The Bernanke renomination has been widely approved — a WSJ survey showed 74% in favor, and amongst Economists, its even higher.

But a backlash against the Fed chief is underway, with some stinging criticisms coming from very sharp observers.

Ambrose Pierce notes in the Telegraph that BB may have saved the world, but he helped cause the crisis in the first place”

“Ben Bernanke has proved himself a heroic fire-fighter, saving world from a calamitous spiral into debt deflation by showering markets with liquidity.
A good thing too. He helped cause the raging fire of 2007-2009 in the first place. As a Princeton professor and then a junior Federal Reserve governor, Mr Bernanke was the intellectual architect of his predecessor Alan Greenspan’s policies that so distorted global finance and pushed debt to historic extremes.”

While there is a lot of truth to that statement, we cannot call Bernanke “the intellectual architect of Greenspan’s policies.” They were decades in the making, well established long before Bernanke joined the FOMC in 2002.

Stephen Roach is even more critical of the Fed Chief as FOMC governor in the FT. He notes that “It is as if a doctor guilty of malpractice is being given credit for inventing a miracle cure. Maybe the patient needs a new doctor.”

Heh. From Firefighting Pyro to MedMal Miracle cure, the metaphors are flying.

Where Roach shines is when he gets more granular. Specifically, Roach identifies “three critical mistakes” that Bernanke made prior to the September ’08 collapse:

1) Like Greenspan, Bernanke was deeply wedded to the philosophical conviction that central banks should be agnostic when it comes to responding to asset bubbles.

2) Bernanke was the intellectual champion of the “global saving glut” defense that exonerated the US from its bubble-prone tendencies; Much to the annoyance of our Asian financiers, BB blamed their savers for our rate conundrum.

3) Philosophically, Bernanke is cut from the same libertarian cloth that led the Greenspan Fed into this mess. He is “Steeped in the Greenspan credo that markets know better than regulators.” Even worse, Bernanke was part of the “prevailing Fed mindset that abrogated its regulatory authority in the era of excess.”

Points 1 and 3 are critical to the Fed — and the global economy — going forward.

I am less critical than Roach regarding the Bernanke renomination as to his 3 year terms as Governor. Let’s not forget that Greenspan was know as the Maestro back then. Congress, which is now pillorying Bernanke every appearance, was adoring of Easy Al’s visage and garbled Greenspeak each and every appearance. AG ran the Fed as an unchallenged stronghold, a fiefdom where he was the central-banker-in-chief as rock star. No one challenged him directly.

That seems to be lost in a lot of the revisionism now taking place. Roach writes “While America’s head central banker deserves credit for being creative and courageous in orchestrating an unusually aggressive monetary easing programme, it is important to remember that his pre-crisis actions played an equally critical role in setting the stage for the most wrenching recession since the 1930s.”

Not exactly. It was Greenspan’s Fed. Under his leadership, the FOMC and its governors were all second bananas to the Wolrd’s most famous banker. In Bailout Nation, I criticize this deference: “The Federal Open Market Committee (FOMC) must take responsibility for following [Greenspan] so obsequiously, especially in the latter years of his reign.”

However much I blame the FOMC, I have a hard time holding them to the same level of accountability as I do Greenspan. He was the master architect, the maestro conducting the monetary policy orchestra.

Second bananas cannot should the blame for what the head of the bunch does. Once they become banana-in-chief, the standards and level of accoutanbility all go up accordingly.


The troubling side of Ben Bernanke
Ambrose Evans-Pritchard.
Telegraph 8:29PM BST 25 Aug 2009

The case against Bernanke
Stephen Roach
FT, August 25 2009

Economists React: Bernanke Reappointment Is ‘Good News’
Phil Izzo
Real Time Economics, AUGUST 25, 2009

More Articles:
Deja Vu: The Next Credit Bubble Is Now – Heidi Moore, The Big Money
Sorry Larry Summers, Ben’s Here To Stay – Jeff Madrick, The Daily Beast
The Troubling Side of Ben Bernanke – Ambrose Evans-Pritchard, Telegraph
The Day Wall Street Was Shaken To Its Core – Todd Harrison, MarketWatch
Bernanke’s Re-Up Is a No Brainer – Robert Samuelson, Washington Post
The Unwarranted Deification of Gentle Ben – William Greider, The Nation
Bush’s Fed Mistake Is Now Obama’s – John Tamny, RealClearMarkets
Betting Against Ben Bernanke’s Federal Reserve – Steve Hanke, Forbes
Bernanke Is Obama’s Proverbial Bird In Hand – Caroline Baum, Bloomberg
Banks Brought Down By New Peter Principle – John Kay, Financial Times
The Dangers Ahead for Bernanke – James Galbraith et al, Room for Debate
Some Words of Wisdom for Mr. Bernanke – James Stewart, SmartMoney
Bernanke Reappointment Makes for Certainty – David Kotok, Cumberland
Ben Bernanke’s Next Tasks Will Be Undoing His First – New York Times

Category: Federal Reserve, Politics

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

122 Responses to “Bernanke Bashing”

  1. Cohen says:

    B-squared exacerbated the problems Greenspan created and I don’t see why praise for his first term is warranted.

    John Hussman lays it out pretty well imo in “Bernanke sees a recovery – How would he know?”

  2. cvienne says:

    I can’t come to any other conclusion other than to think this is a “cover your ass” moment for the Administration.

    Notice how yesterday, along with the Bernanke re-appointment news, came the news about $9+ trillion deficits for the next decade. They’ve gotta be finally thinking, “we’re not getting out of this thing”, so they re- appoint the one guy who will be friendly to the worst parts of their plans going forward, yet who is also a link to the pre-crisis environment.

    In simple terms, keep spending as much as we want, keep blaming it on the other guys.

  3. Naples says:

    Found a live feed of the Fox Business channel on a Canadian business site finally an online alternative to CNBS.

  4. Wes Schott says:

    It’s Bubbles fault – allowing the Shadow Banking System to become more powerful than the Fed itself in terms of money creation on behalf of the Fed

    Helicopter is a mad man – like the captain of a ship that sinks and all of the passengers drown, but the chief mate and crew survive (read – “the banksters”) – he is a hero to some (friends and family of the “crew”), but not to the rest of the passengers (read – “anyone who is not a bankster” – you and me)

    No hero here, but, BO proves once again, change is no change, and like Timmy, keep the guys in the driver seat that were there when the sh*t hit the fan so that the same criminals that guided us into this mess can shield him from the responsibility that would be his, if he actually made a change

    Our government is merging the corporation with the state and this is not socialism as is commonly attributed to the current administration by the guns and bible crowd, it is fascism

  5. wally says:

    Don’t forget that Greenspan was similarly lauded at various points in his career. I think economists – more so than the general public – are way, way, way, way too premature on this. The price of Bernanke’s actions are not yet known, let alone paid. At the present moment there is a deliberate FED re-bubbling of financial markets and stocks and a complete inability to do much else other than make happy talk. Wall Street was ‘saved’ at the expense of Main Street, which still has to go through the recession that the richer brethren have been bailed out of.
    Most disturbing of all is the now-permanent implicit government guarantee accompanied by virtually no increased regulation. There is only one end that can come to.
    Let’s revisit the Bernanke question in 12 or 15 years.

  6. dead hobo says:

    The durable goods report:

    In summary,

    shipments exceed orders

    Total inventories down Month to Month

    Unfilled orders (backlog) down month to month

    Individual categories show better or worse news.

    No green shoots here until backlog goes up and exceeds shipments.

  7. Wes Schott says:

    my thoughtful comment was eaten….right after cv’s – i’ll try again…ok, eaten again, i am going to break it down.

    Bubbles fault.

    Helicopter is a mad man. Like the captain of a ship the sinks and 1000 passengers drown yet the captain, chief mate and crew survive and he is called a hero – the passengers are you and me, the captain and crew are the banksters.

  8. Wes Schott says:

    …and the rest…let see if this is causing the cookie monster to come out and play…..

    Change means No change BO, keeps the same guys in charge, Ben and Timmy, that were on the point when the sheet hit the fan. To change them out would require taking responsibility for real change, this is just cover your asshat and keep the status quo.

    This is not a move toward socialism as the guns and bible crowd thinks, it is a continual move toward Fascism.

  9. Wes Schott says:

    …ok, second half of comment eaten again, i’ll break it down one more time…

    Change means No change BO, keeps the same guys in charge, Ben and Timmy, that were on the point when the sheet hit the fan. To change them out would require taking responsibility for real change, this is just cover your asshat and keep the status quo.

  10. Wes Schott says:

    eaten again,

    is it the word FASCISM?

  11. dead hobo says:

    oops, excuse me. Backlog exceeds shipments. I misspoke.

    No green shoots until backlog starts to rise, as opposed to falling with consistency. When backlog rises and it’s not a fluke, this means people will start going back to work.

    In a business, people get let go when the backlog goes down. While new orders went up, the backlog went down, signifying the things made took only a short time to manufacture. While any new business is good, the new orders displayed were, in the aggregate, already shipped during July.

    Still, not a green shoot.

  12. Wes Schott says:

    …………..This is not a move toward s*cialism as the guns and blble crowd thinks, it is a continual move toward F*scism

  13. Wes Schott says:

    still eating my prose -

    this is not a move toward socialism as the guns and bible crown think, it is a continuing transition to Fascism – the merging of corporations and government

  14. cvienne says:

    I think it here… it comes out there…

    after my (8:11) post I read this…


    Administration officials also drew a lesson from President Bill Clinton’s 1996 decision to appoint Federal Reserve Chairman Alan Greenspan to another term. Vice President Al Gore opposed it, while other Clinton advisers supported the move. Ultimately, Clinton sided with Greenspan’s supporters, knowing that it would mean both would bear responsibility for the economy.

    Similarly, Obama’s aides reasoned that if he appointed somebody other than Bernanke, Obama would fully inherit the economic problems and take ownership of the recession.


    I’m glad the Bloomberg reporters are reading my posts!

  15. Cohen says:

    @dead hobo

    A big boost in the report came from vehicles and parts, which I would attribute to GM and Chrysler exiting bankruptcy and the CFC stimulus. Ex-transports, the report missed by 0.1%.

    Yesterday I think it was, Toyota announced it’s scaling back production by 10% while American car companies are bringing back more capacity. Right now, I’d rather side with Toyota as making the right call here re: production.

  16. dead hobo says:

    I wouldn’t be so angry about Ben The Bubble if he spent some of his helicopter money in placed that benefit the real economy. Adding stability to the financial markets is essential. He’s done that to the point of ridiculous excess. The stock markets are overvalued by tens of percent and the price of oil is probably 2x what it should be and will probably exceed $100 before too long. No cash appears to be going into any area that will benefit regular people. By using helicopter money without a plan, his name of Ben The Bubble is a statement of fact that clearly describes the present and future.

  17. cvienne says:


    “No cash appears to be going into any area that will benefit regular people.”


  18. beaufou says:


    Thank you. Great post

    Just want to add a little link about change we can believe in, well maybe not

  19. cvienne says:

    It looks as though Ted Kennedy has passed away…

    The most ironic thing to me was to see it on YAHOO home page.

    The second caption under the headline was…

    “Mad scramble for his seat”…


  20. I disagree with the third point Roach had. There is nothing free market about a cartel of bankers who control the amount of money in the system. That is called central planning. And, the free markets do correct themselves. They don’t stop people from making bad mistakes, but the free market corrects those mistakes by punishing the folks who misallocate capital (and reward those who allocate it well).

    Second, the Fed will never be able to monitor asset prices. Their job is to cause them. Just look at what they are doing now. This is a massive re-inflation of asset bubbles. Now, they may justify it by saying we need to do it temporarily to keep the world from falling apart, but isn’t this what they said in 2001 through 2004. Look what that did. These guys exist to help bankers loan as much money as possible as this is the only way banks make money. Then they backstop the banks when the mistakes go bad.

  21. Steve Barry says:

    Not only was Greenspan the master architect for poor policies, he was equally the master of neglect…neglecting to regulate banks and derivatives and to stop bubbles. He basically screwed up everything.

  22. Cohen says:

    this got a laugh, Bernanke victim of identity theft

  23. call me ahab says:

    many many good points made on this thread-

    pretty much covered most of my thoughts-

    and yes cv and wes- the O made the safe choice- because he can always share the blame w/ him but not if he picks someone else- then he owns it-

    sb- Bernanke unfortunately creates the conditions that cause bubbles- intended? or desperation?

  24. BearishNews says:

    <- also unhappy with Roach’s 3rd point. NOTHING is libertarian about Greenspan or Bernanke. The problem was excess liquidity, first and foremost.

  25. cvienne says:

    Did I type “Ted”?… What a dick! Shows you where my mind is this AM!

  26. Transor Z says:

    Greenspan’s December 2002 remarks before the Economic Club of New York tell the tale:

    “But often-cited concerns about the levels of debt and debt-servicing costs of households and firms appear a bit stretched. The combination of household mortgage and consumer debt as a share of disposable income has moved up to a historically high level. But the upward trend in the series reflects, in part, financial innovations that have increased access to credit markets for many households. These innovations include the development of a deep secondary market for home mortgages, along with the advent of credit scoring and automated underwriting models that have enhanced the ability of loan officers and credit card companies to identify good credit risks. These innovations lower the risk level of any given amount of debt.”

    * * * * *

    “Some argue that bubbles can be prevented or defused by financial regulatory initiatives. It is observed that asset bubbles have often been associated with rapid credit expansion, and hence it is claimed that restraining credit growth could quash nascent bubbles. A bubble could conceivably be defused by restrictive credit regulations that stifle economic growth. It is by no means clear, however, that such a regime would be more conducive to wealth creation over time than our current regulatory system. Also of relevance, in a vibrant financial system, such as exists in the United States, there will always be many avenues available to investors for financing a bubble.”

    Alan Greenspan
    Remarks before the Economic Club of New York, New York City
    December 19, 2002

    To the extent that the Fed is a “dumb” machine regulating money supply based on broad GDP inputs, there’s a big problem inherent in its function. What was it — $2 trillion? — in GDP vaporized last year. We aren’t going to grow our way back into the trillion in freshly minted reserves set aside to monetize the vaporization.

    I’m no economist and I’m barely financially literate but I do know this much: Bubbles are destructive. They are not merely transient blips. They destroy otherwise healthy businesses as collateral damage. Pay now, pay later, Alan. Too bad you didn’t grasp that. The added tax burden to clean up this mess is going to hamper growth for a LONG time — and, ironically enough, re-channel trillions in wealth through your despised public sector.

    [Queue David Bowie's "The Man who Sold the World"]

  27. Mike in Nola says:

    Cvienne: Re Ted Kennedy. It’s not Yahoo that’s sleazy; it’s politics.

  28. cvienne says:


    Actually the bloomberg article is kind of interesting.

    It kind of steps through the thought process since April.

    There is also some funny stuff in it. Like now the topic was never raised in staff meetings so Larry the lounge Lizard wouldn’t get offended. Can you imagine? :-)

  29. Marcus Aurelius says:

    There’s been so much debt, criminality, cronyism, double-dealing and fraud swept under the rug under Bernanke’s watch, it’s like someone is trying to hide a body. This is not a situation you want to turn over to a new office holder.

  30. Marcus Aurelius says:

    Oh, yeah —

    It’s contained.

  31. cvienne says:

    @Transzor Z

    Yeah, but to Greenspan it was all a “productivity miracle”…

    Productivity my ass, all they “produced” was worthless paper. And so the next logical step is to produce even greater amounts of worthless paper to cover up the old worthless paper.

  32. Transor Z says:

    These innovations include the development of a deep secondary market for home mortgages, along with the advent of credit scoring and automated underwriting models that have enhanced the ability of loan officers and credit card companies to identify good credit risks. These innovations lower the risk level of any given amount of debt.

    @cvienne: EPIC FAIL

  33. davver1 says:

    Bernanke was a huge supporter of low interest rates at the beginning of this decade. He provided the blueprint for them in his deflation speech. Greenspan may have made the final decision, but Bernanke was cheer leading it all the way.

  34. leftback says:

    It makes sense, the markets are used to BB and they can always dump him after Deleveraging Part Deux or if it all goes pear-shaped and blows up. But my sense is that BB knows how to execute the Japanese playbook to a fault.

  35. mcHAPPY says:


    It is scary how similar we have been thinking the last few days. I”m starting to know why they are such cheerleaders on CNBC and in MSM as nothing instills confidence like hearing someone else say what you are thinking, even if you are wrong – hopefully we are not.

  36. mcHAPPY says:


    Nice link regarding BO. “Change you can believe in” has turned out to be nothing more than “Business as usual, you can’t be serious”.

  37. Jim Greeen says:

    Banking is the heart and lungs of our economic system.

    Bernanke was on the Board of Governors of the Fed starting in 2002. He saw the raw banking data on a regular basis. He became chairman in 2006. Continued to see the data. He knew what kind of shape the banks were in and had known it for a long time.

    Yet in November 2007, after being on the job for over 21 monthws his proposed solution to the problem was to offer the Super SIV program. Trying to raise $100 Billion for the banks in trouble until the problem passed. Are you kidding me?? He thought that was the solution??

    The very idea, the very thought that the Super SIV was a solution indicates he had no real knowledge, no graps of the depth and breath of the problem. If he did, how in God‘s name could he put his good name on such a farcical and ill conveived solution? How???

    No vote of confidence here. Also isn’t he the one who said the problem was well contained. Please!!!

    At the end of the day, he brought nothing more than a pedestrian approach to the problem.

  38. Mike in Nola says:

    My biggest problem with BB was one of the things Barry pointed out in his book, which I am almost done reading and which is excellent.

    Barry pointed out that the Fed, with AG leading and BB continuing the practice, has been targeting asset prices instead of the overall health of the economy. (Forgive the paraphrasing.) I believe Greenspan started this with 1987 crash and continued with the bubble and then the housing bubble.

    I attribute the continuation of this policy to BB’s obsession with avoiding 1930′s like deflation. He is convinced that it was deflation that was the problem then, not just that there was a bubble and deflation is a necessary consequence of the pop to get prices back to normal levels. BB seems to believe you can just keep reflating and everything will stabilize.

    The obvious secondary obsession is with consumer spending as the keystone of the economy. Yeah, it’s important, but we have had a healthy and growing economy with proportionatel much lower consumer spending, like when we actually made stuff instead of just borrowng to buy other countries’ stuff. And wasn’t much of the cause of the current problem the profiglate borrowing and spending?

    The obvious problem is that trying to maintain asset prices at inflated levels and to boost spending to pre-crash level requires enormous borrowing from the rest of the world. This results in massive misallocation of capital and is not sustainable without eventually destroying the dollar, although I think that is a longer term problem.

    I was hoping he would have an epiphany, but he, like many in DC, lives in such a bubble himself that he has no idea what reality is outside it.

    On a related note, here is a recent interview with Marc Faber. He first notes that the crisis is really still ahead of us, since nothing has really changed. Also is short term bullish and long term bearish on the dollar. He emphasis is on BB’s tendency to jump in and print money if there is another market crash and that, long term, this is horrible for savers.

  39. leftback says:

    OT: Infrastructure projects are getting started in the UK. Wonder when DC will get the memo about high speed rail:

  40. manhattanguy says:

    Vision for High speed rail in America

    I know they have started the planning process. But it’s pretty early. We probably won’t see anything until early next decade.

  41. leftback says:

    mcHAPPY: Crude inventories UP, very nice call on that yesterday. Respect. LB is short oil and long smiles today.

  42. Mike in Nola says:

    Off topic post:

    We are looking at going to Boston at the end of Sept. for a week.

    Boston hotels were outrageously priced last year and have only gotten a little better this year. (I suppose the rally has made people feel rich.) Anyone have any suggestions for something reasonably priced, comfortable and safe in walking distance of T stops and the North End?

  43. jc says:

    Astounding data, prime is only marginally better than trash mortgages. Is it jobs or a reaction to being way underwter by the primes. These are scary numbers with job losses not expected to turn around soon (from WSJ)
    Homeowners who fall behind on their mortgage payments have become much less likely to catch up again, a new study shows.

    The report from Fitch Ratings Ltd., a credit-rating firm, focuses on a plunge in the “cure rate” for mortgages that were packaged into securities. The study excludes loans guaranteed by government-backed agencies as well as those that weren’t bundled into securities. The cure rate is the portion of delinquent loans that return to current payment status each month.

    Fitch found that the cure rate for prime loans dropped to 6.6% as of July from an average of 45% for the years 2000 through 2006. For so-called Alt-A loans — a category between prime and subprime that typically involves borrowers who don’t fully document their income or assets — the cure rate has fallen to 4.3% from 30.2%. In the subprime category, the rate has declined to 5.3% from 19.4%.

    “The cure rates have really collapsed,” said Roelof Slump, a managing director at Fitch.

    Because borrowers are less willing or able to catch up on payments, foreclosures are likely to remain a big problem. Barclays Capital projects the number of foreclosed homes for sale will peak at 1.15 million in mid-2010, up from an estimated 688,000 as of July 1.

    Cure rates have sunk despite the Obama administration’s prodding of banks to ease terms for millions of borrowers to try to prevent foreclosures. Without those loan-modification efforts, cure rates would be even lower.

    Job losses have left some borrowers unable to make payments. In addition, Mr. Slump said, some who could continue to make payments probably are no longer willing to. That may be because the values of their homes have fallen below their loan balances and they see little hope of ever recovering their investments.

    What’s more, because of widespread backlogs and delays in the foreclosure process, people who quit paying may be able to stay in their homes for more than a year before being evicted.

    The Fitch study covers about $1.7 trillion of mortgages held in securities, representing about 16% of U.S. mortgages outstanding.

  44. The Curmudgeon says:

    The exaltation of the central banker priesthood that this reappointment represents will ultimately destroy us. It’s only a matter of time until the central bankers will take to wearing robes during their deliberations on which business organization will be allowed to survive and which must fail. Centralized economic decision making has been time and again proved inherently inefficient and doomed to failure, but we so wish to believe that big brains and properly-calibrated manipulations of the money will save us from ourselves, that we have essentially abrogated all responsibility for economic outcomes to these bankers.

    It’s quite ironic that a country touting itself as the oldest of the world’s democracies is effectively now ruled by an unelected cabal of economic priests that even more ironically attempt to shield themselves from liability for their actions by claiming the need for “independence”.

    Ben Bernanke has assumed the role that Greenspan created. He will one day be equally villified. Wealth is not created by government fiat. It is created by the millions of daily decisions of people pursuing their own happiness. The massive obligations undertaken by the Federal Reserve under Bernanke’s banker rescue represent an oppressive claim on the pursuits of future generations.

    The foundation of liberty is economic freedom. Bernanke is pushing us along the path to serfdom, yet garners praise and not denunciation. This is what the death of an ideal looks like–a hundred little cuts until it loses so much blood that it dies.

  45. Transor Z says:

    Mike, don’t forget to try Expedia/Priceline. My folks landed a nice room in the Park Plaza in the Theater District for under $175/night a few years ago. Also, try hotels like the Lafayette Hyatt in the Downtown Crossing area and Westin Boston Waterfront, though the Westin isn’t as T-accessible as some.

    North End tends to be expensive because most of the nearby hotels are on the waterfront.

  46. leftback says:

    “The cure rates have really collapsed,” said Roelof Slump, a managing director at Fitch.

    @jc: Is that for real? That’s a good name for the double dip recession: Roll-Off Slump.

  47. tenaciousd says:

    “Second bananas cannot should the blame for what the head of the bunch does. Once they become banana-in-chief, the standards and level of accoutanbility all go up accordingly.”

    So, how exactly was Greenspan held accountable? He took a little heat from Congress and that’s about it. “Oops! My bad.” Pretty good deal for lining his pockets those of his cronies for years on end. The sans coulots would have paraded his head in the streets. (Sigh.) We don’t have enough sans coulots these days.

  48. rustum says:

    Japanese guys should be considered as visionaries if we are going to praise Bernake for printing press job.

  49. Cohen says:


    Do you have the nuber for build in inventory or alink to it?

  50. call me ahab says:

    tc Says-

    “Wealth is not created by government fiat. It is created by the millions of daily decisions of people pursuing their own happiness.

    undoubtedly- also- i can see your vision of Bernanke and his high council sitting around in robes issuing supreme commands- but maybe it is more akin to the scene in Sout Park where they cut the chicken’s head off until he falls on the spot on the giant roulette wheel which dictates their next action- very voodoo-ish

    m in nola-

    i will 2nd tz’s recommendation of priceline- got some great plane tickets to New Orleans in April- last minute and half price better than what i could find on kayak or sidestep

  51. [...] Bernanke Bashing – The Big Picture [...]

  52. Mike in Nola says:

    Transor: have been on a lot.It allows search of the most the big travel sites simultaneously. Agree about the north end. Just don’t want to have too ardous a travel after a heavy dinner. Will check the suggestions.

  53. Mike in Nola says:

    Great post from Greg Palast’s blog. Something of a populist rabble rouser, but sounds like what we need these days.

  54. Onlooker from Troy says:


    Bloomberg Economic Calendar, very good source

  55. Cohen says:

    Thanks, very helpful

  56. Steve Barry says:

    Cash for Clunkers…wildly successful they tell us. Of course, they don’t consider the debt created to pay for it and the debt now placed on the consumers who financed the rest of the purchase. And now demand will crater.

  57. Onlooker from Troy says:

    Transor Z

    God, every time I read that stuff from the past I just get so angry. These guys have been spinning their B.S. and fooling the public for soooo long. Over the years. lots of people have been talked out of their common sense, gut feeling about the pdeficit spending (public and private) because all these “smart economists” said it was OK. That there was some complicated macroeconomic reason that it would all be alright, no matter how stupid and counterintuitive it sounded to the “regular” person.

    I really don’t know if Greenspan believed/believes that crap or if it was all a devious plan to fool the people and keep the ponzi scheme going. I go back and forth in my head on that one. Was he just a puppet being manipulated by the bankers who just used his pathetic desire to be liked by them and adored by the public to get him to do their bidding? I tend to think so. He’s the little geek who wants to be in with the popular crowd and will do whatever they want for their approval. His supposed free market, Randian philosophy was more of the same.

    And of course he has reaped millions from the industry since he left the Fed. They parade him around and funnel him money for speaking to crowds. It’s thoroughly disgusting.

  58. bubba says:

    per Krugman’s blog:

    i agree with those who suggest that this was a safe (politically) gambit on O’s part.

  59. leftback says:

    Thanks, Onlooker. Note that crude inventories are significantly higher now than they were last year when the crude oil price began its meltdown. That was in part the result of the unwinding of leveraged yen carry trades and the same is true here, except that short dollar positions are probably even more significant than last year.

  60. cvienne says:


    “gambit”…interesting word choice.

    gam·bit (gmbt)
    1. An opening in chess in which a minor piece, or pieces, usually a pawn, is offered in exchange for a favorable position.
    2. A maneuver, stratagem, or ploy, especially one used at an initial stage.


  61. cvienne says:


    Oh those pesky “short dollar” positions ;-)

  62. Steve Barry says:

    Anyone still think the March low will be taken out? There are very few of us left. If it is to happen, NYSE Bullishness needs to get back to the bottom…looks to me like it could take a year to do. It certainly looks like it will be hard to get much more bullish given the economic/deficit relities.

  63. Mike in Nola says:

    Steve: The wild card is always BB. As Faber warns, he may well intervene on any significant drop. Whether he can have that short term an effect is another matter.

  64. cvienne says:

    @Steve Barry

    “Anyone still think the March low will be taken out?”

    In a word…YES…

    The only thing is that I have bumped the forecast on that into 2010…I’d been thinking Oct ’09 earlier this year…Now I’m thinking more like July ’10…

  65. bubba says:


    lol. dude, you’re over intellectualizing my choice of words. i’m not as literarily gifted, say, as the great leftback. i simply meant “a calculated move.”

    per webster (definition 2b)

  66. mcHAPPY says:

    Oil stockpiles are enormous and the short dollar positions are huge. Combine this with a forecast of a relatively weak storm season, forecasts for a warm winter thanks to a return of El Nino, a shortage of credit in credit based markets (i.e. most western economies), a completion (for now) of Chinese commodity stockpiling, and a tightening of Chinese easy money via lending practices. I think it is safe to conclude the oil gains might give back more than they took over the next 5-6 months or so. Anyone care to wager on oil in the low $20′s?

  67. Steve Barry says:


    At what point is there too much liquidity and we drown? Other things have to start breaking…rates and oil could skyrocket. I don’t think BB is that stupid, but who knows.

  68. cvienne says:


    You pretty much summed it up.

  69. Mike in Nola says:

    Steve: You give him more credit than I do :)

  70. mcHAPPY says:

    @ Steve

    Yes, I do think they will be taken out. Of course when is the real issue. My reasoning for this is the consumer. I believe jaguar inflation is real. You can’t force people to borrow who do not want to. Add to this mix lenders are not lending and we have no demand.

    As an aside, I noticed yesterday CNBC has gone from talking about a job-less recovery (because we know there will be no jobs minus a miracle technological advance) to debating a consumer-less recovering.

  71. cvienne says:

    cvienne is buying some FAZ calls here.

  72. cvienne says:

    @Steve @Mike

    How would you like on your resume (as a central bank chairman), $200 a barrel oil, and double digit rates?

  73. bubba says:


    “Found a live feed of the Fox Business channel on a Canadian business site finally an online alternative to CNBS.”

    hey, that would make you the 21,001 daily viewer. congrats! :)

  74. Transor Z says:


    No, no, no, no, no.

    -With significant inputs from the heads of major financial institutions,dDesigned and implemented historic reforms within U.S. and global financial systems, including unprecedented increases in transparency of Federal Reserve operations and improved regulatory oversight financial markets.

    -Led a hand-picked team of miscreants and crusty-yet-benevolent malcontents on a daring mission behind enemy lines to rescue the fabled Ark of the Covenant, Crystal Skull, and Technicolor Dreamcoat from evil nazi priestsLed a team that oversaw the rescue of world financial markets through out-of-the-box thinking, gumption, and good old fashioned hard work.

  75. leftback says:

    mcHAPPY: every few years the hurricane tracks switch from mainly Gulf entry to East Coast pathways, perhaps due to changes in water temperature in the tropical Atlantic. Nobody knows exactly why but there is a seven to ten year cycle I believe – if this is one such (Atlantic) season then the danger to US rigs will be minimal. Another factor that the bulls may not have to rely on this time around. Mike in NOLa would be our expert on this.

  76. cvienne says:

    @Transor Z

    I’m not sure which comment you’re referring to???

  77. mcHAPPY says:

    Oh right! Further to my post at 11:31 am:

    There are a lot less people driving to work and there is a lot less trade i.e. importing and exporting/shipping.

    Did anyone catch Japan’s export numbers (down 36.5%, worse than June y/o/y, exports to China down 26.5%, US 39.5%, Europe 45.8%)?

    But here are the green shoots: they were still better than estimates (expected 38.4%) and based on volume up over June (2.4%).

  78. Transor Z says:

    @cvienne: the resume comment :)

  79. cvienne says:


    “But here are the green shoots: they were still better than estimates (expected 38.4%) and based on volume up over June (2.4%).”

    I sum up the reaction to “green shoots” as follows. We basically had a Wil E. Coyote moment last year (with the economy looking like it was over the cliff)… The “green shooters” are ones who looked back and saw that they had a parachute…

    But we “cartoon watchers” realize that the parachute is made by THE ACME PARACHUTE COMPANY…

    Good luck with that coyote!

  80. cvienne says:


    oh I get you now… My mind was completely blanking out as I’m all over the map today with thoughts.

  81. leftback says:

    “The “green shooters” are ones who looked back and saw that they had a parachute…”

    Looking forward to that Wile E Coyote cartoon replacing Goldilocks on the Kudlow Report.

  82. mcHAPPY says:


    Beep! Beep!

  83. [...] the many programs designed to support the financial system.  (Dealscape, WSJ, NYMag, Agnes Crane, Big Picture, [...]

  84. Onlooker from Troy says:

    And what I didn’t read right is the fact that the markets were really discounting Armageddon at 666. I thought it was just looking at the bleak reality we’re truly looking at and discounting that. I thought the true discounting of Armageddon would look something more like 300, or even lower. That was my mistake. I understand the dynamics better now. But the cognitive dissonance is difficult to deal with.

    But apparently the market is still stuck in the valuation paradigm that developed over the last ten plus years and just can’t fathom actually letting true value develop, such as a single digit P/E. Yet. It will come. As we tumble down hill akin to the Nikkei.

  85. Thor says:

    mcHAPPY – There are a lot less people driving to work

    Yes indeed – you wouldn’t believe how much traffic has gone down in the parts of LA I drive through. You can most definitely feel that 12% CA unemployment when you drive. I’d imagine traffic is going down all over the country.

  86. Marc P says:

    I’m wary of Bernanke now. Despite all his lauded intelligence and knowledge of history, he has not performed well.

    He advocates that the Federal Reserve, a private company owned by the banks, should be allowed to give taxpayer dollars to those same banks. There is much circumstantial evidence to show that he has done this during his tenure, but he resists all efforts of Congress to determine the facts. He believes that not only should the citizens not have a say in how much, who or when, but the citizens should not have the legal right to know how much, who or when. That is the utmost in arrogance and contempt for the citizens.

    I see his view as fundamentally opposed to the American way of doing things. He believes his company should be allowed to print and give out money with no debate, no input, and no democracy. It is likely unconstitutional. Only Congress has the power to spend the taxpayer’s money, and I don’t think that Congress may constitutionally delegate that power to a private company without veto power, review, or disclosure.

    That Bernanke would advocate this position shows that he is fundamentally unfit for the position, regardless of his education or experience.

  87. cvienne says:


    “I’d imagine traffic is going down all over the country”

    All except for the I-340 corridor over the Potomac River & Shenandoah River bridges where the American Recovery & Re-Investment act has been feeding baloney sandwiches to poor struccling workers all summer long and causing 2 hour backups during peak travel times.

  88. Steve Barry says:

    “How would you like on your resume (as a central bank chairman), $200 a barrel oil, and double digit rates?”

    Even worse…with the moral hazard he has re-ignited, and the thought that he will intervene on any loss, what happens if an event triggers a sudden shock and he has no time to print up the money? He could have a 1929 or 1987 on his resume too.

  89. cvienne says:

    The PPT better get themselves back from lunch and get busy…

    It might not look too good id they can’t get this thing back up to 1031 by the end of the day…

  90. cvienne says:

    Looks like the PPT got my (1:38) memo…

    They just tried to ram this thing up, but got stopped at 1,029.20…

    OK boys, you can go back to your sandwiches for awhile…

  91. manhattanguy says:

    Doug Kass called the top (one more time). Hope this one stays true.

    But I agree with his view for 2010.

    “A double-dip outcome in 2010 represents my baseline expectation. Higher interest rates, rising marginal tax rates and a lower U.S. dollar”

  92. Pat G. says:

    I figured that there would already be a “few” responses to this thread. However, here’s a couple of new links to ponder. The first from Tamny the second from Forbes.

  93. BobDobalina says:

    Don’t forget about John Hussman’s weekly comment from this Monday:

  94. call me ahab says:

    okay here’s the question-

    what will be the outcome when the rest of the world deems we are an unsatisfactory credit risk- when it is realized that we are insolvent- when we have a net negative foreign capital inflow-

    will we create $ and monetize- crashing the $- and forcing hyperinflation- let’s say 20% or greater- or will we default outright and refuse to honor debt held by foreign countries- thereby crashing the dollar and possible causing trade wars/real wars

  95. Mike in Nola says:

    LB: Was in another few tabs checking fares and hotel rates. May wind up in Vancouver, BC. Cost is about the same.

    Anyways, don’t claim too much expertise on the hurricance cycle other than that there seem to be some. Whether they are actually periodic is another matter. Seems to be an interaction of Atlantic currents and El Nino and possibly other things. There have been some long quiescent periods, including one from after the 1960′s until well into the 1990′s that encouraged a lot of building in low lying areas, e.g around NOLA, FLA and much of the Gulf Coast. These are areas that have gotten pounded.

    Here’s an older article about it in general, although there’s a good bit of anti-global warming by Max Mayfield. My opinion on global warming follows that of Pascal on God: maybe there isn’t any, but it’s an awful big gamble, so it’s better to act within reason like it exists.

    The variability is apparent.
    By mid-Sept. last year we were up to Ike in names. By the end of August 2005, we were up to Katrina and they wound up using the whole alphabet and then some before the season was over. This year what do we have, Bill? Looks like a slow year. We have noticed that we have already gotten a couple of fronts through Houston and NOLA. You can’t exactly call them cool, but they did bring down the temps from about 100 to the low 90′s. Also, from what I heard, it was pretty cool in the N.E., so it looks like there’s something different going on this year.

  96. cvienne says:


    As much as anyone wants to ponder those scenarios…

    The basic difference between us and Argentina is…well… we’re NOT Argentina…

  97. manhattanguy says:

    My prediction is that we will see a sharp 10% correction on indexes before end of Sep.

  98. cvienne says:

    …as Bill Murry put it in the movie “Stripes”

    “We’re the US Army! We’re 10-1″…

    Note: That movie was 1981…So now we’re more like 11-2-1 (if you don’t count Grenada as a preseason game)…

  99. Wes Schott says:

    ahab@2:25 –

    we will never be able to pay back the money we owe

    the gov will inflate away

    if it gets out of control and we slip into hyperinflation, then introduce a new currency