Bernanke Bashing
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.
>
Sources:
The troubling side of Ben Bernanke
Ambrose Evans-Pritchard.
Telegraph 8:29PM BST 25 Aug 2009
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6089383/The-troubling-side-of-Ben-Bernanke.html
The case against Bernanke
Stephen Roach
FT, August 25 2009
http://www.ft.com/cms/s/0/a2ba2378-9186-11de-879d-00144feabdc0.html
Economists React: Bernanke Reappointment Is ‘Good News’
Phil Izzo
Real Time Economics, AUGUST 25, 2009
http://blogs.wsj.com/economics/2009/08/25/economists-react-bernanke-reappointment-is-good-news/
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
August 26th, 2009 at 7:31 am
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?”
http://hussmanfunds.com/wmc/wmc090824.htm
August 26th, 2009 at 8:11 am
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.
August 26th, 2009 at 8:21 am
Found a live feed of the Fox Business channel on a Canadian business site http://www.thestreet.ca finally an online alternative to CNBS.
August 26th, 2009 at 8:39 am
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
http://en.wikipedia.org/wiki/Fascism
August 26th, 2009 at 8:43 am
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.
August 26th, 2009 at 8:44 am
http://www.census.gov/indicator/www/m3/adv/pdf/durgd.pdf
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.
August 26th, 2009 at 8:52 am
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.
August 26th, 2009 at 8:53 am
…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.
http://en.wikipedia.org/wiki/Fascism
August 26th, 2009 at 8:54 am
…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.
August 26th, 2009 at 8:55 am
eaten again,
is it the word FASCISM?
August 26th, 2009 at 8:56 am
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.
August 26th, 2009 at 8:59 am
…………..This is not a move toward s*cialism as the guns and blble crowd thinks, it is a continual move toward F*scism
August 26th, 2009 at 9:01 am
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
http://en.wikipedia.org/wiki/Fascism
August 26th, 2009 at 9:06 am
I think it here… it comes out there…
after my (8:11) post I read this…
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a547M5DN4i4E
excerpt:
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!
August 26th, 2009 at 9:08 am
@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.
August 26th, 2009 at 9:12 am
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.
August 26th, 2009 at 9:18 am
@dh
“No cash appears to be going into any area that will benefit regular people.”
LET THEM EAT CAKE!
August 26th, 2009 at 9:24 am
@dh
Thank you. Great post
Just want to add a little link about change we can believe in, well maybe not
http://www.truthdig.com/report/item/20090825_who_is_obama_playing_ball_with/
August 26th, 2009 at 9:30 am
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”…
CLASSY YAHOO
August 26th, 2009 at 9:32 am
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.
August 26th, 2009 at 9:33 am
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.
August 26th, 2009 at 9:39 am
this got a laugh, Bernanke victim of identity theft
http://www.minyanville.com/dailyfeed/index.htm#129
August 26th, 2009 at 9:42 am
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?
August 26th, 2009 at 9:46 am
<- also unhappy with Roach’s 3rd point. NOTHING is libertarian about Greenspan or Bernanke. The problem was excess liquidity, first and foremost.
August 26th, 2009 at 9:49 am
Did I type “Ted”?… What a dick! Shows you where my mind is this AM!
August 26th, 2009 at 9:49 am
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
http://www.federalreserve.gov/boarddocs/speeches/2002/20021219/
——————————–
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"]
August 26th, 2009 at 9:51 am
Cvienne: Re Ted Kennedy. It’s not Yahoo that’s sleazy; it’s politics.
August 26th, 2009 at 9:51 am
@ahab
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?
August 26th, 2009 at 9:52 am
[...] Barry Ridholtz (short): http://www.ritholtz.com/blog/2009/08/bernanke-bashing/(2) the improvement in the Case Shiller home price index is notable. [...]
August 26th, 2009 at 9:52 am
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.
August 26th, 2009 at 9:55 am
Oh, yeah —
It’s contained.
August 26th, 2009 at 9:56 am
@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.
August 26th, 2009 at 10:00 am
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
August 26th, 2009 at 10:00 am
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.
August 26th, 2009 at 10:04 am
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.
August 26th, 2009 at 10:16 am
@leftback,
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.
August 26th, 2009 at 10:23 am
@beaufou
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”.
August 26th, 2009 at 10:24 am
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.
August 26th, 2009 at 10:25 am
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 dot.com 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.
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/8/19_Dr._Marc_Faber_files/Marc%20Faber%2008%3A19%3A2009.mp3
August 26th, 2009 at 10:27 am
OT: Infrastructure projects are getting started in the UK. Wonder when DC will get the memo about high speed rail:
http://news.bbc.co.uk/2/hi/business/8221540.stm
August 26th, 2009 at 10:31 am
Vision for High speed rail in America
http://www.fra.dot.gov/US/content/31
I know they have started the planning process. But it’s pretty early. We probably won’t see anything until early next decade.
August 26th, 2009 at 10:32 am
mcHAPPY: Crude inventories UP, very nice call on that yesterday. Respect. LB is short oil and long smiles today.
August 26th, 2009 at 10:32 am
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?
Thanks.
August 26th, 2009 at 10:35 am
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.
August 26th, 2009 at 10:38 am
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.
August 26th, 2009 at 10:44 am
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.
August 26th, 2009 at 10:46 am
“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.
August 26th, 2009 at 10:48 am
“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.
August 26th, 2009 at 10:53 am
Japanese guys should be considered as visionaries if we are going to praise Bernake for printing press job.
August 26th, 2009 at 10:55 am
@LB
Do you have the nuber for build in inventory or alink to it?
August 26th, 2009 at 10:55 am
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
August 26th, 2009 at 10:58 am
[...] Bernanke Bashing – The Big Picture [...]
August 26th, 2009 at 10:58 am
Transor: have been on kayak.com 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.
August 26th, 2009 at 10:59 am
Great post from Greg Palast’s blog. Something of a populist rabble rouser, but sounds like what we need these days.
http://www.gregpalast.com/the-year-the-levees-broke-2
August 26th, 2009 at 11:00 am
Cohen
Bloomberg Economic Calendar, very good source
http://www.bloomberg.com/markets/ecalendar/index.html
August 26th, 2009 at 11:04 am
Thanks, very helpful
August 26th, 2009 at 11:08 am
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.
August 26th, 2009 at 11:11 am
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.
August 26th, 2009 at 11:15 am
per Krugman’s blog:
http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html
i agree with those who suggest that this was a safe (politically) gambit on O’s part.
August 26th, 2009 at 11:18 am
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.
August 26th, 2009 at 11:21 am
@bubba
“gambit”…interesting word choice.
gam·bit (gmbt)
n.
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.
—
Emphasis on “A PAWN IS OFFERED IN EXCHANGE”
August 26th, 2009 at 11:22 am
@lefty
Oh those pesky “short dollar” positions
August 26th, 2009 at 11:24 am
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.
http://www.investorsintelligence.com/x/free_chart.html?r=101#
August 26th, 2009 at 11:27 am
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.
August 26th, 2009 at 11:27 am
@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…
August 26th, 2009 at 11:28 am
@cviene
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 http://www.merriam-webster.com/dictionary/gambit (definition 2b)
August 26th, 2009 at 11:31 am
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?
August 26th, 2009 at 11:32 am
@Mike:
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.
August 26th, 2009 at 11:33 am
@mcHappy
You pretty much summed it up.
August 26th, 2009 at 11:37 am
Steve: You give him more credit than I do
August 26th, 2009 at 11:37 am
@ 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.
August 26th, 2009 at 11:39 am
cvienne is buying some FAZ calls here.
August 26th, 2009 at 11:45 am
@Steve @Mike
How would you like on your resume (as a central bank chairman), $200 a barrel oil, and double digit rates?
August 26th, 2009 at 11:51 am
@naples
“Found a live feed of the Fox Business channel on a Canadian business site http://www.thestreet.ca finally an online alternative to CNBS.”
hey, that would make you the 21,001 daily viewer. congrats!
http://krugman.blogs.nytimes.com/2009/08/25/what-if-they-held-a-network-and-nobody-came/
August 26th, 2009 at 12:06 pm
@cvienne:
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.August 26th, 2009 at 12:08 pm
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.
August 26th, 2009 at 12:14 pm
@Transor Z
I’m not sure which comment you’re referring to???
August 26th, 2009 at 12:23 pm
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%).
August 26th, 2009 at 12:31 pm
@cvienne: the resume comment
August 26th, 2009 at 12:32 pm
@mcHappy
“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!
August 26th, 2009 at 12:35 pm
@TZ
oh I get you now… My mind was completely blanking out as I’m all over the map today with thoughts.
August 26th, 2009 at 12:36 pm
“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.
August 26th, 2009 at 12:36 pm
@cvienne
Beep! Beep!
August 26th, 2009 at 12:39 pm
[...] the many programs designed to support the financial system. (Dealscape, WSJ, NYMag, Agnes Crane, Big Picture, [...]
August 26th, 2009 at 1:11 pm
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.
August 26th, 2009 at 1:14 pm
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.
August 26th, 2009 at 1:14 pm
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.
August 26th, 2009 at 1:27 pm
@Thor
“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.
August 26th, 2009 at 1:29 pm
@cvienne:
“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.
August 26th, 2009 at 1:38 pm
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…
August 26th, 2009 at 2:04 pm
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…
August 26th, 2009 at 2:08 pm
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”
http://www.thestreet.com/story/10590765/2/kass-market-has-likely-topped.html
August 26th, 2009 at 2:17 pm
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.
http://www.realclearmarkets.com/articles/2009/08/26/bushs_fed_mistake_is_now_obamas_97376.html
http://www.forbes.com/forbes/2009/0907/financial-inflation-deflation-bernanke-point-of-view.html
August 26th, 2009 at 2:21 pm
Don’t forget about John Hussman’s weekly comment from this Monday:
http://www.hussmanfunds.com/wmc/wmc090824.htm
August 26th, 2009 at 2:25 pm
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
August 26th, 2009 at 2:37 pm
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.
http://www.cnn.com/2005/TECH/science/09/23/hurricane.cycle/
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.
August 26th, 2009 at 2:37 pm
@ahab
As much as anyone wants to ponder those scenarios…
The basic difference between us and Argentina is…well… we’re NOT Argentina…
August 26th, 2009 at 2:39 pm
My prediction is that we will see a sharp 10% correction on indexes before end of Sep.
August 26th, 2009 at 2:40 pm
…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)…
August 26th, 2009 at 2:45 pm
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
August 26th, 2009 at 2:53 pm
You think Summers is nervous about funding the defiicit?
1) He brings Brad Setser to the NEC — the expert on TIC data and well respected in China; 2) They announce the revised deficits late on a Friday; 3) They announce the reappointment of Gentle Ben on a day to drown out the hard news of CBO revised deficits. Must be hearing some naschty stuff from China…. Nevertheless, me thinks they will make the auctions work in the short term.
August 26th, 2009 at 2:58 pm
@ ahab
Ditto Wes’ comment.
August 26th, 2009 at 3:02 pm
Bob Pisani is disappointed in today’s market…I am going to gag.
August 26th, 2009 at 3:05 pm
@Wes
You most likely are correct in the final outcome but I suspect there will be a few ups and downs between now and then.
August 26th, 2009 at 3:10 pm
@ Steve
Pisani is disappointing. Ever count how many times that he uses the word “here” in his commentary. His nickname, “Cool Breeze”? Should be more like “Drool Ease”.
August 26th, 2009 at 3:33 pm
Wes/Pat G-
are we talking inflation or stagflation- and if infaltion what is your analysis on how it would effect the stock market?
August 26th, 2009 at 3:58 pm
Steve B
Don’t subject yourself to the CNBC drivel! Just stay away. That’s what I do. My blood pressure can’t take it.
August 26th, 2009 at 4:06 pm
@ ahab
High unemployment and inflation = stagflation. Allthough, I realize some here do not believe in this scenario. The stock market craters. My guess is that it would be best to be in oil, TIPs, precious metals or another country’s currency.
August 26th, 2009 at 4:12 pm
ahab -
inflation is simply the case of too much money (and credit) chasing to few goods
stagflation seems like some Keynesian’s mixed metaphor
in principal, if they create enough money and credit, then that would likely be the fuel to propel the stock market upwards and onwards in nominal terms, but not in real terms
pretty good discussion with dr gloom, boom, doom – http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/8/19_Dr._Marc_Faber.html
August 26th, 2009 at 4:15 pm
On the second point, I believe that most of the responsibility for devising the imbecilic “savings glut” theory should be put on John B. Taylor, the Stanford economist who went to Bush’s Treasury. As I recall, it was he who came up with the idea of a Chinese savings glut, which in turn Bernanke subsequently adopted. Such rationales certainly suited the political purposes of Bush-Cheney and most importantly enabled Bush to defer any decision to address the problem of deficient US savings and the skyrocketing US trade and balance of accounts deficits. Bernanke and Greenspan should have known better but apparently didn’t.
August 26th, 2009 at 4:16 pm
“Pat G. Says:
August 26th, 2009 at 4:06 pm
@ ahab
High unemployment and inflation = stagflation.”
This is the scenario I expect to play in 2011. I will be shorting USD at that point.
August 26th, 2009 at 4:21 pm
@ manhattanguy
We must be using the same playbook. 2011 is my target date too. Let’s wish us both luck, since this is so much like being in a casino, given the mass interventions into markets and quantitative easings by all of the world’s central bankers (the house).
August 26th, 2009 at 4:25 pm
@ manhattanguy
I believe my first comment to you is being “moderated”. So, let’s keep this one simple; I agree exactly with your timeframe.
August 26th, 2009 at 4:32 pm
@pat g -
it may still appear
i got “moderated” this am and, thinking it was a word press filter, i kept decimating the comment until it went, then much later in the day, all of the decimated comments appeared as well
strange
August 26th, 2009 at 4:39 pm
@ Wes
Yeah, the same thing happened to me last week. Then poof, the same comment came up three different times. Bet everyone thought I was into the sauce. But it was still only 9AM here. I wait until at least 10AM. lol
August 26th, 2009 at 4:49 pm
Pat G – Nice to see you have the will power to wait until 10am – Someday I hope to be that strong
August 26th, 2009 at 4:51 pm
@ 420d
Somedays waiting, is a real struggle. lol
August 26th, 2009 at 9:00 pm
@Pat G
I think it’s the word
c… a… s… i…n…o that gets moderated
August 26th, 2009 at 10:04 pm
onisac
August 26th, 2009 at 10:06 pm
@cvienne
Not if you spell it d…r….a….w….k….c….a….b
August 27th, 2009 at 4:39 am
Greenspan may have set the stage for financial disaster, but Ben B was in charge for 3 years before it hit the fan.
He had ample opportunity to tame things so as to prevent the blowup; instead, he stood by, as more and more kerosene cans were placed right near the fire, just waiting for it to get out of control and explode.
We’re in a real time world; yet, it wans’t until march 2008, when Bear Stearns blew up, that any of these guys gave any thought to the problem. Then they basically dicked around another 6 months hoping it would self-correct, until Lehman/Citi/AIG grabbed them by the throat and made them finally react.
Ben should have seen this coming at least 2 years earlier; yet, he’s given great credit for the 9 months following the Sept. 08 blowup without being called out whatsoever for his admittedly passive role until then.
August 27th, 2009 at 11:47 am
same libertarian cloth? i’m not sure i know of any that consider alan and ben on their friends list, or certainly the fed. silliness.