actions over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil.
[His actions over the past two years have been guided by one and only one motive]
Yes! To ensure that his close friends that run commercial and investment banks remain excessively comfortable. If he cared about America more than his career or his banker buddies he could have behaved more responsibly. He's a crook.
The problem I have with most economists is the same thing I have with Bernanke; two people I know, a dry cleaner and convenience store operator knew (in so many words) that the economy had taken a serious downturn by early 08 and the pros did not.
I could not disagree more....there is no way in hell that Bernanke and Co. have been operating under the framework of what can we do to minimize the harm caused to "ordinary" people.
That is B.S.
Propoganda at its most obvious and worse.
His actions over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil.
What about anyone on a fixed income like many retirees who relied on interest earned from savings?? How have his actions helped them or is it rationalized by saying "it would be much worse for those retirees if we had not pumped liquidity"
Politics in a central banker?! The goal should be the same as all politicians: Get reelected.
How does a central banker do that? Shake out the economy in the first 2 years of the presidency and then let it heat up going into reelection. Think about it...
Portal: entranceway
Acheron: river separating world from underworld
Circle 1/Limbo: home of unbaptized
Circle 2: home of "carnal sinners"
Circle 3: home of the gluttonous
-->Circle 4: home of the prodigal and avaricious<--here be Americans!
-->Circle 5/Styx: home of the wrathful<--ME!
Circle 6: heretics
Circle 7: Phlegethon (those violent to neighbors), those who were violent to themselves, and those who were violent to nature.
Circle 8/Malebolge: has 10 deeper bastions, including Boldia, flatterers, buyers/sellers of pardons, fortunetellers, grafters, hypocrites, robbers, evil counslors, scandalmongers, liars
Circle 9/Cocytus: a frozen lake, including a pit of giants and all traitors
Center of the Earth: home of Lucifer (oh shit)
Im going to have to also disagree somewhat. That might be a secondary goal, but I think his main goal is to preserve the status quo.
It's a crapshoot on the integrity question...not sure we can ever know.
But it's pretty clear that on the competence issue, he is either a)incompetent or b) a propagandist liar
Neither one of those options is very encouraging, and because one of them is true, it makes me question his integrity a bit more than I might otherwise as well.
We could also make the case that he DOES care about the little people, but is being gamed by the system into giving then all they want, again, due to his incompetence.
lama, you don't see me disagreeing - in fact I was making fun of Bernanke's economic statements the entire way ... but I think people have gone too far (I saw Mish's post today and I was appalled).
@lama - Sometimes I think it's Ivory tower syndrome - they distrust the 'ear to tracks" view of things because they're afraid to miss the forest for the trees (howzat for mangling metaphors!...been a while since we had the mixed metaphors index on here), other times, and I think this applies with Bernanke (unlike, say, Mankiw, who is a partisan ideologue), it's because they recognize that in a 70% consumer consumption based economy, consumer sentiment is so much of the ballgame. It really does become a matter of 'creating your own reality'. I think that, and the likelihood that the shrub would have sacked Bernanke or picked a better yes man for the Fed job, probably accounts for his attitude. I think CR pointed out how effective the Fed was in narrowing the A2P2 spread, and that did seem crucial to mitigating the risk of systemic meltdown at a time when we really needed the help.
It would appear that Bernanke doesnt think that the principal instigators of this crisis have anything to account for either. That he would reward them for their behavior is evidence enough. That makes me think that he has no integrity, or at least that he doesnt care for the common man. How much of the common man's future will be mortgaged so that the current broken system can pay out more bonuses?
Forced to choose, I would go with someone with a tad less integrity, and a whole lot more ability to see things as they really are. On the other hand, perhaps Mr. Bernanke did see things as they were, but succumbed to the pressure to claim to the world that all is well with our housing market.
RockyR, well - since this is what I believe (I agree with Hamilton), I think I should step up and say it. I know others disagree - and that is why I can't stay silent.
brianinboise, I think missing the entire bubble is pretty damning on his economic forecasting abilities - no question. I'd prefer someone who saw the problems - at least by 2004 or 2005.
Hey, when did Summers first start worrying about the bubble in public? That would be interesting since he is mentioned as the leading candidate to replace Bernanke. I'll have to look for some Summers' quotes - of course he wasn't in a public role at that time, so he might not have said much.
Chairman Bernanke is smart enough to have made a ton of money running a hedge fund
or serving as a principal in an investment bank. Instead he spent his professional life
in academia and government. I don't see how one can regard him as a crook. He's
a public-spirited academic who has the misfortune to be responsible for mitigating
calamities produced by lesser men.
I would place him above 99.9% of those recently in power in Washington on the integrity dimension, not to mention IQ.
Intergrity? The man can't admit he was/is wrong. The MER/BAC/Ken Lewis fiasco seriously calls into question Bernanke's integrity. Further, Bernanke is forcing trillions of losses onto honest people in order to bailout his own incompetence. Wall street played Bernanke for a stooge, a useful idiot. And Bernanke's deflation/helicopter speech was a campaign speech for his fed chairmanship. The speech was also a green light for wall street fraud. The same fraud Bernanke is now covering up/bailing out. I don't see any integrity.
As for Bernanke's IQ, maybe he is booksmart. Maybe he's Rainman. Regardless, he clearly can't apply his smarts to the real world. His big claim to fame as a fed chairman is hyper use of the fed's infinite balance sheet. He doesn't even have the guts to force CONgress to make difficult decisions. Instead, he beats it out of the little guy via inflation in order to bailout fraud.
Hamilton is a polyanna. What a crock. He can't defend Bernanke's actions so he becomes the anti-name calling police.
On the question of integrity - Is anyone questioning Chris Cox' integrity ? The very same argument could be made about all regulators. If a regulator conveniently routinely looks the other way and covers it up by making obtuse statements that to even the most casual observer appear absurd, it should be obvious they are hiding the truth.
Hiding the truth isn't a trait associated with integrity.
His actions ( BB ) over the past two years have been guided by one and only one motive, that being to minimize the harm caused to the Banking Oligarchs by their wanton greed so they can pump up great chunks of the Big Shitpile that's essentially worthless unless the peak real estate values of the bubble can be miraculously restored.
"Those [economic] fundamentals, Bernanke said, include low mortgage rates...[no quotation marks in CR text]"
Well there's your problem right there, Mr Chair. Your sewer line isn't connected to anything, it's just been filling up a large sinkhole under the fundament. The last guy never noticed it either. The broker just threw a tarp over it when it started to stink.
Shit isn't bad for growing some green shoots, but as the fundamental support of your house, not so much.
I think integrity is a valid question, intellectual and moral, before the public.
We had access to the same facts, perhaps even fewer, and arrived at the opposite conclusion. Bubble vs. No Bubble.
If Bernanke arrived a different series of conclusions (no bubble, healthy employment growth, contained...) from the same facts, and his intellectual integrity is not in question--then, he was and is simply a creature of politics.
In that case, his moral integrity is in question--did he believe otherwise than what he spoke, on the record, repeatedly, that in fact there was a bubble, no real growth, asset price distortions, poorly enforced regulations of markets, but said otherwise because of politics?
Well, I'm not sure it really matters, aside from some observation that smart people be can be convinced and convince themselves of the wrong conclusions.
In terms of the post-denial bubble phase, I'd say the debate is whether or not the various Liquidity vehicles were better than a bank-holiday and aggressive FDIC action.
"He's a public-spirited academic" ...and a laughable failure at that. His entire take on the depression is just stupid, and extremely dangerous in the present context. Maybe if instead of trying to be Friedman minus -15 IQ points he would have spent a few moments pondering the world's second-largest economy in the past two decades...
Bernanke is a complete, total idiot, a high voodoo priest of a discredited cult with less credibility than phrenology circa 1910, psychotherapy circa 1850, or astrology circa 1300.
It is so easy to demonize a man and not an institution or system. Why? Because changing a system requires work. Hey, the ripples would probably rock your very own boat. Demonize the man only requires enough effort to type a few sentences under a screen name.
Really, like Machiavelli points out, it's really not about having good intentions, but about being effective. One of the problems with the notion of macroeconomics as a science is that there is no way to do controlled experiments.
Economists have served one useful function in this crisis - making astrologers look really, really good.
I think Bernanke's just an elbow-patches academic out of his league in the world of modern finance.
Anyone who calls themselves an economist should have to manage his own retirement account in public view, with 1-, 2-, 5- and lifetime returns returns posted immediately after his academic titles.
Bernanke is a disingenuous liar with a memory problem. He is also an economic dunce who does not understand the cause of great depression nor could he spot a housing/credit bubble visible to nearly every blogger in the country. However, like his mentor Greenspan, Bernanke believes that every problem can be cured by throwing money at it. Finally, he is a creative, political power grabbing hack who gives memorable speeches about throwing money out of helicopters.
To assume incompetence on Bernanke's or Greenspan's part is pure naiveté. As chairmen of the American banking cartel, they delivered the best long-term risk/reward outcomes their shareholders could expect.
On this point, it's easier to sleep at night when the figure-head you've demonized is replaced, only to realize that the new person suddenly, magically takes on all the undesirable qualities of the last one you just got rid of.
You are correct. It's a system, and in many respects the individuals are place-holders at the top of an org-chart.
Scott/CR,
I might even agree that Bernanke has a higher IQ than 99.9% of those in Washington...I choose not to think about that one too much.
My own concurrent economic indicator; Look at the interplay between retail businesses that are primarily cash sales against those with mostly credit sales.
"It is so easy to demonize a man and not an institution or system. Why? Because changing a system requires work. "
I've been extremely consistent about demonizing all of the above - BB himself, the Federal Reserve, and the business/finance/economics academia that creates entrail-reading sociopaths in the first place.
I would place him above 99.9% of those recently in power in Washington on the integrity dimension, not to mention IQ.
It's true. Ben Bernanke scored 1590 on the SAT exam. A score of 1450 or above on the pre-1995 SAT puts you above 99.9% of the population in IQ, let alone those "recently in power in Washington."
You know, so many of the commentariat are unduly anxious for a repeat of the Andrew Mellon approach to global depression - to wit: take your Dr. Paul medicine and cuddle up with a nice lump of coal for failing to embrace a sufficiently austere puritan lifestyle - which in and of itself is a pretty discredited (with evidence) approach to ending global depressions, that it seems few have hardly any room to criticize Bernanke.
I really do wonder how many of you would tell the kidnapper to F--- O-- and let them blow your kids brains out as a matter of principle. Sure, you can then safely shoot them, and make good and sure the kidnapper is punished, but you know, you are still without your loved one. I am personally more concerned with mitigating and minimizing the damage to my person and life than I am with punishing the guilty.
Nuts. I share your moral indignation, but really, grow up. It's like listening to a bunch of teenage wanna-be anarchists.
Not misplaced at all. BB's failure to identify the bubble caused incredible harm to tens of millions of americans, and his future bailout binge threatens to enslave future generations in mind-blowing levels of debt and a emaciated economy stretched to the breaking point to support it. We should be angry. Very angry.
One fo the things I respect most about CR is that he tries to be fair, and is willing to stand up for what he believes in.
Withtat said, here is my major complaint with this post. Absolutely, assailing BB's integrity is out of bounds, at least in my view. However, one of the major reasons that we are in this mess today is because Ben did not want to challenge the status quo. Either that or he was just incredibly (and willfully?) ignorant of the greatest credit bubble in the past 70 years.
He is guilty not of being a bad person, but of being a person who was unwilling to listen when the voices were at a fever ptich. His actions to stabilize and provide liquidity were a direct result of his previous failures. That is not a failure of integrity. It is simply a failure. His failure far outweighs the 'success' of his response.
It is possible to be a very smart man of high integrity and still fail disastrously. I'm sorry CR, but that sin is bigger and cannot be ignored.
Hamilton and CR doing their best to frame the Overton Window. Hey, let's talk all we want about how Bernanke might be mistaken ... made errors of judgment... is operating with imperfect information. But to suggest that such a public servant might be operating from something other than the most noble motives... it is beyond the pale! (notice that no evidence of Bernanke's character is offered - the key element here is the pretense that any discussion of this is really out of bounds).
The discussion about what remedies the financial system requires are similarly circumscribed... more regulation, or about the same? But no mention of crucifying ten thousand bankers along the beltway...
1 - mellon may never have said that. the quote comes from hoover's memoirs, as I recently discovered.
2 - "a pretty discredited (with evidence) approach to ending global depressions" you can't disprove a negative, scott. i'd expect more, even from a teenage wanna-be anarchist.
3 - all we're saying is: put down the syringe. and you don't kick the habit by moving in with your dealer.
Angry Saver, I didn't say his integrity was "above reproach", but I think the burden is always on those who call someone a "liar". Just because he is a public figure - and can't sue for defamation - it is still defamation.
I think this whole thing is pointless. Who cares whether ol' Bennie would steal candy from a kid? The system is increasingly being run for the super rich, and run by the super rich.
I would agree that Bernanke does have a high degree of integrity. However he was wrong because he underestimated "the shadow" banking system, as Shiller calls it. He underestimated the exposure of investment banks and hedge funds (shadow banking) to leverage and the possibility of a bank run on those business institutions.
Ever since the Bear S. collapse, Benny has been playing a catch up. He should have told himself, "I don't know" & lets take it slow instead of rushing into the great unknown. The real economy is not a lab experiment, where you could try again by pressing the restart button.
p.s. Benny, you can't save it all, so save what matters - us the taxpayers and healthy institutions. Give your chopper a break, d... it.
Contrary to my cr persona, I'm generally an easy going person. Very moderate in most things. No political affiliations whatsoever. Both parties look about the same to me. Though they say different things, they basically act the same.
That said, I don't feel that the biggest swindle in history is a time for subtlety. This fiasco should not be swept under the printing press rug.
Prior to this historic ripoff, I'd never called or written my elected representatives.
"On this point, it's easier to sleep at night when the figure-head you've demonized is replaced, only to realize that the new person suddenly, magically takes on all the undesirable qualities of the last one you just got rid of."
Good one. Societies do go in the wrong path, sometimes even for centuries. Like Soviet Unions for example, wise ones inside SU and outside realized already in the early 30's that this path is not going to be really good one but glorious SU went all the way to the 80's.
Why? Because other one form of society already equally tilted, but to the other way, was actually supporting it Capitalism won but it wanted double and triple and more and more and more. And now?
CR, while this post has generated alot of commentary on Bernanke's integrity, I have to agree with you. I don't know enough about the man personally to make that call, nor do I know his thought processes. I do see the "ivory tower" syndrome alot in my line of work, not from lack of integrity but loosing the ability to look at both the forest and the trees, not letting either one cloud the other.
To put this in my terms as a consultant: what's Bernanke's post-mortem analysis for why his model failed?
That is, he had a method and data? Which was wrong, the method for analysis that churned out the wrong answer, or the data, or both?
And I think this has bearing in his current capacity to continue to serve. How must he change his method to come-line with the facts? How must he change the sources of data, or the way that data was gathered to come in line with the facts?
The fact that he's perhaps doing as effective job as possible at limiting the radioactivity (and there's quite an argument there), is still irrelevant (to me) about his continued capacity to serve.
He hasn't corrected his model, or he hasn't elaborated on that in public hearings.
And whoever the next in line is better have an answer about their own methodology and numbers and fact checking and seeking independant views that are different from your own conclusion.
I think of this as a ship that has taken tremendous damage in an attack. BB is not the CO, he is one of the officers in charge of damage control. The CO has decided to keep her afloat. BB is doing what he has been training for years to do. The bulkheads may be rotten. The ship should have been in the yard for overhaul years ago. That is not his problem. His problem is keeping her afloat. He will flood compartments and shore rotten bulkheads. He will not, because it is not his job, make any decisions other than that.
@Hack - no, Mellon didn't say that, I did. Mellon believed very strongly in the notion of Laffer curves (low marginal tax rates) and creative destruction. He took precisely this attitude of "let the weak banks fail". I don't think Ron Paul was around back then. The evidence is that after three years of his policies, following the '29 collapse, things were dramatically worse. I stick by that assertion. What Mellon said is:
"[T]he government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: "Liquidate labor, liquidate stocks, liquidate the farmes, liquidate real estate." He insisted that, when the people get an inflation brainstorm, the only way to get it out of their blood is to let it collapse. He held that even a panic was not altogether a bad thing. He said: "It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people"
[edit:]That is Keynes on Mellon. That is also exactly the kind of policy frequently advocated by those here who are po'ed about "bailouts" and preoccupied with punishing the guilty.
In fact, I suspect that without Mellon, Hoover's disaster-relief instincts (which were tremendous) would have taken precedence, and FDR would not have been able to unseat him. That would have been keeping his eye on the ball.
His actions over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil.
The above text from Hamilton's piece, quoted by CR.
I can't accept this as prima facie evidence of anything. We don't know his motives; if this was his one and only motive he did a miserable job indeed.
Obamma,s policies may not be working as well as many had hoped:
1st 100 days - There are 2.9 million more people unemployed in May than there were unemployed in January. The unemployment rate went from 7.6% to 9.4%. Since May 2008, we have lost 5.5 million jobs. The biggest losers were: Manufacturing 1.5 million lost Finance & Prof Serv 1.5 million lost Construction 1.1 million lost Retail & Leisure 1.3 million lost
that's irrelevant. nixon's evil thinking gave us the clean air and water act, ended the vietnam war, and opened a dialog with china which has been, on the whole, for the good of the country. washington's evil behavior in the french-indian war laid the eventual foundation down for a nation.
i don't mind evil thinking, as long as the goal is the long-term benefit of the nation. that's not what we have here. we have non-thinking stupidity, and an obsession with the short-term stability of institutions which needed to fail yesterday.
It has nothing to do with "private evil thinking".
But any man who would support a policy of systematic and purposeful erosion of our currency in order to bail out the bad bets of a very small group of wealthy interests is in no way, shape or form one who I am going to equate anytime soon with the concept of "integrity".
Whether he is evil or not is not for me to decide. But with leaders like this who needs "evil"?
I cant speak to his integrity. I can only try to logically deduce from his actions what his intentions are. The problem is, before you can understand his intentions, you have to understand his competence. And it is clear from his pronouncements, that his interpretation of what was happening economically was horribly flawed. Now, one has to wonder, how one can advance to such a high degree in his field, and then take a huge swing and a miss at the very subject he is supposed to be an expert at. This makes me think that either he is NOT as competent as he is purported to be, or that his integrity has been compromised by the system in which he has found himself. Now of course, these are not mutually exclusive, so he could be both incompetent, AND lacking integrity.
But it is somewhat more likely that he is DOUBLY incompetent, since he is making a hash of the fix to his own screwup (partial fault at least, going along with Greenspan, not changing policy when it was his turn, denying reality of a bubble.) If he didnt see the bubble, how could he possibly match wits with the very people who game the system? I mean, sure, he knows the extraordinary mechanisms the Fed has at its disposal. But the other team (GS, JPM, etc) is designed to take everything he does and use it to their advantage. He may be smart, but he cant beat that.
And that is the MOST charitable interpretation I can make of all this. Which means, it's likely that the reality is worse.
I'm impressed that so many posters are privy to the private evil
I'm not. However, when someone who I will concede is extraordinarily intelligent (1590 SATs, pre-1995, was already mentioned) makes errors that I feel a less intelligent person (me) could have avoided, had I been in his position - then I feel some explanation is required. And in this case, one obvious explanation is that these were not errors at all, but actions taken with a view towards maintaining the fortunes and positions of his extended social circle, and costs to the public be damned.
"Not misplaced at all. BB's failure to identify the bubble "
BB did identify the bubble. What he failed was to realize the speed and degree of it, due to the ability of modern finance to act below the radar. In addition the FED has failed to include the policy of being a bubble watchdog into its agenda.
please, source that quote Tom. As I understand it, the Right Bills policy was not 'liquidationist'. The Mellon described by many is really just a demonized construct used to rationalize a statist approach.
"His actions over the past two years have been guided by one and only one motive, that being to MINIMIZE THE HARM CAUSED TO ORDINARY PEOPLE by the financial turmoil. "
This reminds me of when I was little, and a local Amish man was arrested for gutting his wife like a deer on the kitchen table...he too "meant her no harm"...turns out he was not taking his anti-psycotic medication by direction of the council elders.
Just because someone has "good intentions" does not placate them from doing wrong, these Keynesian policies will only distort the effective distribution of capital further, this will be our ruin...
Here is one food for thought for economists: In a planet that has guaranteed sunlight for about 2 000 000 000 years forward, all values of human knowledge and skills (=200 000 years) will approach zero in a piratebay.org way.
CR, Webster's defines "integrity" as follows: "....INCORRUPTIBILITY .... HONESTY." If Mr. Bernanke saw the housing bubble (as nearly all of the rest of us did), but choose to claim none existed, he lacks the integrity to be the Fed Chair. If, instead, Mr. Bernanke failed to see the housing bubble, he lacks the intellectual ability to be the Fed Chair. I for one would go with Summers. After all, he could hardly do more damage than history will show Bernanke to have done.
And in this case, one obvious explanation is that these were not errors at all, but actions taken with a view towards maintaining the fortunes and positions of his extended social circle, and costs to the public be damned.
There is an even more obvious explanation: The total amount of data that he sees is a lot more than the people in this blogging corner of the world see. I would expect there to be a lot of noise to wade thru, especially since the bankers aren't posting here.
The thing you want in gov't is obviously someone who is maximally tuned in to the reality. But since those people never run for office, you want somebody with the fastest feedback loop. Greenspan had a slooooow feedback loop, the evidence is that Summers is also pretty slow (I was not the inside track at Harvard, but it was clearly damn slow.)
I don't think Bernanke is a crook. In fact he might believe that his actions are helping ordinary people. He might even believe that what's good for the Oligarchs is good for the country.
In other words he might not have a malicious intent in protecting the banking industry at all costs.
So what?
The actions of the treasury and fed are anti-democratic regardless of what Bernanke's personal intentions are. He does not deserve to be the Fed chairman.
My own concurrent economic indicator; Look at the interplay between retail businesses that are primarily cash sales against those with mostly credit sales.
I think that's a pretty good indicator, but I'm curious: what businesses are cash sales anymore? People buy groceries and gasoline on credit cards nowadays...I'm only being partly snarky.
Hamilton said that Bernanke's integrity was above that of 99.9% of the people in power in Washington D.C. You said you agreed with Hamilton. Yet Bernanke was just hauled before CONgress due to potentially unlawful actions in the BAC/MER deal. Your beliefs as well as Hamilton's fly in the face of the facts. How can he have more integrity than all those in D.C. that have never had to testify in front of congress and the American people under suspision of wrong doing?
Beyond the Mer/Bac deal, Bernanke is very likely violating our CONstitution by appropriating $$$ without CONgressional approval. Bernanke is also buying $1.25 trillion in GSE debt and securities. This is a violation of the fed's charter because said securities are not fully guaranteed by the U.S. Gov't. I could make the list longer, but to no end.
Expediency is not integrity. Far from it. Bernanke has become the "easy button" for solving difficult problems on wall street and in CONgress. Just wait until the unintended CONsequences come home to roost over the next generation or two.
"But it is another matter to question Bernanke's intellect or personal integrity."
All the intellect and integrity in the world will not make up for a lack of foresight. And given that the guy's primary field of study is the Depression, his lack of historical imagination is damning. As for integrity, well, I'd trade off some of that for Machiavellian street smarts and a just a drop of paranoia. But it looks like we're stuck with him for now.
The price stability mandate relates only to inflation / deflation and has little to do with prices of any individual asset class within the Economy. Also FED has little say about margin requirements for none banking institutions. I agree, it should have increased the bank equity on the book requirements, however it might have been ineffective in the age of exotic derivatives and other funky paper.
More data should allow for better decisions, not worse.
No. More correct data should allow for better decisions.
The difficulty of leadership positions is that you have to back out the spin from all the data, and I would guess there is much filtering going on before it gets to his level. (This problem in leadership is not new.)
The British Navy did not stop flogging until it realized that it would be going into action against a French Navy whose lowerdecks were motivated by the revolutions ideals. The realization that they would be going into action with a below decks of hostile seamen made the British navy change.
Nothing is going to change in America until, either the pain is too intense, or someone has a better alternative.
You know what? for 70 years the economy of the Soviet Union was run by a council of very intelligent, very dedicated professionals who did their very best to plan the Soviet economy. When asked why the annual plans were called "Optimal plans", one of these bureaucrats answered, "because we are the smartest, most knowledgeable people available, and we worked extremely hard to make this plan right. Therefore, it is the Optimal Plan."
They were very smart, their intentions were pure, they had families they loved, they worked hard for their country, and they used the most up-to-date and modern learnings of socialist-collectivist economic theory. Only problem was, the first principles of the economic theory they worked so hard to propagate were badly, badly flawed.
Were these men evil? Did they mean badly? Were they corrupt? Maybe, maybe not. Should they be held responsible for the millions who suffered and died under their ridiculous economic theories? ABSOLUTELY.
The lifeblood of any economy is its CURRENCY. The currency of the US Economy is CENTRALLY PLANNED. The financial system is CORRUPT and BOGUS. There are men who run this system, maybe they mean well, maybe not, but they CAUSE UNNECESSARY SUFFERING because of their IGNORANCE AT BEST and VENALITY AT WORST.
There is NO WAY that Bernanke gets a pass for what he has done. THERE IS NO EXCUSE.
Thanks CR - great post. Others can disagree but at least you aren't dodging the issue. Kudos.
Personally I think BB makes the classic failure those in power make - assuming the well being of their class or constituency overlaps with the well being of all other classes. What is good for General Motors might or might not be good for the USA. And rising tides might not float all boats... especially if the 'tide of liquidity' is narrowly distributed.
To go back the the Titanic analogy often cited here... It isn't a shock to me that many who are not among the class getting a seat in the life boats would question both the judgment & integrity of those people [fed & treasury] deciding who gets a seat. If you're gonna drown then the distinction between personal & policy becomes irrelevant.
Three posts from the linked CR archvices:
[Yes, I know how to spell archives.]
dry fly wrote on Thu, 7/28/2005 - 11:07 am
Do you know how much of our current soveriegn paper is out longer than 5 years? I don't but it isn't much. My understanding is something like 80% of our gov't debt is due in less than 5 years... as long bonds come due we keep laddering it into short term debt and adding on more each year to boot and so far they keep buying it and nobody sweats. It is revolving credit with a teaser rate.
They should be sweating and a lot. We should all be sweating.
Hoocoodanode it would take 4 full years for this bomb to go off?
CalculatedRisk (homepage, profile) wrote on Wed, 7/27/2005 - 4:17 pm
Jason, if you read my previous post on jobs (linked in post) I cut the Bush Administration slack for some of the reasons you give. But "slack" does not equal "credit". No one can crow about 161K jobs in 4 1/2 years.
We pine for the days of +161k jobs in 4 1/2 years.
Tanta (profile) wrote on Wed, 7/13/2005 - 2:33 am
I am a mortgage lender. Also, I am very vigilant.
I am, therefore, your best defense against economic catastrophe.
You need not genuflect, although from here on out you may refer to me as "Your Grace." It will show your perspective and good sense.
Am I the only one who thinks things are going exactly per plan? We're seeing the biggest transfer of assets from the dumb to the smart and I doubt that's an accident.
And I believe Angry Saver hit the nail on the head with the comment that Wall Street views Bernanke as a useful idiot.
Bernanke may or may not deserve to be reappointed. But I agree with Hamilton and CR on the question of Bernanke's integrity and honesty. The burden of proof remains on those who think otherwise.
While Bernanke failed to see the housing bubble, he "failed conventionally". Few in his "profession" will criticize him for this. If he had seen the bubble and tried to do something about it, he would likely been removed as Fed Chair. Or be blamed for the bubble bursting.
He did not get where he is by undervaluing career risk.
Hamilton is wrong and so are you, CR. One of the problems we have today is that no one wants to be the one to say "Hey, that guy is evil," or "That person is bad." We can't go around hurting someone's precious self-esteem now, can we?
The British Navy did not stop flogging until it realized that it would be going into action against a French Navy whose lowerdecks were motivated by the revolutions ideals. The realization that they would be going into action with a below decks of hostile seamen made the British navy change.
Nothing is going to change in America until, either the pain is too intense, or someone has a better alternative.
Meanwhile, enjoy the slow descent to squalor.
That must be where the saying... "Beatings will continue until morale improves!!!" ... came from.
I think many people in this thread are confusing integrity with infallibility. BB can have good intentions and still misread situations.
I do take issue with the "minimized harm caused to ordinary people" comment though. He is not an elected official. His constituency is not "the people". His constituency is the banking industry, including the large banks and bank holding companies. He has been very responsive to his constituency, and to that extent, he has done well.
"But it is another matter to question Bernanke's intellect or personal integrity."
His comments about subprime not being a problem as well as those about house prices in the context of the historical record demonstrate either a lack of intelligence or a lack of forthrightness. If he is working under an institutional directive to be publicly dishonest it is still his personal choice to do so and in my opinion he must be judged for that.
CR - you run an excellent blog with the best charts around. It sucks to say what follows but this is the truth...
It's amazing that you can cover every detail of economics and finance but completely miss the big picture. These SOBs have bankrupted the country. They looted the treasury in broad daylight. You defending them is an insult. You are an apologist for evil. When the ties that bind the nation have disintegrated and we are left with nothing you will comfort yourself by saying "hey, they had the best intentions."
Come on, leave BS Bernanke alone; he is just a symptom of a much larger condition. And now that the pacient is on his death-bed, unable even to contemplate what sort of disease led him to his condition, what difference does it make?
מה שהיה הוא שיהיה ומה שנעשה הוא שיעשה ואין כל חדש תחת
השמש׃
I agree that BB should be replaced. Has nothing to do with his integrity or intelligence. He just represents too much of the old school, which is contra productive for this increasingly new crisis. We need someone off the main economic grid. Unfortunately most of the potential nominees will be even more orthodox than BB.
His comments about subprime not being a problem as well as those about house prices in the context of the historical record demonstrate either a lack of intelligence or a lack of forthrightness.
Impressive. A poster has isolated the ONLY two possibilities. There exist NO other possibilities, just those two. Either/or.
I said it when BB was nominated. He is smart and educated and has learned the lessons of history. He will not repeat the mistakes that led to the great depression. Instead he will make entirely different mistakes that may send us into our own depression. I also said absent extraordinary efforts there was no chance of a depression and that one was only possible via ill conceived interventions in trying to prevent a necessary recession.
I fear BBs largest failures will manefest in the future. His Too Big to Fail bailout of GS, JPM BAC etc, to protect the Oligopilists will be the destruction of our way of life. The bailout of GS through AIG is particularly agregious given GS's payout of their largest bonus' in history last month, flaunting their unassaliable position.
Ben Bernanke deserves immediate removal not just denial of renomination based upon his disrespect for the limitations of the rule of law, the Constitution and his own agencies' charter.
Anything less is but lipstick on the pig of "ends justifying the means."
I said it when BB was nominated. He is smart and educated and has learned the lessons of history. He will not repeat the mistakes that led to the great depression. Instead he will make entirely different mistakes that may send us into our own depression.
The more things change the more they remain the same...
Either 1) He saw it coming, but politically could not say so.
Or 2) He didn't see it coming, because his model didn't allow it to be seen.
That's a gross simplification, but I think that's the crux. In the first case, he needs to be removed because he is dishonest. The second case, he needs to explain what went wrong in his intellectual apparatus to miss the bubble, misinterpret the facts, or accept as facts where there we're no facts...and then after a detailed explanation, we can decide whether or not to give him the keys to the car again (no).
However, I doubt that it's merely the man, nor an institution, but the entire super-structure of institutions, siphoning off the wealth of those poorly placed politically and economically.
there is only one guy, who could be more beneficial than harmful - Shiller. The others are Tovbin & Sollow but I am affraid they are ether dead or too old.
While Bernanke failed to see the housing bubble, he "failed conventionally". Few in his "profession" will criticize him for this. If he had seen the bubble and tried to do something about it, he would likely been removed as Fed Chair. Or be blamed for the bubble bursting.
He did not get where he is by undervaluing career risk.
Somebody who values their career above what is in the best interest of society is by definition immoral.
I've always made this argument about Greenspan - he chose himself above society. I'm not convinced Bernanke is doing the same thing, but the simple fact is he's been either Fed Chairman or Fed Governor leading up to one of the greatest financial disasters in history.
Good intentions simply aren't enough when you're talking about something of this magnitude.
"Those fundamentals, Bernanke said, include low mortgage rates"
This is the part that troubles me most. If a house trades like a bond, going up when rates are down, then it also has to go down when rates are up. It is not possible to conclude that interest rates are a "fundamental" without also concluding that house prices should have significant volatility. Yet Bernanke backed a mortgage banking system leveraged into a shadow banking system that relied on no volatility at all, at least not downward. I can't come up with a good faith explanation for this behavior.
"If you link the two together in your brain -- helping the little people means preserving the status quo -- you can do both and have integrity. And also a massive case of cognitive dissonance that you keep trying to shove into the closet."
This is as close as I can come to a reconciliation. But recognizing that the valuation models were transparently wrong, it was closer to willful denial than cognitive dissonance.
"...to minimize the harm caused to ordinary people..."
I cannot agree that that has been his goal. The price is already being paid - a very deep recession in spite of all the promises - with a far greater drag of an immense burden on productivity increases for years to come. His decision has been to try to perpetuate a credit bubble rather than allow it to deflate or collapse.
If Goldman, or any other major 'bailed-out' institution now starts handing out out future tax money - our future earnings- as bonus money like candy on Easter, there will be problems. Bernanke seems to thoroughly buy the notion that prosperity of the wealthy is the essential condition for subsistance by the rest. i do not agree with that. I also do not agree that Bernake's experiments have been successful. That cannot be judged for many years to come.
As to the comments that BB has been loyal to the banks, couldn't he have helped the banks more if early on he had legitimately fought to prevent the housing bubble from worsening?
'To go back the the Titanic analogy often cited here... It isn't a shock to me that many who are not among the class getting a seat in the life boats would question both the judgment & integrity of those people [fed & treasury] deciding who gets a seat. If you're gonna drown then the distinction between personal & policy becomes irrelevant.'
Barfly,
Thank you for that. It's the best summation I have seen thus far for much of anger that seems to be overtaking us folks who didn't even make it into the seat lottery.
Regardless of whether the anger is misplaced or not, it will need to be dealt with. Any corrections in policy or other appeasements will need to be perceived as fair and just across all income brackets. Anything less is fueling the current fire.
As I have said many times,
this isn't over until a city burns.
Instead he will make entirely different mistakes that may send us into our own depression.- RD
True, but unfortunately people generally do tend to do that, so if we got a BB replacement, s/he might very well just generate another set of mistakes. Any replacement would come out of the same bag of candidates, too, most likely. I can't see Taleb or Roubini in there.
I'm perfectly willing to stay away from personal remarks about BB, however. I don't care about that stuff anyway. Is that the point of this thread?
These SOBs have bankrupted the country. They looted the treasury in broad daylight. You defending them is an insult.
Many of you make it sound like BB is the one that bankrupted the country. I got news for you:
Most of the officials and regulators, including BB, are merely:
Messenger of doom
Cleanup of mess
This crisis is in formation long before BB is in office, and arguably well before any of the current powers in office are even in govt.
We can bitch and moan and kill the messenger all we want. The wealth has been spent, the time to turn around was WAY past. All the seemingly expensive "bailouts" or "moral hazard" is merely cleanup tasks for a wound long in the making.
Simple question:
When a home owner took out a loan 5 years ago to buy a now foreclosed house; That loan is really someone's deposit/investment or a savings / CD account from 5 years ago...
so when the house is trashed and the loan is gone; you have a choice to restate all 5 years of history, and tell the saver from 5 years back, his money is gone. Or to try to hold the system together, so the saver have some assurance and don't all try to mass withdraw from banks, (and then gradually use inflation to make the savers total loss be realized anyway.)
Both options frankly sucks. Loss is loss, and it will be realized one way or another.
Blame the sins that got committed years ago, not so much the messenger who's trying to tell you "you have a loss".
but the FED was created because of the bank runs and depression during the 1890's (lasted from 93 to 98, was very wild & scandalous, etc) . The major reason of it were rumors according to some historians). It was created due to the popular demand and political pressure. People wanted someone to be able to prevent financial panic attacks. I would agree that we need something better, however having nothing at all would be even more harmful. Well, at least historically it was more harmful.
I will admit that there is 1 very obvious factor that hasn't been adequately articulated - the extreme political pressure on the Fed, and their independence. That's clearly a big obstacle to the Fed performing their function. Also an obstacle to honest pursuits.
Every great party comes to an end and the keg of Fed Reserve is starting to float in the ice bucket.
Are you leaving now or waiting for the rest of the drunks?
You are supposed to assign their conflicting words with great value, getting lost in the contradictions, not noticing the scam right on the other side of the television.
There is no point in overly scrutinizing what they say. Everything they say is inconsistent. They and the ones who came before are part of a big con.
Keep the Fed but instead of the Board of Governors we poll the commentariat as to the correct course for monetary policy. Gee, what do you the results would be if "we" decided not to purchase Treasuries or pressure dealers to buy more than was their wont.
@Jane & Barfly - I have to say, I am glad people are angry...that will be needed when the time comes for structural reform. It will require holding Congress' feet to the fire, and that takes a lot of outrage - or a city or two burning. Unfortunately, even here, where most folks have a clue, when the White House whitepaper came out, there was a lot of anger, but not as much solution finding. Whether or not the Fed, now that has taken on an FDIC-like role in backstopping a lot of the oligarchs, is the best suited regulator is debatable, but screaming "down with the fed, down with the fed, down with fiat currency" isn't really much of a proposal either.
His job was to forestall a worldwide systemic breakdown, and he and his colleagues did by providing record amounts of liquidity in short order. He cannot be held responsible for the ongoing fiscal misadventures at Treasury and the White House.
I thought the Republicans' questioning of Bernanke was uncalled for, over the top, and irrational. How this sort of grandstanding produces a viable GOP is not clear to me. Kudlow had Rep. Issa on one night last week and Issa was the worst of the worst.
Either 1) He saw it coming, but politically could not say so.
Again, if this is the case then he lacks the leadership ability, integrity, and moral authority to hold the sort of position he has.
IMO if you're not willing to risk your career to avert a global disaster when you genuinely have influence in the global sphere, then you deserve all the scorn and derision a society can heap on you.
"Many of you make it sound like BB is the one that bankrupted the country"
That is why I said THESE SOBs. Only together could they have brought on so much destruction. Just because they did it together and not single handed does not mean they deserve a free pass. Dismissing recent actions as being mere cleanup tasks after the fact is a flat out lie. Ohh I know it is too late to fix it now but excusing their actions is a joke.
the extreme political pressure on the Fed, and their independence. That's clearly a big obstacle to the Fed performing their function. Also an obstacle to honest pursuits.
I heard a story that Greenspan leaned on Clinton regarding tax rates - threatened to jack rates on Clinton if he didn't reduce the size of the increases...I wonder that that isn't a two-way street sometimes.
"His job was to forestall a worldwide systemic breakdown, and he and his colleagues did by providing record amounts of liquidity in short order. He cannot be held responsible for the ongoing fiscal misadventures at Treasury and the White House."
Don't blame the Fed for problems they planned, bend over and accept their fix.
They are so far ahead of you it isn't funny.
PATRIOT ACT
No charge or trial required for a lifetime of prison or a bullet.
Why do you think TPTB have gone to great lengths to define US Citizens as terrorists?
not the bible/guns/ammo/pitchfork crowd.
Yeah! I'm 3 for 4!
Agree. I also particaulary hate 'following orders' sorts, as if bureacracy involves crossing a moral ergosphere where the laws of decency have been suspended, where carrying out the most venal orders is necessary, and probably good for career advancement.
His job was to forestall a worldwide systemic breakdown, and he and his colleagues did by providing record amounts of liquidity in short order. He cannot be held responsible for the ongoing fiscal misadventures at Treasury and the White House.
He was Fed Governor while the Fed was pumping liquidity and credit left and right in to the dot com and housing bubbles.
To paraphrase Marc Faber:
"Now that they've poured gasoline everywhere and set the town on fire, everyone at the Fed wants to be a fireman."
Institutions are made up of men. Individuals tend to disavow responsibility for bad decisions, instead saying it was the "institution." "I was just following orders" Bernanke IS a part of the system and many of us ARE working to get the corruption stopped.
JohnRDC (profile) wrote on Mon, 6/29/2009 - 12:31 pm
I agree with CR's conclusion re Bernanke.
His job was to forestall a worldwide systemic breakdown, and he and his colleagues did by providing record amounts of liquidity in short order. He cannot be held responsible for the ongoing fiscal misadventures at Treasury and the White House.
His job is spelled out in detail and unambiguously circumscribed. Stable dollar commensurate with optimal economy/employment. I assert he's failed. And pleas don't bring up the FRB website's "expanded" duties mission statement.
"I heard a story that Greenspan leaned on Clinton regarding tax rates - threatened to jack rates on Clinton if he didn't reduce the size of the increases"
Bill was boffing Andrea(he'd boff anything that moves) and Alan let his emmotions get the best of him
"but the FED was created because of the bank runs and depression during the 1890's (lasted from 93 to 98, was very wild & scandalous, etc) . The major reason of it were rumors according to some historians). It was created due to the popular demand and political pressure. People wanted someone to be able to prevent financial panic attacks. I would agree that we need something better, however having nothing at all would be even more harmful. Well, at least historically it was more harmful."
At least that is the history the MSM would have you believe. I suggest you do more homework.
"Only together could they have brought on so much destruction. Just because they did it together and not single handed does not mean they deserve a free pass."
In a democracy, the country deserves the govt it gets.
In more ways than one, the govt also reflects the collective desire of the people. I can tell you the recent crisis tells me one thing very loudly (Sorry if this offends):
Americans demands goods and services, abhors labor and hard work; and expect the world to bend over for them and hand them things for free.
This central idea spins into many variations, like:
Expecting housing to "forever go up" so that someone's retirement and home-ATM lifestyle can be taken care of. (replace the word house with stocks or 401K, depending on your investment style)
Expecting services, retirement guarantees, medical reform, and various policies from the govt on one hand, and then refusing to pay for it when it comes to taxation on the other -- essentially forcing the govt to perpetually go into debt.
Expecting that third world countries's export-oriented policies to continue forever, and for foreigners to come in with money and invest forever.
But the central theme is the same.
The moral of the story is, if you want to look for blame, look into the mirror. We're the devils.
The govt is surprisingly efficiently at reflecting our flaws.
I would favor Volker to replace BB, and let him pick his own Leutenants. He probabbly knows better than anyone who is capable. Imagine not having a policy of 2-3% inflation every year. What a concept.
As to the comments that BB has been loyal to the banks, couldn't he have helped the banks more if early on he had legitimately fought to prevent the housing bubble from worsening?
I think the argument is not that he's been loyal to the banks but that he's been loyal to the bankers...a subtle but important distinction.
Personally I don't agree with either formulation. Bernanke holds his office because his approach to the problem--well publicized in advance of his nomination and even of any public perception of the problem--was seen as beneficial by the bankers. That doesn't imply any misdirected loyalty or false dealing on Bernanke's part.
that's funny, it looks like every piece of cash I run across claiming to be money is a "federal reserve note". amazing, they create our "money" and run up trillions on that mysterious balance sheet at the nyfed with zero transparency or oversight, and yet they are just innocent bystanders...
we aren't bitching about spilt milk, hc - we're complaining about the giant running milk fountain installed without a basin in the middle of the living room - and the milk bill automatically going onto our credit card while the milk gets deeper on the floor.
"Nothing is going to change in America until, either the pain is too intense, or someone has a better alternative. "
I make the same point about pain to my liberal friends all the time. But I would argue that people only strongly commit to the "better alternative" AFTER the pain is too intense. Otherwise inertia and fear keep them in place -- the latter due at least in part to the efforts of the Powers That Be. ("Don't go there, it's SCARY, and we can't PROTECT YOU" (even though WE are the cause of your problems).
If we are all so perfect how come we even worry about the economy instead of counting our money....economics is dismal enough, but to put in a healthy dose of politics, it becomes . . . well you get the idea.
"His actions over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil."
With the unemployment where it is and the loss of savings/investment assets, he has not succeeded. Nor has he and the Summer's gang able to straighten out the crooked ways of the Financial world. So its failure on both counts, inspite of al good intentions?
CR: Just writing to say thanks, and agree with you. I don't agree with all the statements or decisions he's made, but I've not the slightest doubt about his integrity.
I think the community owes you for going on the record about this. It won't stop the conspiracy theorists, but you have enough credibility that I hope it will make some readers think carefully the next time they hear the bile spouting forth.
You mention several examples of Mr. Bernanke’s incompetence in dealing with the economy in general & the financial sector in particular. Then you declare him competent because of his “good intentions”. Need I remind you that the road to ruin is littered with good intentions?
It’s not about qualifications, IQ, intentions, looking smart, acting smart or talking smart. It’s about RESULTS. And Mr. Bernanke doesn’t have any.
First, for all the bloggers/posters who claim Bernanke was a miserable failure because he didn't couldn't see all this coming even though they and many others did, this question: How many of you sold your vastly overpriced homes at the peak of the housing bubble, used their bubble-equity to load-up on long-term puts in the banking sector back in 2007, and are now posting from your French chateaux or your 200-foot yacht? If you aren't, "to know but not to act is not to know." Saying that you know something is going to happen, and having enough deep-down confidence to really jump in with both feet to capitalize on a once-in-a-lifetime situation are two different things. CR just recently mentioned that he lived in such a bubble area of California, but didn't sell, so what are we to make of that?
Second, what if Bernanke had known? He's the Fed Chair for the whole country, not just California, Florida, Arizona and Nevada where so much of the bubble real estate prices and sub-prime loans were. What of places like Dallas, Portland, or Charlotte where there wasn't a California-size bubble (and there's also not a California-size collapse)? What was he supposed to do, come out and say, "If you want to buy a house in North Carolina that's cool, but we're raising mortgage rates and standards to discourage people who want to buy in California"???
Finally, does anyone actually think Bernanke wouldn't have done anything in his power to prevent this from happening if he really knew it was coming and if he really knew what the right policy response was?
"but the FED was created because of the bank runs and depression during the 1890's (lasted from 93 to 98, was very wild & scandalous, etc) . The major reason of it were rumors according to some historians). It was created due to the popular demand and political pressure. People wanted someone to be able to prevent financial panic attacks. I would agree that we need something better, however having nothing at all would be even more harmful. Well, at least historically it was more harmful."
At least that is the history the MSM would have you believe. I suggest you do more homework.
"
are you saying that 1890's recession and bank panics were a lie? or are you saying that one of the most respected authors on econ - history are falsifying their accounts? The Panic of 1907 & Animal Spirits books do cover the subject in detail. Should I believe someone who post on your tube to a higher degree than to believe people that were screaming an asset bubble prior to everyone else?
DO I hate the politicized FED in the form it is today - absolutely. Would we be better without any central institution setting the interest rates and bank related requirements - absolutely not.
So Bernanke is smarter than 99.9% of Washington yet he still repeats the same mistakes as the previous Japanese recession and our Depression. He allows the system to get there on his watch yet only has our good in mind when he continues his assault on the free markets.
I don't think asking a man if he used force or threats to make a deal happen is an attack on him personally. The Fed Chairman (any of them not just Bernanke) is a man who is engaged in a systematic destruction of the US currency and eventually the US way of life. Is it on purpose? I have no idea nor do I care what his intentions are. Only the results that have come on his watch.
If he is smarter than 99.99% of Washington... May God help us all.
Bernanke is a conspirator in some of the largest thefts in history
being better than 99.9% of the other slimeballs in Washington DC is NOT GOOD ENOUGH given that Ben's chair is unelected and wields more power than the rest of the government.
He's not better than 99.9 of the other slimeballs in DC. Economics nerds just like the taste of Bernanke feces because it is more familiar than the other feces shoved down their throats.
CR:
Dont usually post since I find your posts to be so illustrative and informative. However, on this have to disagree - if we had any more public servants ( this may not be technically accurate in the case of BB) and they all act like he did for the "ordinary" folk, we are for sure doomed.
The press reported that, at the meeting of the Federal Reserve Bank of NY convened on a weekend to finally seal the fate of Lehman Brothers, one civilian was present, none other than the CEO of Goldman Sachs ("GS"), the chief beneficiary of the meeting.
If the above is true, Bernanke should have walked out, if he had any moral fiber. Apparently he stayed. The GS CEO was very well known to Guentner, who reportedly spent many an hour every week discussing "important matters" with his mentor at the most profitable firm on earth.
Did the former CEO of GS and Treasury Secretary Robert Rubin deserve 150,000,000 for his tenure at CitiBank?
Didn't Treasury Secretary Paulson know GS well? Isn't the current right hand man of dark Prince Guentner the recent Chief Lobbyist of GS. Isn't the current President of AIG a former GS man. Ditto the new President of the NY Federal Reserve Bank of NY, the former Chief Economist of GS.
Wake up America! The Elites are in control and looting your vaults of every last dime. The idea that civil servants like Bernanke et al are looking after the common folk is not only laughable, it's professionally incompetent.
Bernanke is a disingenuous liar with a memory problem. He is also an economic dunce who does not understand the cause of great depression nor could he spot a housing/credit bubble visible to nearly every blogger in the country. However, like his mentor Greenspan, Bernanke believes that every problem can be cured by throwing money at it. Finally, he is a creative, political power grabbing hack who gives memorable speeches about throwing money out of helicopters.
Having spent five years at the Fed in relatively senior positions, I am somewhat amused by the various descriptions that have appeared on this thread of the Fed's purposes and functions. By no coincidence, that is the title of a book available (at last look) free of charge from the Fed. It might bear reading.
JohnRDC -
from the "book" FRB: The Federal Reserve System Purposes and Functions
"The Federal Reserve sets the nation’s monetary policy to
promote the objectives of maximum employment, stable prices,
and moderate long-term interest rates."
Those seem to be what most on this thread are refering to. The housing bubble was not stable pricing.
But the bailouts of Bear Sterns, AIG, Citibank, etc? How do they promote "maximum employment, stable prices,
and moderate long-term interest rates"? It seems they do not.
He's a good kid who got in with a bad crowd.
What's that they say about misguided people with good intentions?
A single-man operation has stolen US$ 60 billion, says the U.S. District Court in Manhattan before giving Madoff 150 years.
Billionaire Madoff tied to intelligence agencies
No conspiracy charge by feds against Madoff is covering up links to domestic and foreign intelligence.
16 June, 2009, 21:16
The failure of federal prosecutors to bring conspiracy charges against Bernard Madoff, the mega-billion dollar Ponzi scammer who pleaded guilty March 12 to eleven counts of fraud and other crimes in U.S. District Court in Manhattan, is providing cover to those who pulled the strings on Madoff's illegal operation.
WMR spoke to a former close aide to Madoff who related how he handled a number of transactions personally for Madoff. The source said that Madoff was running a special type of "pump and dump" scheme. The source said Madoff would "pump money out of the system and dump it out to another place." When asked what that "other place" was, the source replied, "Israel."
Billionaire Madoff tied to intelligence agencies - RT Top Stories
The foxnewsification of the masses demands that there be no differentiation between personal and positional attacks.
CR, thank you for that last part.
The question of integrity is, for me, the most troubling.
His actions over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil.
I agree with Professor Hamilton.
CR joins flat earth society.
[His actions over the past two years have been guided by one and only one motive]
Yes! To ensure that his close friends that run commercial and investment banks remain excessively comfortable. If he cared about America more than his career or his banker buddies he could have behaved more responsibly. He's a crook.
The problem I have with most economists is the same thing I have with Bernanke; two people I know, a dry cleaner and convenience store operator knew (in so many words) that the economy had taken a serious downturn by early 08 and the pros did not.
What a joke. Read this if you want an opinion from a non-American who isn't naive.
FT.com | Willem Buiter's Maverecon | Central banking as partisan politics
I could not disagree more....there is no way in hell that Bernanke and Co. have been operating under the framework of what can we do to minimize the harm caused to "ordinary" people.
That is B.S.
Propoganda at its most obvious and worse.
[CR joins flat earth society]
+10!
Banks in 2007 began increasing the interbank lending rates because of the bubble's market risk.
It was the systemic regulator (Fed) who STOPPED the macroprudential behavior of the private sector.
Bernanke's "temporary" liquidity (to an overliquidity problem) is approaching its second anniversary:
Not One Cent: Should Ben Bernanke Resign? Who Should Be the New Federal Reserve Chair?
His actions over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil.
What about anyone on a fixed income like many retirees who relied on interest earned from savings?? How have his actions helped them or is it rationalized by saying "it would be much worse for those retirees if we had not pumped liquidity"
Politics in a central banker?! The goal should be the same as all politicians: Get reelected.
How does a central banker do that? Shake out the economy in the first 2 years of the presidency and then let it heat up going into reelection. Think about it...
Portal: entranceway
Acheron: river separating world from underworld
Circle 1/Limbo: home of unbaptized
Circle 2: home of "carnal sinners"
Circle 3: home of the gluttonous
-->Circle 4: home of the prodigal and avaricious<--here be Americans!
-->Circle 5/Styx: home of the wrathful<--ME!
Circle 6: heretics
Circle 7: Phlegethon (those violent to neighbors), those who were violent to themselves, and those who were violent to nature.
Circle 8/Malebolge: has 10 deeper bastions, including Boldia, flatterers, buyers/sellers of pardons, fortunetellers, grafters, hypocrites, robbers, evil counslors, scandalmongers, liars
Circle 9/Cocytus: a frozen lake, including a pit of giants and all traitors
Center of the Earth: home of Lucifer (oh shit)
Sorry, CR, you're gonna get it for this one
Im going to have to also disagree somewhat. That might be a secondary goal, but I think his main goal is to preserve the status quo.
It's a crapshoot on the integrity question...not sure we can ever know.
But it's pretty clear that on the competence issue, he is either a)incompetent or b) a propagandist liar
Neither one of those options is very encouraging, and because one of them is true, it makes me question his integrity a bit more than I might otherwise as well.
We could also make the case that he DOES care about the little people, but is being gamed by the system into giving then all they want, again, due to his incompetence.
WHERE. ARE. THE. CLAWBACKS ?
lama, you don't see me disagreeing - in fact I was making fun of Bernanke's economic statements the entire way ... but I think people have gone too far (I saw Mish's post today and I was appalled).
best wishes
@lama - Sometimes I think it's Ivory tower syndrome - they distrust the 'ear to tracks" view of things because they're afraid to miss the forest for the trees (howzat for mangling metaphors!...been a while since we had the mixed metaphors index on here), other times, and I think this applies with Bernanke (unlike, say, Mankiw, who is a partisan ideologue), it's because they recognize that in a 70% consumer consumption based economy, consumer sentiment is so much of the ballgame. It really does become a matter of 'creating your own reality'. I think that, and the likelihood that the shrub would have sacked Bernanke or picked a better yes man for the Fed job, probably accounts for his attitude. I think CR pointed out how effective the Fed was in narrowing the A2P2 spread, and that did seem crucial to mitigating the risk of systemic meltdown at a time when we really needed the help.
It would appear that Bernanke doesnt think that the principal instigators of this crisis have anything to account for either. That he would reward them for their behavior is evidence enough. That makes me think that he has no integrity, or at least that he doesnt care for the common man. How much of the common man's future will be mortgaged so that the current broken system can pay out more bonuses?
Forced to choose, I would go with someone with a tad less integrity, and a whole lot more ability to see things as they really are. On the other hand, perhaps Mr. Bernanke did see things as they were, but succumbed to the pressure to claim to the world that all is well with our housing market.
RockyR, well - since this is what I believe (I agree with Hamilton), I think I should step up and say it. I know others disagree - and that is why I can't stay silent.
best wishes
And being above 99.9% of those in power in Washington in the "integrity" department is not really saying all that much either.
The same could be said of 98% of Americans. All you have to be is not a total crook or liar and you are there.
brianinboise, I think missing the entire bubble is pretty damning on his economic forecasting abilities - no question. I'd prefer someone who saw the problems - at least by 2004 or 2005.
Hey, when did Summers first start worrying about the bubble in public? That would be interesting since he is mentioned as the leading candidate to replace Bernanke. I'll have to look for some Summers' quotes - of course he wasn't in a public role at that time, so he might not have said much.
best wishes
Your statement is as galling and preposterous as that chainsaw photo you love to trot out.
Chairman Bernanke is smart enough to have made a ton of money running a hedge fund
or serving as a principal in an investment bank. Instead he spent his professional life
in academia and government. I don't see how one can regard him as a crook. He's
a public-spirited academic who has the misfortune to be responsible for mitigating
calamities produced by lesser men.
I would place him above 99.9% of those recently in power in Washington on the integrity dimension, not to mention IQ.
Intergrity? The man can't admit he was/is wrong. The MER/BAC/Ken Lewis fiasco seriously calls into question Bernanke's integrity. Further, Bernanke is forcing trillions of losses onto honest people in order to bailout his own incompetence. Wall street played Bernanke for a stooge, a useful idiot. And Bernanke's deflation/helicopter speech was a campaign speech for his fed chairmanship. The speech was also a green light for wall street fraud. The same fraud Bernanke is now covering up/bailing out. I don't see any integrity.
As for Bernanke's IQ, maybe he is booksmart. Maybe he's Rainman. Regardless, he clearly can't apply his smarts to the real world. His big claim to fame as a fed chairman is hyper use of the fed's infinite balance sheet. He doesn't even have the guts to force CONgress to make difficult decisions. Instead, he beats it out of the little guy via inflation in order to bailout fraud.
Hamilton is a polyanna. What a crock. He can't defend Bernanke's actions so he becomes the anti-name calling police.
On the question of integrity - Is anyone questioning Chris Cox' integrity ? The very same argument could be made about all regulators. If a regulator conveniently routinely looks the other way and covers it up by making obtuse statements that to even the most casual observer appear absurd, it should be obvious they are hiding the truth.
Hiding the truth isn't a trait associated with integrity.
His actions ( BB ) over the past two years have been guided by one and only one motive, that being to minimize the harm caused to the Banking Oligarchs by their wanton greed so they can pump up great chunks of the Big Shitpile that's essentially worthless unless the peak real estate values of the bubble can be miraculously restored.
Yes I agree with this !
"Those [economic] fundamentals, Bernanke said, include low mortgage rates...[no quotation marks in CR text]"
Well there's your problem right there, Mr Chair. Your sewer line isn't connected to anything, it's just been filling up a large sinkhole under the fundament. The last guy never noticed it either. The broker just threw a tarp over it when it started to stink.
Shit isn't bad for growing some green shoots, but as the fundamental support of your house, not so much.
and Nixon wasn't a crook, Iraq had WMD's, and the US doesn't torture. The layers of neurosis thicken.
I think integrity is a valid question, intellectual and moral, before the public.
We had access to the same facts, perhaps even fewer, and arrived at the opposite conclusion. Bubble vs. No Bubble.
If Bernanke arrived a different series of conclusions (no bubble, healthy employment growth, contained...) from the same facts, and his intellectual integrity is not in question--then, he was and is simply a creature of politics.
In that case, his moral integrity is in question--did he believe otherwise than what he spoke, on the record, repeatedly, that in fact there was a bubble, no real growth, asset price distortions, poorly enforced regulations of markets, but said otherwise because of politics?
Well, I'm not sure it really matters, aside from some observation that smart people be can be convinced and convince themselves of the wrong conclusions.
In terms of the post-denial bubble phase, I'd say the debate is whether or not the various Liquidity vehicles were better than a bank-holiday and aggressive FDIC action.
--bh
"He's a public-spirited academic" ...and a laughable failure at that. His entire take on the depression is just stupid, and extremely dangerous in the present context. Maybe if instead of trying to be Friedman minus -15 IQ points he would have spent a few moments pondering the world's second-largest economy in the past two decades...
Bernanke is a complete, total idiot, a high voodoo priest of a discredited cult with less credibility than phrenology circa 1910, psychotherapy circa 1850, or astrology circa 1300.
It is so easy to demonize a man and not an institution or system. Why? Because changing a system requires work. Hey, the ripples would probably rock your very own boat. Demonize the man only requires enough effort to type a few sentences under a screen name.
vast majority of economists defended and applauded Greenspan also.
Really, like Machiavelli points out, it's really not about having good intentions, but about being effective. One of the problems with the notion of macroeconomics as a science is that there is no way to do controlled experiments.
Economists have served one useful function in this crisis - making astrologers look really, really good.
I think Bernanke's just an elbow-patches academic out of his league in the world of modern finance.
Anyone who calls themselves an economist should have to manage his own retirement account in public view, with 1-, 2-, 5- and lifetime returns returns posted immediately after his academic titles.
Mishs Summary
Bernanke is a disingenuous liar with a memory problem. He is also an economic dunce who does not understand the cause of great depression nor could he spot a housing/credit bubble visible to nearly every blogger in the country. However, like his mentor Greenspan, Bernanke believes that every problem can be cured by throwing money at it. Finally, he is a creative, political power grabbing hack who gives memorable speeches about throwing money out of helicopters.
To assume incompetence on Bernanke's or Greenspan's part is pure naiveté. As chairmen of the American banking cartel, they delivered the best long-term risk/reward outcomes their shareholders could expect.
"Im going to have to also disagree somewhat. That might be a secondary goal, but I think his main goal is to preserve the status quo."
If you link the two together in your brain -- helping the little people means preserving the status quo -- you can do both and have integrity.
And also a massive case of cognitive dissonance that you keep trying to shove into the closet.
nova,
On this point, it's easier to sleep at night when the figure-head you've demonized is replaced, only to realize that the new person suddenly, magically takes on all the undesirable qualities of the last one you just got rid of.
You are correct. It's a system, and in many respects the individuals are place-holders at the top of an org-chart.
--bh
CR: this inappropriate comment was deleted.
Scott/CR,
I might even agree that Bernanke has a higher IQ than 99.9% of those in Washington...I choose not to think about that one too much.
My own concurrent economic indicator; Look at the interplay between retail businesses that are primarily cash sales against those with mostly credit sales.
What kind of world do we live in when a guy like Bernanke can be considered as one having "integrity"?
Has the entire english language been coopted into meaningless drivel so that nothing means anything anymore?
"It is so easy to demonize a man and not an institution or system. Why? Because changing a system requires work. "
I've been extremely consistent about demonizing all of the above - BB himself, the Federal Reserve, and the business/finance/economics academia that creates entrail-reading sociopaths in the first place.
nova, of course Bernanke was quoting
Milton Friedman about the helicopters ... here is the exact quote.
A money-financed tax cut is essentially equivalent to Milton Friedman's famous "helicopter drop" of money.
best wishes
Hell to pay,
Yes.
Have a nice day.
--bh
Well isn't this a pleasant thread. An awful lot of misplaced anger going on here.
CR recognizes Bernanke's credentials while disagreeing with his forecasts and commentaries.
Mish launches a personal attack in a misguided effort to gain additional support for the idea that Bernanke has been wrong thusfar.
One is the approach of a calm, collected, valued commentator. The other is the approach of a raving lunatic.
I would start reading Mish again if he'd learn the art of subtlety and start toning down the useless rhetoric. It just makes him look bad.
"If he was a baptist it would be different "
nonsense. Geithner and Paulson are also criminals, and, if anything, more devious and destructive than doe-eyed Benny.
I have a question, CR. On what basis do you think Bernanke's integrity is above reproach?
If nothing else, given what has transpired, I would think everyone would be at least a little skeptical.
I would place him above 99.9% of those recently in power in Washington on the integrity dimension, not to mention IQ.
It's true. Ben Bernanke scored 1590 on the SAT exam. A score of 1450 or above on the pre-1995 SAT puts you above 99.9% of the population in IQ, let alone those "recently in power in Washington."
You know, so many of the commentariat are unduly anxious for a repeat of the Andrew Mellon approach to global depression - to wit: take your Dr. Paul medicine and cuddle up with a nice lump of coal for failing to embrace a sufficiently austere puritan lifestyle - which in and of itself is a pretty discredited (with evidence) approach to ending global depressions, that it seems few have hardly any room to criticize Bernanke.
I really do wonder how many of you would tell the kidnapper to F--- O-- and let them blow your kids brains out as a matter of principle. Sure, you can then safely shoot them, and make good and sure the kidnapper is punished, but you know, you are still without your loved one. I am personally more concerned with mitigating and minimizing the damage to my person and life than I am with punishing the guilty.
Nuts. I share your moral indignation, but really, grow up. It's like listening to a bunch of teenage wanna-be anarchists.
"An awful lot of misplaced anger going on here."
Not misplaced at all. BB's failure to identify the bubble caused incredible harm to tens of millions of americans, and his future bailout binge threatens to enslave future generations in mind-blowing levels of debt and a emaciated economy stretched to the breaking point to support it. We should be angry. Very angry.
One fo the things I respect most about CR is that he tries to be fair, and is willing to stand up for what he believes in.
Withtat said, here is my major complaint with this post. Absolutely, assailing BB's integrity is out of bounds, at least in my view. However, one of the major reasons that we are in this mess today is because Ben did not want to challenge the status quo. Either that or he was just incredibly (and willfully?) ignorant of the greatest credit bubble in the past 70 years.
He is guilty not of being a bad person, but of being a person who was unwilling to listen when the voices were at a fever ptich. His actions to stabilize and provide liquidity were a direct result of his previous failures. That is not a failure of integrity. It is simply a failure. His failure far outweighs the 'success' of his response.
It is possible to be a very smart man of high integrity and still fail disastrously. I'm sorry CR, but that sin is bigger and cannot be ignored.
Nice post, CR.
It amuses me more people cannot separate the man from his actions.
BH, well put.
HollywoodHack, Yes, it was a generalization.
Mother Teresa could run the American health System and nothing would change. Including her still being dead.
Hamilton and CR doing their best to frame the Overton Window. Hey, let's talk all we want about how Bernanke might be mistaken ... made errors of judgment... is operating with imperfect information. But to suggest that such a public servant might be operating from something other than the most noble motives... it is beyond the pale! (notice that no evidence of Bernanke's character is offered - the key element here is the pretense that any discussion of this is really out of bounds).
The discussion about what remedies the financial system requires are similarly circumscribed... more regulation, or about the same? But no mention of crucifying ten thousand bankers along the beltway...
scott:
1 - mellon may never have said that. the quote comes from hoover's memoirs, as I recently discovered.
2 - "a pretty discredited (with evidence) approach to ending global depressions" you can't disprove a negative, scott. i'd expect more, even from a teenage wanna-be anarchist.
3 - all we're saying is: put down the syringe. and you don't kick the habit by moving in with your dealer.
BobDobbs - i should be more explicit. Status quo of the financial system. Not of the status of consumers.
Angry Saver, I didn't say his integrity was "above reproach", but I think the burden is always on those who call someone a "liar". Just because he is a public figure - and can't sue for defamation - it is still defamation.
best to all
The Summers' full court press is on... question is whether Bernanke simply decides to retreat to Princeton. Game on.
bbartlog-very good comment.
I think this whole thing is pointless. Who cares whether ol' Bennie would steal candy from a kid? The system is increasingly being run for the super rich, and run by the super rich.
". I am personally more concerned with mitigating and minimizing the damage to my person and life than I am with punishing the guilty"
How does shifting the risk from those who took the risk onto the taxpayers mitigate and minimze the damage to your person. Very shortsighted
I would agree that Bernanke does have a high degree of integrity. However he was wrong because he underestimated "the shadow" banking system, as Shiller calls it. He underestimated the exposure of investment banks and hedge funds (shadow banking) to leverage and the possibility of a bank run on those business institutions.
Ever since the Bear S. collapse, Benny has been playing a catch up. He should have told himself, "I don't know" & lets take it slow instead of rushing into the great unknown. The real economy is not a lab experiment, where you could try again by pressing the restart button.
p.s. Benny, you can't save it all, so save what matters - us the taxpayers and healthy institutions. Give your chopper a break, d... it.
well, CR, I agree that "liar" implies a knowledge of the truth, and that gives him far too much credit.
but as for "shill", "idiot", "dunce", "criminal", "villain" - the truth tends to hold up pretty well in court.
Asswipe--
You're kidding about the religion comment, right?
Noob,
Contrary to my cr persona, I'm generally an easy going person. Very moderate in most things. No political affiliations whatsoever. Both parties look about the same to me. Though they say different things, they basically act the same.
That said, I don't feel that the biggest swindle in history is a time for subtlety. This fiasco should not be swept under the printing press rug.
Prior to this historic ripoff, I'd never called or written my elected representatives.
" but I think the burden is always on those who call someone a "liar".
So he didn't threaten Lewis and others if they didn't play ball?
"On this point, it's easier to sleep at night when the figure-head you've demonized is replaced, only to realize that the new person suddenly, magically takes on all the undesirable qualities of the last one you just got rid of."
Good one. Societies do go in the wrong path, sometimes even for centuries. Like Soviet Unions for example, wise ones inside SU and outside realized already in the early 30's that this path is not going to be really good one but glorious SU went all the way to the 80's.
Why? Because other one form of society already equally tilted, but to the other way, was actually supporting it
Capitalism won but it wanted double and triple and more and more and more. And now?
Wow. Such emotional arguments.
I'm impressed that so many posters are privy to the private evil thinking of a public figure.
Bernanke, Greenspan, Bush, Obama, etc...
these guys are actors.
Any difference between what they say now and said previously is a merely a change in the script.
They are well paid actors.
Asswipe--
You're kidding about the religion comment, right?
Only because I'm not a Jew
JP, I saw this with Leona Helmsley as well.
CR, while this post has generated alot of commentary on Bernanke's integrity, I have to agree with you. I don't know enough about the man personally to make that call, nor do I know his thought processes. I do see the "ivory tower" syndrome alot in my line of work, not from lack of integrity but loosing the ability to look at both the forest and the trees, not letting either one cloud the other.
A point, perhaps the only one, I can think of in Bernanke's favor is that Larry Summers in waiting in the wings.
CR,
To put this in my terms as a consultant: what's Bernanke's post-mortem analysis for why his model failed?
That is, he had a method and data? Which was wrong, the method for analysis that churned out the wrong answer, or the data, or both?
And I think this has bearing in his current capacity to continue to serve. How must he change his method to come-line with the facts? How must he change the sources of data, or the way that data was gathered to come in line with the facts?
The fact that he's perhaps doing as effective job as possible at limiting the radioactivity (and there's quite an argument there), is still irrelevant (to me) about his continued capacity to serve.
He hasn't corrected his model, or he hasn't elaborated on that in public hearings.
And whoever the next in line is better have an answer about their own methodology and numbers and fact checking and seeking independant views that are different from your own conclusion.
--bh
I think of this as a ship that has taken tremendous damage in an attack. BB is not the CO, he is one of the officers in charge of damage control. The CO has decided to keep her afloat. BB is doing what he has been training for years to do. The bulkheads may be rotten. The ship should have been in the yard for overhaul years ago. That is not his problem. His problem is keeping her afloat. He will flood compartments and shore rotten bulkheads. He will not, because it is not his job, make any decisions other than that.
The Chairman's job is political, so BB is either mendacious or incompetent.
@Hack - no, Mellon didn't say that, I did. Mellon believed very strongly in the notion of Laffer curves (low marginal tax rates) and creative destruction. He took precisely this attitude of "let the weak banks fail". I don't think Ron Paul was around back then. The evidence is that after three years of his policies, following the '29 collapse, things were dramatically worse. I stick by that assertion. What Mellon said is:
"[T]he government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: "Liquidate labor, liquidate stocks, liquidate the farmes, liquidate real estate." He insisted that, when the people get an inflation brainstorm, the only way to get it out of their blood is to let it collapse. He held that even a panic was not altogether a bad thing. He said: "It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people"
[edit:]That is Keynes on Mellon. That is also exactly the kind of policy frequently advocated by those here who are po'ed about "bailouts" and preoccupied with punishing the guilty.
In fact, I suspect that without Mellon, Hoover's disaster-relief instincts (which were tremendous) would have taken precedence, and FDR would not have been able to unseat him. That would have been keeping his eye on the ball.
His actions over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil.
The above text from Hamilton's piece, quoted by CR.
I can't accept this as prima facie evidence of anything. We don't know his motives; if this was his one and only motive he did a miserable job indeed.
We need to stop the corruption by Goldman, bank of Amerika, and Jp Morgan. Stop the Geithner and bernanke. .
Go to: Financial Opinions Updated Daily iamned.com
and read the full Rolling Stone [Taibbi] The Great American Bubble Machine article.
Obamma,s policies may not be working as well as many had hoped:
1st 100 days - There are 2.9 million more people unemployed in May than there were unemployed in January. The unemployment rate went from 7.6% to 9.4%. Since May 2008, we have lost 5.5 million jobs. The biggest losers were: Manufacturing 1.5 million lost Finance & Prof Serv 1.5 million lost Construction 1.1 million lost Retail & Leisure 1.3 million lost
good articles Financial Opinions Updated Daily iamned.com
recommended reading
Why isnt the stock market falling when the economy is sinking? Why cant we get change in Washington that we really need? Why vote?
"the private evil thinking"
that's irrelevant. nixon's evil thinking gave us the clean air and water act, ended the vietnam war, and opened a dialog with china which has been, on the whole, for the good of the country. washington's evil behavior in the french-indian war laid the eventual foundation down for a nation.
i don't mind evil thinking, as long as the goal is the long-term benefit of the nation. that's not what we have here. we have non-thinking stupidity, and an obsession with the short-term stability of institutions which needed to fail yesterday.
@ JP
It has nothing to do with "private evil thinking".
But any man who would support a policy of systematic and purposeful erosion of our currency in order to bail out the bad bets of a very small group of wealthy interests is in no way, shape or form one who I am going to equate anytime soon with the concept of "integrity".
Whether he is evil or not is not for me to decide. But with leaders like this who needs "evil"?
We arent JP.
I cant speak to his integrity. I can only try to logically deduce from his actions what his intentions are. The problem is, before you can understand his intentions, you have to understand his competence. And it is clear from his pronouncements, that his interpretation of what was happening economically was horribly flawed. Now, one has to wonder, how one can advance to such a high degree in his field, and then take a huge swing and a miss at the very subject he is supposed to be an expert at. This makes me think that either he is NOT as competent as he is purported to be, or that his integrity has been compromised by the system in which he has found himself. Now of course, these are not mutually exclusive, so he could be both incompetent, AND lacking integrity.
But it is somewhat more likely that he is DOUBLY incompetent, since he is making a hash of the fix to his own screwup (partial fault at least, going along with Greenspan, not changing policy when it was his turn, denying reality of a bubble.) If he didnt see the bubble, how could he possibly match wits with the very people who game the system? I mean, sure, he knows the extraordinary mechanisms the Fed has at its disposal. But the other team (GS, JPM, etc) is designed to take everything he does and use it to their advantage. He may be smart, but he cant beat that.
And that is the MOST charitable interpretation I can make of all this. Which means, it's likely that the reality is worse.
"His actions over the past two years have been guided by one and only one motive..."
To support his shareholders, the large national banks.
The Fed is responsible for creating the current crisis, and will be found responsible for creating the next, which will be the Great Collapse.
JP, I saw this with Leona Helmsley as well.
Funny, Bernanke doesn't look a whole lot like a dead white woman.
And that dead white woman wasn't a bookish Prof either.
Yet the two situations are identical.
I'm impressed that so many posters are privy to the private evil
I'm not. However, when someone who I will concede is extraordinarily intelligent (1590 SATs, pre-1995, was already mentioned) makes errors that I feel a less intelligent person (me) could have avoided, had I been in his position - then I feel some explanation is required. And in this case, one obvious explanation is that these were not errors at all, but actions taken with a view towards maintaining the fortunes and positions of his extended social circle, and costs to the public be damned.
"Not misplaced at all. BB's failure to identify the bubble "
BB did identify the bubble. What he failed was to realize the speed and degree of it, due to the ability of modern finance to act below the radar. In addition the FED has failed to include the policy of being a bubble watchdog into its agenda.
"In addition the FED has failed to include the policy of being a bubble watchdog into its agenda."
Price stability is part of the Fed's mandate.
"....one and only one motive, that being to minimize the harm caused to ordinary people ...."
He is, indeed, easy to confuse with Gandhi.
please, source that quote Tom. As I understand it, the Right Bills policy was not 'liquidationist'. The Mellon described by many is really just a demonized construct used to rationalize a statist approach.
"His actions over the past two years have been guided by one and only one motive, that being to MINIMIZE THE HARM CAUSED TO ORDINARY PEOPLE by the financial turmoil. "
This reminds me of when I was little, and a local Amish man was arrested for gutting his wife like a deer on the kitchen table...he too "meant her no harm"...turns out he was not taking his anti-psycotic medication by direction of the council elders.
Just because someone has "good intentions" does not placate them from doing wrong, these Keynesian policies will only distort the effective distribution of capital further, this will be our ruin...
Here is one food for thought for economists: In a planet that has guaranteed sunlight for about 2 000 000 000 years forward, all values of human knowledge and skills (=200 000 years) will approach zero in a piratebay.org way.
CR, Webster's defines "integrity" as follows: "....INCORRUPTIBILITY .... HONESTY." If Mr. Bernanke saw the housing bubble (as nearly all of the rest of us did), but choose to claim none existed, he lacks the integrity to be the Fed Chair. If, instead, Mr. Bernanke failed to see the housing bubble, he lacks the intellectual ability to be the Fed Chair. I for one would go with Summers. After all, he could hardly do more damage than history will show Bernanke to have done.
"BB did identify the bubble."
um, no, he explicitly said the opposite - calling the symptoms of the bubble "fundamentals". RTFA again, please.
And in this case, one obvious explanation is that these were not errors at all, but actions taken with a view towards maintaining the fortunes and positions of his extended social circle, and costs to the public be damned.
There is an even more obvious explanation: The total amount of data that he sees is a lot more than the people in this blogging corner of the world see. I would expect there to be a lot of noise to wade thru, especially since the bankers aren't posting here.
The thing you want in gov't is obviously someone who is maximally tuned in to the reality. But since those people never run for office, you want somebody with the fastest feedback loop. Greenspan had a slooooow feedback loop, the evidence is that Summers is also pretty slow (I was not the inside track at Harvard, but it was clearly damn slow.)
I don't think Bernanke is a crook. In fact he might believe that his actions are helping ordinary people. He might even believe that what's good for the Oligarchs is good for the country.
In other words he might not have a malicious intent in protecting the banking industry at all costs.
So what?
The actions of the treasury and fed are anti-democratic regardless of what Bernanke's personal intentions are. He does not deserve to be the Fed chairman.
More data should allow for better decisions, not worse. But you probably believe in the paradox of choice, too...
@lama:
My own concurrent economic indicator; Look at the interplay between retail businesses that are primarily cash sales against those with mostly credit sales.
I think that's a pretty good indicator, but I'm curious: what businesses are cash sales anymore? People buy groceries and gasoline on credit cards nowadays...I'm only being partly snarky.
CR,
Hamilton said that Bernanke's integrity was above that of 99.9% of the people in power in Washington D.C. You said you agreed with Hamilton. Yet Bernanke was just hauled before CONgress due to potentially unlawful actions in the BAC/MER deal. Your beliefs as well as Hamilton's fly in the face of the facts. How can he have more integrity than all those in D.C. that have never had to testify in front of congress and the American people under suspision of wrong doing?
Beyond the Mer/Bac deal, Bernanke is very likely violating our CONstitution by appropriating $$$ without CONgressional approval. Bernanke is also buying $1.25 trillion in GSE debt and securities. This is a violation of the fed's charter because said securities are not fully guaranteed by the U.S. Gov't. I could make the list longer, but to no end.
Expediency is not integrity. Far from it. Bernanke has become the "easy button" for solving difficult problems on wall street and in CONgress. Just wait until the unintended CONsequences come home to roost over the next generation or two.
"But it is another matter to question Bernanke's intellect or personal integrity."
All the intellect and integrity in the world will not make up for a lack of foresight. And given that the guy's primary field of study is the Depression, his lack of historical imagination is damning. As for integrity, well, I'd trade off some of that for Machiavellian street smarts and a just a drop of paranoia. But it looks like we're stuck with him for now.
"Price stability is part of the Fed's mandate. "
The price stability mandate relates only to inflation / deflation and has little to do with prices of any individual asset class within the Economy. Also FED has little say about margin requirements for none banking institutions. I agree, it should have increased the bank equity on the book requirements, however it might have been ineffective in the age of exotic derivatives and other funky paper.
More data should allow for better decisions, not worse.
No. More correct data should allow for better decisions.
The difficulty of leadership positions is that you have to back out the spin from all the data, and I would guess there is much filtering going on before it gets to his level. (This problem in leadership is not new.)
Well put, blackhat. I think that BB needs to change course and demonstrate the line of thought driving the change. Or be replaced.
The British Navy did not stop flogging until it realized that it would be going into action against a French Navy whose lowerdecks were motivated by the revolutions ideals. The realization that they would be going into action with a below decks of hostile seamen made the British navy change.
Nothing is going to change in America until, either the pain is too intense, or someone has a better alternative.
Meanwhile, enjoy the slow descent to squalor.
British entrepreneurs flees debts in Dubai
British entrepreneur flees debts in Dubai - Telegraph
You know what? for 70 years the economy of the Soviet Union was run by a council of very intelligent, very dedicated professionals who did their very best to plan the Soviet economy. When asked why the annual plans were called "Optimal plans", one of these bureaucrats answered, "because we are the smartest, most knowledgeable people available, and we worked extremely hard to make this plan right. Therefore, it is the Optimal Plan."
They were very smart, their intentions were pure, they had families they loved, they worked hard for their country, and they used the most up-to-date and modern learnings of socialist-collectivist economic theory. Only problem was, the first principles of the economic theory they worked so hard to propagate were badly, badly flawed.
Were these men evil? Did they mean badly? Were they corrupt? Maybe, maybe not. Should they be held responsible for the millions who suffered and died under their ridiculous economic theories? ABSOLUTELY.
The lifeblood of any economy is its CURRENCY. The currency of the US Economy is CENTRALLY PLANNED. The financial system is CORRUPT and BOGUS. There are men who run this system, maybe they mean well, maybe not, but they CAUSE UNNECESSARY SUFFERING because of their IGNORANCE AT BEST and VENALITY AT WORST.
There is NO WAY that Bernanke gets a pass for what he has done. THERE IS NO EXCUSE.
this thread is making my head hurt
this thread is making my head hurt
Like many painful experiences: It is in fact revealing.
At one time, people spoke highly of Madoff's "integrity" also
Thanks CR - great post. Others can disagree but at least you aren't dodging the issue. Kudos.
Personally I think BB makes the classic failure those in power make - assuming the well being of their class or constituency overlaps with the well being of all other classes. What is good for General Motors might or might not be good for the USA. And rising tides might not float all boats... especially if the 'tide of liquidity' is narrowly distributed.
To go back the the Titanic analogy often cited here... It isn't a shock to me that many who are not among the class getting a seat in the life boats would question both the judgment & integrity of those people [fed & treasury] deciding who gets a seat. If you're gonna drown then the distinction between personal & policy becomes irrelevant.
"Bernanke has become the "easy button" for solving difficult problems on wall street and in CONgress"
Exactly, because the Fed is not subject to Congressional overview.
Three posts from the linked CR archvices:
[Yes, I know how to spell archives.]
dry fly wrote on Thu, 7/28/2005 - 11:07 am
Do you know how much of our current soveriegn paper is out longer than 5 years? I don't but it isn't much. My understanding is something like 80% of our gov't debt is due in less than 5 years... as long bonds come due we keep laddering it into short term debt and adding on more each year to boot and so far they keep buying it and nobody sweats. It is revolving credit with a teaser rate.
They should be sweating and a lot. We should all be sweating.
Hoocoodanode it would take 4 full years for this bomb to go off?
CalculatedRisk (homepage, profile) wrote on Wed, 7/27/2005 - 4:17 pm
Jason, if you read my previous post on jobs (linked in post) I cut the Bush Administration slack for some of the reasons you give. But "slack" does not equal "credit". No one can crow about 161K jobs in 4 1/2 years.
We pine for the days of +161k jobs in 4 1/2 years.
Tanta (profile) wrote on Wed, 7/13/2005 - 2:33 am
I am a mortgage lender. Also, I am very vigilant.
I am, therefore, your best defense against economic catastrophe.
You need not genuflect, although from here on out you may refer to me as "Your Grace." It will show your perspective and good sense.
A smile and a tear. I miss "Her Grace".
Am I the only one who thinks things are going exactly per plan? We're seeing the biggest transfer of assets from the dumb to the smart and I doubt that's an accident.
And I believe Angry Saver hit the nail on the head with the comment that Wall Street views Bernanke as a useful idiot.
"Nothing is going to change in America until, either the pain is too intense, or someone has a better alternative. "
nova...exactly. Which is why getting resolution to the banking problems (which will be painful) would bring change for the better.
All the intellect and integrity in the world will not make up for a lack of foresight.---Scone
Agreed. Additionally it's a very specialised intellect and apparently an even narrower type of integrity.
Bernanke may or may not deserve to be reappointed. But I agree with Hamilton and CR on the question of Bernanke's integrity and honesty. The burden of proof remains on those who think otherwise.
While Bernanke failed to see the housing bubble, he "failed conventionally". Few in his "profession" will criticize him for this. If he had seen the bubble and tried to do something about it, he would likely been removed as Fed Chair. Or be blamed for the bubble bursting.
He did not get where he is by undervaluing career risk.
Hamilton is wrong and so are you, CR. One of the problems we have today is that no one wants to be the one to say "Hey, that guy is evil," or "That person is bad." We can't go around hurting someone's precious self-esteem now, can we?
The British Navy did not stop flogging until it realized that it would be going into action against a French Navy whose lowerdecks were motivated by the revolutions ideals. The realization that they would be going into action with a below decks of hostile seamen made the British navy change.
Nothing is going to change in America until, either the pain is too intense, or someone has a better alternative.
Meanwhile, enjoy the slow descent to squalor.
That must be where the saying... "Beatings will continue until morale improves!!!" ... came from.
@ lunatic- Am I the only one who thinks things are going exactly per plan?
I agree with that.
The powers that be are waging economic warfare against us; the citizenry.
Elephants and Asses
Trampling the Masses...
I think many people in this thread are confusing integrity with infallibility. BB can have good intentions and still misread situations.
I do take issue with the "minimized harm caused to ordinary people" comment though. He is not an elected official. His constituency is not "the people". His constituency is the banking industry, including the large banks and bank holding companies. He has been very responsive to his constituency, and to that extent, he has done well.
"But it is another matter to question Bernanke's intellect or personal integrity."
His comments about subprime not being a problem as well as those about house prices in the context of the historical record demonstrate either a lack of intelligence or a lack of forthrightness. If he is working under an institutional directive to be publicly dishonest it is still his personal choice to do so and in my opinion he must be judged for that.
Red and Blue Neo-CONS and their mercenary army of little green USD suicide bombers....
vs. the rest of us...
CR - you run an excellent blog with the best charts around. It sucks to say what follows but this is the truth...
It's amazing that you can cover every detail of economics and finance but completely miss the big picture. These SOBs have bankrupted the country. They looted the treasury in broad daylight. You defending them is an insult. You are an apologist for evil. When the ties that bind the nation have disintegrated and we are left with nothing you will comfort yourself by saying "hey, they had the best intentions."
Come on, leave BS Bernanke alone; he is just a symptom of a much larger condition. And now that the pacient is on his death-bed, unable even to contemplate what sort of disease led him to his condition, what difference does it make?
מה שהיה הוא שיהיה ומה שנעשה הוא שיעשה ואין כל חדש תחת
השמש׃
I agree that BB should be replaced. Has nothing to do with his integrity or intelligence. He just represents too much of the old school, which is contra productive for this increasingly new crisis. We need someone off the main economic grid. Unfortunately most of the potential nominees will be even more orthodox than BB.
His comments about subprime not being a problem as well as those about house prices in the context of the historical record demonstrate either a lack of intelligence or a lack of forthrightness.
Impressive. A poster has isolated the ONLY two possibilities. There exist NO other possibilities, just those two. Either/or.
I said it when BB was nominated. He is smart and educated and has learned the lessons of history. He will not repeat the mistakes that led to the great depression. Instead he will make entirely different mistakes that may send us into our own depression. I also said absent extraordinary efforts there was no chance of a depression and that one was only possible via ill conceived interventions in trying to prevent a necessary recession.
Defend his intergrity, if it is truly defendable.
What you can't do is defend his incompetence.
I don't care if you cut my balls off with a loving smile or a spiteful grimace.
You're still cutting my balls off.
I fear BBs largest failures will manefest in the future. His Too Big to Fail bailout of GS, JPM BAC etc, to protect the Oligopilists will be the destruction of our way of life. The bailout of GS through AIG is particularly agregious given GS's payout of their largest bonus' in history last month, flaunting their unassaliable position.
Thanks Dawg - blast from the pasts.
And you are right... a measly 161K job growth would be viewed as Jack-&-the-Beanstalk scale green shoots right about now.
With whom would you replace him?
Tall Paul at 82, or whatever he is?
Great read
The Great American Bubble Machine by Matt Taibbi
BB has a lot of integrity - he has been absolutely loyal to his shareholders, the banks. That is his job, not supporting the serfs.
"With whom would you replace him?"
How about CR?
Ben Bernanke deserves immediate removal not just denial of renomination based upon his disrespect for the limitations of the rule of law, the Constitution and his own agencies' charter.
Anything less is but lipstick on the pig of "ends justifying the means."
I said it when BB was nominated. He is smart and educated and has learned the lessons of history. He will not repeat the mistakes that led to the great depression. Instead he will make entirely different mistakes that may send us into our own depression.
The more things change the more they remain the same...
ac,
This is where I'm going.
Either 1) He saw it coming, but politically could not say so.
Or 2) He didn't see it coming, because his model didn't allow it to be seen.
That's a gross simplification, but I think that's the crux. In the first case, he needs to be removed because he is dishonest. The second case, he needs to explain what went wrong in his intellectual apparatus to miss the bubble, misinterpret the facts, or accept as facts where there we're no facts...and then after a detailed explanation, we can decide whether or not to give him the keys to the car again (no).
However, I doubt that it's merely the man, nor an institution, but the entire super-structure of institutions, siphoning off the wealth of those poorly placed politically and economically.
--bh
"With whom would you replace him?"
No one, I would abolish the Federal Reserve.
""With whom would you replace him?""
there is only one guy, who could be more beneficial than harmful - Shiller. The others are Tovbin & Sollow but I am affraid they are ether dead or too old.
"His Too Big to Fail bailout of GS, JPM BAC etc, to protect the Oligopilists"
Oligopilists = his shareholders.
While Bernanke failed to see the housing bubble, he "failed conventionally". Few in his "profession" will criticize him for this. If he had seen the bubble and tried to do something about it, he would likely been removed as Fed Chair. Or be blamed for the bubble bursting.
He did not get where he is by undervaluing career risk.
Somebody who values their career above what is in the best interest of society is by definition immoral.
I've always made this argument about Greenspan - he chose himself above society. I'm not convinced Bernanke is doing the same thing, but the simple fact is he's been either Fed Chairman or Fed Governor leading up to one of the greatest financial disasters in history.
Good intentions simply aren't enough when you're talking about something of this magnitude.
" Juvenal Delinquent (profile) wrote on Mon, 6/29/2009 - 8:28 am
The darkest places in hell are reserved for those who maintain their neutrality in times of moral crisis.
Dante Alighieri"""""
How is it that the devil makes moral judgments in stratifying the damned?
"Those fundamentals, Bernanke said, include low mortgage rates"
This is the part that troubles me most. If a house trades like a bond, going up when rates are down, then it also has to go down when rates are up. It is not possible to conclude that interest rates are a "fundamental" without also concluding that house prices should have significant volatility. Yet Bernanke backed a mortgage banking system leveraged into a shadow banking system that relied on no volatility at all, at least not downward. I can't come up with a good faith explanation for this behavior.
"If you link the two together in your brain -- helping the little people means preserving the status quo -- you can do both and have integrity. And also a massive case of cognitive dissonance that you keep trying to shove into the closet."
This is as close as I can come to a reconciliation. But recognizing that the valuation models were transparently wrong, it was closer to willful denial than cognitive dissonance.
"...to minimize the harm caused to ordinary people..."
I cannot agree that that has been his goal. The price is already being paid - a very deep recession in spite of all the promises - with a far greater drag of an immense burden on productivity increases for years to come. His decision has been to try to perpetuate a credit bubble rather than allow it to deflate or collapse.
If Goldman, or any other major 'bailed-out' institution now starts handing out out future tax money - our future earnings- as bonus money like candy on Easter, there will be problems. Bernanke seems to thoroughly buy the notion that prosperity of the wealthy is the essential condition for subsistance by the rest. i do not agree with that. I also do not agree that Bernake's experiments have been successful. That cannot be judged for many years to come.
A smile and a tear indeed...missing the opportunity to genuflect.
As to the comments that BB has been loyal to the banks, couldn't he have helped the banks more if early on he had legitimately fought to prevent the housing bubble from worsening?
'To go back the the Titanic analogy often cited here... It isn't a shock to me that many who are not among the class getting a seat in the life boats would question both the judgment & integrity of those people [fed & treasury] deciding who gets a seat. If you're gonna drown then the distinction between personal & policy becomes irrelevant.'
Barfly,
Thank you for that. It's the best summation I have seen thus far for much of anger that seems to be overtaking us folks who didn't even make it into the seat lottery.
Regardless of whether the anger is misplaced or not, it will need to be dealt with. Any corrections in policy or other appeasements will need to be perceived as fair and just across all income brackets. Anything less is fueling the current fire.
As I have said many times,
this isn't over until a city burns.
Instead he will make entirely different mistakes that may send us into our own depression.- RD
True, but unfortunately people generally do tend to do that, so if we got a BB replacement, s/he might very well just generate another set of mistakes. Any replacement would come out of the same bag of candidates, too, most likely. I can't see Taleb or Roubini in there.
I'm perfectly willing to stay away from personal remarks about BB, however. I don't care about that stuff anyway. Is that the point of this thread?
These SOBs have bankrupted the country. They looted the treasury in broad daylight. You defending them is an insult.
Many of you make it sound like BB is the one that bankrupted the country. I got news for you:
Most of the officials and regulators, including BB, are merely:
This crisis is in formation long before BB is in office, and arguably well before any of the current powers in office are even in govt.
We can bitch and moan and kill the messenger all we want. The wealth has been spent, the time to turn around was WAY past. All the seemingly expensive "bailouts" or "moral hazard" is merely cleanup tasks for a wound long in the making.
Simple question:
When a home owner took out a loan 5 years ago to buy a now foreclosed house; That loan is really someone's deposit/investment or a savings / CD account from 5 years ago...
so when the house is trashed and the loan is gone; you have a choice to restate all 5 years of history, and tell the saver from 5 years back, his money is gone. Or to try to hold the system together, so the saver have some assurance and don't all try to mass withdraw from banks, (and then gradually use inflation to make the savers total loss be realized anyway.)
Both options frankly sucks. Loss is loss, and it will be realized one way or another.
Blame the sins that got committed years ago, not so much the messenger who's trying to tell you "you have a loss".
"No one, I would abolish the Federal Reserve. "
but the FED was created because of the bank runs and depression during the 1890's (lasted from 93 to 98, was very wild & scandalous, etc) . The major reason of it were rumors according to some historians). It was created due to the popular demand and political pressure. People wanted someone to be able to prevent financial panic attacks. I would agree that we need something better, however having nothing at all would be even more harmful. Well, at least historically it was more harmful.
I will admit that there is 1 very obvious factor that hasn't been adequately articulated - the extreme political pressure on the Fed, and their independence. That's clearly a big obstacle to the Fed performing their function. Also an obstacle to honest pursuits.
Every great party comes to an end and the keg of Fed Reserve is starting to float in the ice bucket.
Are you leaving now or waiting for the rest of the drunks?
You are supposed to assign their conflicting words with great value, getting lost in the contradictions, not noticing the scam right on the other side of the television.
There is no point in overly scrutinizing what they say. Everything they say is inconsistent. They and the ones who came before are part of a big con.
Here's something new under the sun:
Cold, hard cash for smarts!
Comment by 1 currency now -yogi from thread 'BIS: Toxic Assets Still a Threat'
Who can put me in touch with that Sterligov character? He will put up some caviar.
Keep the Fed but instead of the Board of Governors we poll the commentariat as to the correct course for monetary policy. Gee, what do you the results would be if "we" decided not to purchase Treasuries or pressure dealers to buy more than was their wont.
@Jane & Barfly - I have to say, I am glad people are angry...that will be needed when the time comes for structural reform. It will require holding Congress' feet to the fire, and that takes a lot of outrage - or a city or two burning. Unfortunately, even here, where most folks have a clue, when the White House whitepaper came out, there was a lot of anger, but not as much solution finding. Whether or not the Fed, now that has taken on an FDIC-like role in backstopping a lot of the oligarchs, is the best suited regulator is debatable, but screaming "down with the fed, down with the fed, down with fiat currency" isn't really much of a proposal either.
I agree with CR's conclusion re Bernanke.
His job was to forestall a worldwide systemic breakdown, and he and his colleagues did by providing record amounts of liquidity in short order. He cannot be held responsible for the ongoing fiscal misadventures at Treasury and the White House.
I thought the Republicans' questioning of Bernanke was uncalled for, over the top, and irrational. How this sort of grandstanding produces a viable GOP is not clear to me. Kudlow had Rep. Issa on one night last week and Issa was the worst of the worst.
Of course, Mish marches to his own drummer.
ac,
This is where I'm going.
Either 1) He saw it coming, but politically could not say so.
Again, if this is the case then he lacks the leadership ability, integrity, and moral authority to hold the sort of position he has.
IMO if you're not willing to risk your career to avert a global disaster when you genuinely have influence in the global sphere, then you deserve all the scorn and derision a society can heap on you.
CR, has your opinion of Geithner changed at all?
hc said...
"Many of you make it sound like BB is the one that bankrupted the country"
That is why I said THESE SOBs. Only together could they have brought on so much destruction. Just because they did it together and not single handed does not mean they deserve a free pass. Dismissing recent actions as being mere cleanup tasks after the fact is a flat out lie. Ohh I know it is too late to fix it now but excusing their actions is a joke.
Thank you CR for staying classy. You remind me of why I like your blogs... for the intellectual comment, and not the bible/guns/ammo/pitchfork crowd.
the extreme political pressure on the Fed, and their independence. That's clearly a big obstacle to the Fed performing their function. Also an obstacle to honest pursuits.
I heard a story that Greenspan leaned on Clinton regarding tax rates - threatened to jack rates on Clinton if he didn't reduce the size of the increases...I wonder that that isn't a two-way street sometimes.
"His job was to forestall a worldwide systemic breakdown, and he and his colleagues did by providing record amounts of liquidity in short order. He cannot be held responsible for the ongoing fiscal misadventures at Treasury and the White House."
Don't blame the Fed for problems they planned, bend over and accept their fix.
Snark Factor 5
or a city or two burning.
They are so far ahead of you it isn't funny.
PATRIOT ACT
No charge or trial required for a lifetime of prison or a bullet.
Why do you think TPTB have gone to great lengths to define US Citizens as terrorists?
not the bible/guns/ammo/pitchfork crowd.
Yeah! I'm 3 for 4!
ac,
Agree. I also particaulary hate 'following orders' sorts, as if bureacracy involves crossing a moral ergosphere where the laws of decency have been suspended, where carrying out the most venal orders is necessary, and probably good for career advancement.
--bh
His job was to forestall a worldwide systemic breakdown, and he and his colleagues did by providing record amounts of liquidity in short order. He cannot be held responsible for the ongoing fiscal misadventures at Treasury and the White House.
He was Fed Governor while the Fed was pumping liquidity and credit left and right in to the dot com and housing bubbles.
To paraphrase Marc Faber:
"Now that they've poured gasoline everywhere and set the town on fire, everyone at the Fed wants to be a fireman."
maybe this has already been said, havent had time to read the entire thread
you may have a beef with BB, but if he is replaced with ole larry, you will wish you had BB to kick around
nullpointer,
to summarize: neither a bugger nor a bullocks be...
I choose neither.
--bh
Institutions are made up of men. Individuals tend to disavow responsibility for bad decisions, instead saying it was the "institution." "I was just following orders" Bernanke IS a part of the system and many of us ARE working to get the corruption stopped.
JohnRDC (profile) wrote on Mon, 6/29/2009 - 12:31 pm
I agree with CR's conclusion re Bernanke.
His job was to forestall a worldwide systemic breakdown, and he and his colleagues did by providing record amounts of liquidity in short order. He cannot be held responsible for the ongoing fiscal misadventures at Treasury and the White House.
His job is spelled out in detail and unambiguously circumscribed. Stable dollar commensurate with optimal economy/employment. I assert he's failed. And pleas don't bring up the FRB website's "expanded" duties mission statement.
Code dollarbudget I cited you this morning, I hope you don't mind.
I am still an interested party and hate to talk my book, even though I worship books.
Comment by 1 currency now -yogi from thread 'Freddie Mac June Investor Presentation'
"I heard a story that Greenspan leaned on Clinton regarding tax rates - threatened to jack rates on Clinton if he didn't reduce the size of the increases"
Bill was boffing Andrea(he'd boff anything that moves) and Alan let his emmotions get the best of him
Keep the FED fine, but the trade off is Goldman Sachs must go.
When's the last time anyone saw David Walker on CNBC? (real question, I don't watch)
A man among wistle blowers.
Keep the FED fine, but the trade off is Goldman Sachs must go. - s
How might that be accomplished?
"but the FED was created because of the bank runs and depression during the 1890's (lasted from 93 to 98, was very wild & scandalous, etc) . The major reason of it were rumors according to some historians). It was created due to the popular demand and political pressure. People wanted someone to be able to prevent financial panic attacks. I would agree that we need something better, however having nothing at all would be even more harmful. Well, at least historically it was more harmful."
At least that is the history the MSM would have you believe. I suggest you do more homework.
"Only together could they have brought on so much destruction. Just because they did it together and not single handed does not mean they deserve a free pass."
In a democracy, the country deserves the govt it gets.
In more ways than one, the govt also reflects the collective desire of the people. I can tell you the recent crisis tells me one thing very loudly (Sorry if this offends):
This central idea spins into many variations, like:
But the central theme is the same.
The moral of the story is, if you want to look for blame, look into the mirror. We're the devils.
The govt is surprisingly efficiently at reflecting our flaws.
I would favor Volker to replace BB, and let him pick his own Leutenants. He probabbly knows better than anyone who is capable. Imagine not having a policy of 2-3% inflation every year. What a concept.
OT from layoff daily: El Monte, CA considers bankruptcy
El Monte considers bankruptcy - Pasadena Star-News
Anyone with more info?
His actions indicate that his overriding goal has been to support Wall St. in the hope that Main St. will follow. Trickle down financing.
As to the comments that BB has been loyal to the banks, couldn't he have helped the banks more if early on he had legitimately fought to prevent the housing bubble from worsening?
I think the argument is not that he's been loyal to the banks but that he's been loyal to the bankers...a subtle but important distinction.
Personally I don't agree with either formulation. Bernanke holds his office because his approach to the problem--well publicized in advance of his nomination and even of any public perception of the problem--was seen as beneficial by the bankers. That doesn't imply any misdirected loyalty or false dealing on Bernanke's part.
Goldman Sacks; the company that grew so big it had to fail. Reads like the pre-history of "Rollerball."
Ber-nan-ke! Ber-nan-ke! Ber-nan-ke!
And to think John Houseman used to pitch for Smith Barney. Remember them?
I think the argument is not that he's been loyal to the banks but that he's been loyal to the bankers...a subtle but important distinction.
To the detriment of the banks, shareholders, borrowers & nation as a whole.
"are merely:"
that's funny, it looks like every piece of cash I run across claiming to be money is a "federal reserve note". amazing, they create our "money" and run up trillions on that mysterious balance sheet at the nyfed with zero transparency or oversight, and yet they are just innocent bystanders...
we aren't bitching about spilt milk, hc - we're complaining about the giant running milk fountain installed without a basin in the middle of the living room - and the milk bill automatically going onto our credit card while the milk gets deeper on the floor.
It is absolutely necessary to the perpetuation of the institutions and their inherent corruption that people think as you do here.
"Nothing is going to change in America until, either the pain is too intense, or someone has a better alternative. "
I make the same point about pain to my liberal friends all the time. But I would argue that people only strongly commit to the "better alternative" AFTER the pain is too intense. Otherwise inertia and fear keep them in place -- the latter due at least in part to the efforts of the Powers That Be. ("Don't go there, it's SCARY, and we can't PROTECT YOU" (even though WE are the cause of your problems).
The real issue isn't BB's integrity or whether he's for the people vs. the powerful. It's results. He's a failure.
If we are all so perfect how come we even worry about the economy instead of counting our money....economics is dismal enough, but to put in a healthy dose of politics, it becomes . . . well you get the idea.
It was all for the children. When Bernanke is finally Martyred his reward will be 72 virgins and a bankerdome on Maiden Lane.
"His actions over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil."
With the unemployment where it is and the loss of savings/investment assets, he has not succeeded. Nor has he and the Summer's gang able to straighten out the crooked ways of the Financial world. So its failure on both counts, inspite of al good intentions?
CR: Just writing to say thanks, and agree with you. I don't agree with all the statements or decisions he's made, but I've not the slightest doubt about his integrity.
I think the community owes you for going on the record about this. It won't stop the conspiracy theorists, but you have enough credibility that I hope it will make some readers think carefully the next time they hear the bile spouting forth.
Integrity? Give me a break. In the middle of a financial meltdown where he is directing the BofA / ML deal, he cannot recall specifics? Pfft.
You mention several examples of Mr. Bernanke’s incompetence in dealing with the economy in general & the financial sector in particular. Then you declare him competent because of his “good intentions”. Need I remind you that the road to ruin is littered with good intentions?
It’s not about qualifications, IQ, intentions, looking smart, acting smart or talking smart. It’s about RESULTS. And Mr. Bernanke doesn’t have any.
Well, no way I can keep silent on this topic.
A couple of things come to mind.
First, for all the bloggers/posters who claim Bernanke was a miserable failure because he didn't couldn't see all this coming even though they and many others did, this question: How many of you sold your vastly overpriced homes at the peak of the housing bubble, used their bubble-equity to load-up on long-term puts in the banking sector back in 2007, and are now posting from your French chateaux or your 200-foot yacht?
If you aren't, "to know but not to act is not to know." Saying that you know something is going to happen, and having enough deep-down confidence to really jump in with both feet to capitalize on a once-in-a-lifetime situation are two different things. CR just recently mentioned that he lived in such a bubble area of California, but didn't sell, so what are we to make of that?
Second, what if Bernanke had known? He's the Fed Chair for the whole country, not just California, Florida, Arizona and Nevada where so much of the bubble real estate prices and sub-prime loans were. What of places like Dallas, Portland, or Charlotte where there wasn't a California-size bubble (and there's also not a California-size collapse)? What was he supposed to do, come out and say, "If you want to buy a house in North Carolina that's cool, but we're raising mortgage rates and standards to discourage people who want to buy in California"???
Finally, does anyone actually think Bernanke wouldn't have done anything in his power to prevent this from happening if he really knew it was coming and if he really knew what the right policy response was?
Sebastian
"but the FED was created because of the bank runs and depression during the 1890's (lasted from 93 to 98, was very wild & scandalous, etc) . The major reason of it were rumors according to some historians). It was created due to the popular demand and political pressure. People wanted someone to be able to prevent financial panic attacks. I would agree that we need something better, however having nothing at all would be even more harmful. Well, at least historically it was more harmful."
At least that is the history the MSM would have you believe. I suggest you do more homework.
"
are you saying that 1890's recession and bank panics were a lie? or are you saying that one of the most respected authors on econ - history are falsifying their accounts? The Panic of 1907 & Animal Spirits books do cover the subject in detail. Should I believe someone who post on your tube to a higher degree than to believe people that were screaming an asset bubble prior to everyone else?
DO I hate the politicized FED in the form it is today - absolutely. Would we be better without any central institution setting the interest rates and bank related requirements - absolutely not.
So Bernanke is smarter than 99.9% of Washington yet he still repeats the same mistakes as the previous Japanese recession and our Depression. He allows the system to get there on his watch yet only has our good in mind when he continues his assault on the free markets.
I don't think asking a man if he used force or threats to make a deal happen is an attack on him personally. The Fed Chairman (any of them not just Bernanke) is a man who is engaged in a systematic destruction of the US currency and eventually the US way of life. Is it on purpose? I have no idea nor do I care what his intentions are. Only the results that have come on his watch.
If he is smarter than 99.99% of Washington... May God help us all.
A few facts here:
CR:
Dont usually post since I find your posts to be so illustrative and informative. However, on this have to disagree - if we had any more public servants ( this may not be technically accurate in the case of BB) and they all act like he did for the "ordinary" folk, we are for sure doomed.
The press reported that, at the meeting of the Federal Reserve Bank of NY convened on a weekend to finally seal the fate of Lehman Brothers, one civilian was present, none other than the CEO of Goldman Sachs ("GS"), the chief beneficiary of the meeting.
If the above is true, Bernanke should have walked out, if he had any moral fiber. Apparently he stayed. The GS CEO was very well known to Guentner, who reportedly spent many an hour every week discussing "important matters" with his mentor at the most profitable firm on earth.
Did the former CEO of GS and Treasury Secretary Robert Rubin deserve 150,000,000 for his tenure at CitiBank?
Didn't Treasury Secretary Paulson know GS well? Isn't the current right hand man of dark Prince Guentner the recent Chief Lobbyist of GS. Isn't the current President of AIG a former GS man. Ditto the new President of the NY Federal Reserve Bank of NY, the former Chief Economist of GS.
Wake up America! The Elites are in control and looting your vaults of every last dime. The idea that civil servants like Bernanke et al are looking after the common folk is not only laughable, it's professionally incompetent.
Mishs Summary
Bernanke is a disingenuous liar with a memory problem. He is also an economic dunce who does not understand the cause of great depression nor could he spot a housing/credit bubble visible to nearly every blogger in the country. However, like his mentor Greenspan, Bernanke believes that every problem can be cured by throwing money at it. Finally, he is a creative, political power grabbing hack who gives memorable speeches about throwing money out of helicopters.
in Summary he is a politician.....
Having spent five years at the Fed in relatively senior positions, I am somewhat amused by the various descriptions that have appeared on this thread of the Fed's purposes and functions. By no coincidence, that is the title of a book available (at last look) free of charge from the Fed. It might bear reading.
JohnRDC -
from the "book"
FRB: The Federal Reserve System Purposes and Functions
"The Federal Reserve sets the nation’s monetary policy to
promote the objectives of maximum employment, stable prices,
and moderate long-term interest rates."
Those seem to be what most on this thread are refering to. The housing bubble was not stable pricing.
But the bailouts of Bear Sterns, AIG, Citibank, etc? How do they promote "maximum employment, stable prices,
and moderate long-term interest rates"? It seems they do not.