Here’s a candidate for the understatement of the year: The Federal Reserve is concerned that their free-wheeling, money-printing, dollar-destroying, quantitative-easing, zero-percent interest rate policy might be “fueling undue financial-market speculation.”

Do ya think?

The Fed is a serial bubble blower worse yet, they have refused to hold the most aggressive and damaging speculators accountable for their own losses. Instead, they have participated in a massive socialization of risk, where profits remain private but losses are the taxpayers’ burden.

Is this anyway to run a Central Bank? (and I am not calling for the Fed to be dismanttled or hobbled like others are).

There has been little or no clawback of the ill gotten gains from the people who caused the problem, but escaped with 100s of millions of dollars; there has been endless subsidies for the banks, but little hard-to-swallow medicine for the banking system.

My pet theory is that all of the anger about Health Care Reform is misdirected rage at the corrupt Bailouts. I don’t want to get too Continental on you, but the conversation in Europe I encountered repeatedly was the sheer perplexity at why people are protesting health care coverage for all. One fund manager said to me in Berlin, “You give trillions to rogue bankers, yet you have 40 million uninsured American. Why is that?”

My answer: I haven’t the foggiest idea why.

Meanwhile, the banks are (rationally) hording capital, thus they have not increased lending, all the while they garner huge state subsidized profits.

We have not yet sufficiently called out Hank Paulson for his role in this mess. Tim Geithner is starting to capture flack for his participation in the massive wealth transfer/taxpayer giveaway, but he was junior to what we now think of as the Hank & Ben show.

Let me be brutally frank: With George W. Bush AWOL during the crisis in 2008, it was Bernanke and Paulson who stepped into the void. But make no mistake about it — the chief architect of the massive bailouts was none other than former Goldman Sachs CEO and then Treasury Secretary Hank Paulson.

Perhaps when his book comes out, it will grant people another opportunity to look more closely at his role in the crisis. He didn’t create it, but he sure as Hell made things a whole lot worse.

Meanwhile, here’s Bloomberg:

“Federal Reserve policy makers said for the first time that their decision to cut interest rates to zero may be fueling undue financial-market speculation even as they called the dollar’s decline “orderly.”

The Federal Open Market Committee said its policy of keeping rates low might cause “excessive risk-taking” or an “unanchoring of inflation expectations,” according to minutes of its Nov. 3-4 meeting released yesterday. Central bankers also said further dollar depreciation that might “put significant upward pressure on inflation would bear close watching.”

The dollar weakened as investors wagered the central bank will tolerate further declines in a currency that has slid more than 6 percent against the yen in three months. Policy makers are wary of fueling a third asset-price bubble in about a decade as they hold the benchmark interest rate near a record low to revive growth, economists said.

“Financial markets have been doing much better than people might have expected,” said Marvin Goodfriend, a former policy adviser at the Richmond Fed who is now a professor at Carnegie Mellon University in Pittsburgh. “The Fed is saying to markets, ‘Don’t overdo it.’”

Thanks for nuttin, Danny . . .

>

Previously:
Tactical Error: Health Care vs Finance Regulatory Reform (September 9th, 2009)

http://www.ritholtz.com/blog/2009/09/finance-reform-vs-health-care-reform/

Source:
Fed Officials Watch Asset Prices for Signs of ‘Excessive Risk’
Craig Torres
Bloomberg, Nov. 25 2009

http://www.bloomberg.com/apps/news?pid=20601087&sid=atWoGngEpam4&pos=3

See Also:
Fed Cautious About Strength of Recovery (NYT)

Category: Bailouts, Federal Reserve, Travel

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.

58 Responses to “Fed Reserve Endorses “Crony Communism” for Wealthy”

  1. Don’t get boggged down discussing Health Care — it isn’t my bailiwick, and I don’t have a professional interest in — but the Europeans are utterly perplexed by the debate.

    The real issue is what will the Fed’s largesse and our collective refusal to hold people accountable for their actions lead to?

  2. torrie-amos says:

    Using the cracker jack, decoder ring……………….Wall Street, we need an orderly pullback, soon, please.

    IMHO, never underestimate the people at the top, banks have a trillion bucks and will not lend, why, next year Alt A’s will implode, the fed has too stop some of the crap, and the bankers now it………..does anyone really think after that famed 30 minute meeting where all banks had too take TARP money, they did not have a game plan, an end game, a time line based on xyz, this and that………my best guess is Ben, the good cop, has set the stage with the banks for what can and cannot be done, note, of all the times he gets grilled in congress, he agree’s with most everything, talks reform, lowering debt etc., buy by god you will not look at my balance sheet or who got when and why etc………..obvious to me is if you knew the facts, you could connect the dots…….I’ve been saying all year 85 a barrell oil and all is off, because it effects everyone worldwide, he can put up with a gold bubble, they are speculators what does he care, it’s not main street…………here you got Timmy, the bad cop, getting branded incompetent, silly, a crony, whatever you want………and now they come out with pacifying words………..I’m sure they have a number on there sheets for Alt-A failures what they can’t afford is oil going gang busters again, at 4 dollars a gallon in oil, family of two who uses 40 gallons a week, the average, that’s 60 bucks a week, 240 a month, 2800 a year, or 2.8 mortgage payments, foreclosures would climb in all sectors all states….

  3. rileyx67 says:

    A bit of anger evident in that, Barry, and could not agree with you more. Fed up with the DC-Wall Street ties and seeming continuance of same under the new administration, which I, admittedly, did not expect. Also interesting how our view can so often be cleared a bit when viewed from “afar”…our own perspectives can often change when we TALK with “them”, rather than “tour” their countries.

  4. HEHEHE says:

    Good post. The reality being that the only bubble bigger than the current speculative bubble in assets is the bubble in INVESTMENT BANK BONUSES!!!!

    I really am amazed that there’s not rioting in the streets over all of this. I think it’s the first time in the history of this country where an entire failed industry was rewarded for their failure. Absolutely criminal. Bergabe, Paulson, Geithner, Bair, Blankfein, Dimon, Summers, Bush, Obama, Frank, etc. all belong in jail for their conduct or lack thereof in the past year.

    One more thing, the current mess is not the result of capitalism. It is the result of a crony capitalist fascist state that has evolved in this country over the past 30 years. We only have capitalism on the small business level in this country. You want a way out of this mess break up the banks and pass a constitutional amendment making political campaigns publicly funded.

  5. scepticus says:

    A few points to consider:

    1) if obama et al are following keynes, keynes advised against wholesale reform in the midst of a crisis. He advocated short term measures to stop the freefall then a longer period of gradual reform. Thats not to justify bankrolling criminals – keynes never advocated that AFAIK.

    2) dressing banker bailouts up as communism is a peculiar, very american bit of twisted logic. its cleary fascism/corporatism, not communism. C’mon, admit it. Stalin would have simply executed these men.

    3) an economy with very low underlying growth needs very low interest rates. No two ways about it. Given that’s where we are (both sides of the pond, europe too), the needed reform might be held to be reform designed to secure long term low interest rates while at the same time preventing undue speculation as a result of the same. Cheap money, not easy money.

    ~~~

    BR: You are correct — I better change the post name to “Crony Communism”

  6. DM RTA says:

    I too agree with the frustration and anger in this post. And while I agree with the European perspective on health care I can’t help feel it comes at the worst possible time; as if it is an attempt to buy the vote or a look over the other shoulder as profits are intentionally produced for the financial class and everyone else gets bought off when the credit card is already maxed out. This point in time should prove one thing in a way that cannot be refuted…ever. Lobbiests have eclipsed the power of voters by an amount that can no longer be ignored and change must happen. Change isn’t a slogan.

  7. stanleybdavis says:

    When we started turning to Ann Coulter, Rush Limbaugh, and Hollywood to educate our voting positions, we really let loose the foxes in the hen house. The sense of disbelief from “across the pond” is palpable. How did “newspeak” replace educated dialogue in America?

  8. danm says:

    The real issue is what will the Fed’s largesse and our collective refusal to hold people accountable for their actions lead to?
    ————–

    It’s not because we are not publicly hanging people that there are not unintented consequences.

    You might think there is no accountability but there is ALWAYS a reaction for any action.

    For example, the “winners” are getting cockier by the day… they are so giddy, they can’t hold themselves back anymore. They WILL get in trouble. They WILL push people to the limit with they arrogance. It might not be the result you are hoping fore but there will be a reaction. It’s human nature.

  9. flipspiceland says:

    Can’t believe the naivete of some of the posters here to think for a second that electing a marionette of the New York/Washington/London/Israel AIPAC crowd would somehow change the stance of the Bush years.

    To believe that a candidate put in office by Goldman Sucks and the rest of the primary dealers was going to make TheBamster a populist is a real leap of faith, akin to a teenager believing in the Easter Bunny.

    And regarding Health Care, to say you have no idea why 40 million don’t have have insurance is beyond the ken.

    Half of them just do not want to buy it for heaven’s sake. And overturning the entire system at a time like this is just one more reason why Europeans live in tiny houses, their kids can’t afford to live on their own, and their streets stink of urine.

  10. drewburn says:

    Great point, Barry. Agree on the healthcare vs. bailout misperceptions.

  11. Wes Schott says:

    …uh, you were speaking with rational and properly educated people in euroland. ones who can see that the money comes from one big pot

    when i listen real carefully, what i hear is that the concern with health care is that government is getting involved – ie getting bigger and the government can’t do anything right, not whether it is good or bad for the people who are not covered, or for undoing the scam between the drs-insurers-pharma, etc…(come to think about it – they are kinda entwined like the banks-fed-mortgage providers-re were/are)

    what Paulson engineered doesn’t seem the same to the people, it doesn’t seem like a “new” extension of government, it may not seem right, but it doesn’t seem like a growing government – thank you Ronnie.

    inflation is the hidden tax – its all one pot, in the end – the fed as pick pocket

    there is a large portion of america that does not live near any coastline, they like their guns and bibles, and they are pissed and getting more pissed.

    the government has been taken over by bidness interest, the congress and the executive are owned, beholding to corporate interest through the massive lobbying and campaign contributions – there was no change we can believe in – sos – f a s c i s m

    tea parties, tax revolts, american revolution part deux? i kinda doubt it, but, we’ll see

  12. scepticus says:

    “How did “newspeak” replace educated dialogue in America?”

    Us anglo-saxons are cursed with a very polar divide of opinion that makes educated dialogue without name calling (you know, communism, fascism, extremeism of various kinds) next to impossible. This is why the UK and US have essentially two party systems and media aligned accordingly. We regard coalitition governments as unstable and undesirable and ‘undynamic’.

    Doddering coalition governments like in italy which never get anything done and are always collapsing now look rather appealing. Now its the two party turn left or turn right systems which are entirely paralysed, and the economies run by faceless civil servants and engineers which look to have the upper hand.

  13. danm says:

    I really am amazed that there’s not rioting in the streets over all of this.
    ————-
    It’s brewing. We have not reached the straw that broke the camel’s back.

    Most people still have faith that things can get fixed. Americans are an optimistic bunch and this is a thorn on their side.

    But with the elite, increasingly smug or sticking out their tongues at the “losers” and telling them they are doing god’s work, the mood is starting to change.

    Having 2 kids, I know what taunting leads to.

  14. call me ahab says:

    while i see your point regarding misdirected anger towards health care- in that the public is done in with all the machinations by the federal government to “save” the banking system- and enrich the bankers (risk free no less) – and possibly can no longer stand the thought of the the government doing anything else until all is “put right” with the banking debacle- however-

    re health insurance- and i know this is not your bag BR- but a la John Kerry- i was for it – but now i am against it – because there are provisions to penalize individual Americans who for whatever reason fail to get or sign up for health care- with fines or jail time- good luck with that- especially all free spirits who do not buy into the American system of anything- big government at its finest- i find that unconscionable- Big Brother telling me what to do- and i say- fuck them- who the hell are they to tell me what i have to do for my own self- even IF it is in my best interests-

    and the timing or this Health Care push could not have been worse- let’s get our shit together first- shrink the empire- stop the wars- break up the banks- create real finance reform- remove the greed- get our financial house in order-

    then- like adults- discuss health care

  15. danm says:

    And overturning the entire system at a time like this is just one more reason why Europeans live in tiny houses, their kids can’t afford to live on their own, and their streets stink of urine.
    ——–
    You sure seem to be describing cities in the US and not the ones I visited in Europe.

  16. danm says:

    and the timing or this Health Care push could not have been worse- let’s get our shit together first- shrink the empire- stop the wars- break up the banks- create real finance reform- remove the greed- get our financial house in order-

    then- like adults- discuss health care
    ————-
    LOL!

    Your whole system is upside down. Where do you start?

  17. Wes Schott says:

    @danm, ahab –

    …i’m not sure we can get there from here…

  18. call me ahab says:

    upside down how?

    simply put- let’s stop the $$$$ bleeding before we embark on new trillion dollar programs- especially one’s that jail people that are uninsured

  19. SINGER says:

    All this money MAY fuel excessive speculation… This is the understatement of the eon, and shows how stupid the government thinks people are…

  20. call me ahab says:

    re cities w/ urine in the streets- that is any big city in the World- except for maybe Singapore- when tourist season is on

  21. Moss says:

    ‘pass a constitutional amendment making political campaigns publicly funded’.

    ‘Lobbiests have eclipsed the power of voters’

    I believe these are the two most coercive aspects of our current ‘democracy’ and are at the root of most distortions. Coupled with the Fed being the guardian of the banking hegemony and we have the fully functioning dysfunction.

    Must shrink lobby industry and eliminate campaign funding loophole. Lobbyists should have same access to any legislator that a normal citizen has. Any funds given by a PAC or other entity should have a significant excise tax imposed. Outlaw all those political hacks (527 entities) such as Swift Boat Veterans for Truth.

  22. number2son says:

    Half of them just do not want to buy it for heaven’s sake.

    Your street may not smell of urine, but comments like this stink of horse shit.

  23. hue says:

    thanks for nutting, Danny! a Caddyshack line lol …

    i’m pretty sure Europeans are so perplexed too about why Americans hate gov’t so much. the people who need free health care the most, the wittle class, will be the ones supporting the filibustering of it. don’t you think they shouldn’t be allowed to symbolically filibuster, but instead must get up and talk endlessly like the old days, read from the yellow pages, etc. ….

    every industralized nation has it, but we’re different. we’re not even Japan with all of this queasing.

    yup, Uncle Sams gives trillions to the bank, they gladly accept it. he tries to give free health care to the mass, and the masses cry s o c i a l ism. capitalism for Main Street, s o c i a l i sm for Wall Street.

    on your deathbed, you shall receive total consciousness. so i have that going for me, that’s nice, i think.

  24. danb says:

    In theory, it is decidedly not communism because the class divisions are clear. I think the best description is Corporatism, the govt. serves the interests of business elites, not the public.

    The fundamental problem is one of the paradigm, or cultural epistemology, through which we make sense of what is going on. We can stipulate to regulatory capture, greed, making debts a public burden and profits a private right (to crow about: “Doing God’s work”). Since banking was invented finance’s internal dynamic has been to become that vampire squid. The issue now, I suggest, is that we no longer have the net energy inputs into this system to keep it going or repair the damage. But if the dominant paradigm/episteme assumes abundant energy inputs, the foundation of our dilemma remain unrecognized. I’m referring, of course, to peak oil. Now whistleblowers (at the IEA) are beginning to come forward -as are counter propagandists like George Will- to inform us of the oil situation. The hidden equation is something like this: net energy inputs are at a plateau, possibly in decline = no possibility of a return to a growth economy. All the corruption, greed, cronyism, waste is based upon the belief that it’s really okay since the economy will expand forever.

  25. flipspiceland says:

    Once you realize that Central Government is the enemy of the people, it all makes perfect sense:

    http://www.youtube.com/watch?v=uP-9WzAh26Y

  26. call me ahab says:

    ” it’s really okay since the economy will expand forever.”

    no doubt- that whole idea needs to be put to rest

    in that vein- to all- please consider the following this Friday-

    https://www.adbusters.org/blogs/adbusters/buy-nothing-day.html

  27. scepticus says:

    “no doubt- that whole idea needs to be put to rest”

    Then so does the concept of lending money at any significant rate of interest.

  28. bsneath says:

    BRSays: Let me be brutally frank: With George W. Bush AWOL during the crisis in 2008, it was Bernanke and Paulson who stepped into the void. But make no mistake about it — the chief architect of the massive bailouts was none other than former Goldman Sachs CEO and then Treasury Secretary Hank Paulson.

    Yes. My affiliation as a Republican ended during this episode of absolute ineptitude where the economy was crashing, Bush was dumbfounded (quite an appropriate use of the word), and the Republicans in Congress, led by cartoonish characters like Shelby & Boehner were opposing any and every action proposed by anyone to stop the massive hemorrhaging of the economy and financial system.

    Romney understood what was happening and would likely have taken an appropriate no nonsense business approach to coming up with a fix, but he had already sold out his soul to the Republican elite and lost in the primaries to the more populist but economically inept McCain.

  29. call me ahab says:

    Bush’s defining moment in economics-

    “go out and buy something”

    wow- dude had it all figured out- in a nutshell- as insulting and embarrassing as his suggestion was- that is the paradigm we live under- all economic theory- for success- all comes down to those words-

    so if you are having a down day- you know- a little blue- and you want to feel better- and help the economy- well go out and buy something-

    then you are somebody

  30. sparrowsfall says:

    >Meanwhile, the banks are (rationally) hording capital

    Just interesting to note, it’s exactly what they did during The Great Depression:

    http://www.asymptosis.com/banks-who-needs-em.html

  31. KidDynamite says:

    “ya think?!?!?” was my identical reaction to that Fed quote…

  32. wally says:

    “Is this anyway to run a Central Bank? (and I am not calling for the Fed to be dismanttled or hobbled like others are).”

    Perhaps not…but could you at least say: change or die?

  33. radioman says:

    It would probably make complete sense if we remind ourselves that the Fed is NOT a government entity and if we knew who their shareholders were. I don’t have any betting money left, but if I did, I’d bet Goldman Sachs is one of their biggest shareholders and I’d bet there’s a correlation between each bank’s bailout and their holdings.

  34. [...] Barry Ritholtz, “Here’s a candidate for the understatement of the year: The Federal Reserve is concerned that their free-wheeling, money-printing, dollar-destroying, quantitative-easing, zero-percent interest rate policy might be “fueling undue financial-market speculation.”  (Big Picture) [...]

  35. ashpelham2 says:

    I don’t know why there is so much trashing of Bush’s actions during the crisis last year. It shouldn’t come as a surprise to any of the esteemed readers/posters on this blog. Here’s a guy who essentially backed into the office from the general election in 2000. Didn’t win it, but fell into it, like many other offices in his life. MainStreet loved him, especially Alabama, my home state, because he was folksy and simple. My question was “Is that what you want running the country?” And even more amazingly, I voted for him. Why? Because the choices I had against him were Kerry and Gore, who had been in office long enough and did nothing but invent the internet.

    The job demand experience. After 7 years in the captain’s chair, Bush had lost interest in it, knew he was on his way out, and did the perfect impression of a Lame Duck. Didn’t have the skills to contribute to leading us out of crisis. Didn’t have the skills to lead us into war either, in two countries, no less.

    If I found myself in a personal fiscal and physical crisis, with two many issues to handle at once, I would do what most logical people would do. First, I’d take care of the matters I could control. Get my hands around whatever problem that was closest to me, fix that, then move on to the next. Healthcare is being rammed through as YET ANOTHER campaign promise, because this guy wants to be in office again in 2012. I don’t know if the American people have the solidarity to vote an incumbent out in that office. It’ll have been 20 years since we last did it when the next election rolls around.

    NO to a healthcare decision of ANY kind, until I have a resolution on how to get our troops out of Afghanistan. Congress and the president should be working on that night and day, not silly campaign promises. OBTW, I think there might have been some promises about Iraq and Afghanistan made during the celebrated campaign.

  36. Lugnut says:

    Not to be pendantic, but its Crony Corportism.

    “One fund manager said to me in Berlin, “You give trillions to rogue bankers, yet you have 40 million uninsured American. Why is that?”

    My answer: I haven’t the foggiest idea why.”

    Because there’s less money and power to be gleaned by helping Joe 6 Pack. Actually helping the citizens requires the expenditure of political capital, it does nothing to build it. This is why we have a Health Plan that does nothing to help reduce costs of obtaining medical care, it only provides a subsidy so that people who don’t have expensive insurance can get it on the backs of the other taxpayers. In essence, it allows providers, insurance carriers, and other interests to get a slightly larger piece of the public pie.

    The reason Europeans are confused are that they don’t see it for the shell game that it really is, as other Americans are starting to realize. Show me a bill that has real tort reform legislation in it, ways to have big pharma reduce their prices to be more on par with what they charge other countries, ways to actually reduce the cost of insurance, not just make it more accessible for poor folks, ways to allow hospitals to not have to cover every indigent and illegal immigrant, and overcharge the payers into the system, and make them disclose up front procedure cost, then maybe you’ll see a more ‘rational’ response from Americans on the Healthcare debate.

  37. tt says:

    there is nothing communist or socialist. it is pure corporate fascism. mussolinis evil cocktail was the merging and marriage of businessmen(bankers), with military for profit, with unions with the government.

    barry you are dead on correct about the outrage over healthcare being really about the bailouts. but your political analysis needs a bit more refinement. using the word fascism confuses people because they equate it with genocide. mussolini himself defined it as socialism turned on it’s head. there is confusion whether he called it corporatism or not, but it is.

    br, you have a wonderful blog. keep up the the good work.

  38. bmoseley says:

    what about the harm done to retired peoples income from the low/no interest rates. obviously my short-term investments are earning next to nothing. i’m being forced to accept more risk to earn income on my savings. this is an is ignored subject

  39. davver1 says:

    As long as the Fed has all the power it will be impossible to control. That’s what power does. If you are unwilling to hamstring the powers of the Fed, then you are unwilling to keep it under control. Giving a non-elected agent with a long term discretion means accepting the results of their discretion.

  40. Mannwich says:

    This has become a truly brilliant comedy show. No need to watch comedy. We’re living it. And the joke’s on us.

  41. zell says:

    Our economy has been subverted by Financialism. From the Fed. (gspan & Ben- perfect examples of how smart people can be stupid & corrupt) through the executive and legislative branches; to the financiers; tothe street level mortgage brokers and bankers our nation has been looted.
    The looters are still in place and have been sent back into the casino with a new pile of chips. While they play, the nation slowly realizes there is no solution and citizens become increasingly angry and suspicious of anything that is proposed.
    There is no way out that is publicly acceptible!

  42. hue says:

    “what about the harm done to retired peoples income”

    it’s call the transfer of wealth, danm has been posting about this here. Mr. Practical has been writing about it for years at Minyanville. when Greenspan did it in back 2004, it spurs the housing bubble and inflated risk assets that people moved their savings into, only to see their risk assets get wiped out starting in 2007. cash is still king, or rook. at least cash may be deflating slower then risk assets.

  43. Mannwich says:

    Great point, Wes. This is all about credibility and our gov’t “leaders” (and corporate, Wall Street “leaders”) have none anymore. Not many trust them to do anything right anymore, even formerly “progressive” or “liberal” types. The corruption is just too obvious. Again, no trust or confidence, and nothing positive can get done. Nada.

  44. torrie-amos says:

    Most things go back, 50-60 years. After WW-II, the rest of the world said to government, you take care of health care we will rebuild businesses, and they did. We were fine and ramped up mfg of everything. In 65 when medicare was passed, as with everything now that you had a government back stop, ie, a consistent money stream, big smart money came running, also with employment good it was easy to give folks cheap, very cheap health care, and so our existing system was born. Over time you went from non-profit hospitals, to private profit ones, and they dominated the industry because they provided same service lower costs, until they took out the non-profits and now for the last 15 years you raise them prices all the time. Like most things, it’s not intentional it is just the evolution, health care providers have money, customers, lobbyitsts, connections etc. They don’t want customers who can’t pay and are always sick.

  45. DeDude says:

    Concerned that it might???

    Do they have any data to support the idea that it is fuelling anything BUT “undue financial-market speculation”? They have allowed the speculators from the investment banks, that almost destroyed our financial system, to become FDIC insurred real bankers with full access to free cash. Without severe restrictions on what FDIC insurred “free money from the fed” banking institutions can do with that money, how could anybody expect it to be used productively? If you allow the bankster the choice between “free money, quick profit, fat bonuses” and “hard work, small delayed profit, small bonuses”, does anybody have any doubt what they will chose? Our federal reserve bank is pumping money straight into speculative bubbles in commodities via conduits called banks; and that speculation is directly blocking our economy from recovery by sucking money out of the consumers pockets. I can see that with half an eye open, don’t tell me that the geniuses at the fed can not.

  46. Pat G. says:

    Great post. Tell the Europeans that the U.S. is FUBAR.

  47. Wes Schott says:

    @Pat G. – sad, but true

  48. hue says:

    last night i happened to watch CBNC with the sound on, and Simon Hobbs was guest hosting Kudlow. they had Inhofe on to talk about the global warming/East Anglia emails. Hobbs didn’t agree that the emails discredited all of the research (i’m not making a pro or con argument here). and Inhofe, frustrated, said something along the line, “I don’t know where you are coming from. I know where Kudlow would be coming from.” it was hilarious. Inhofe didn’t realize he wasn’t getting Kudlow on Kudlow.

  49. Pat G. says:

    @ Wes – The good news is that the revolt which is quickly approaching will change things for the better.
    I hope.

  50. [...] Understatement of the year? Fed’s concerned near-zero interest rate policy may cause “excessive [...]

  51. red_pill says:

    I don’t think a revolt will come as we are incapable of outrage as a society. we’ve been told that only those crazy Europeans do that. the erosion in our purchasing power is being done gradually (well, maybe not so gradually these days) enough that people aren’t aware of it. As long as we get some scraps thrown to us and a little bread and circus with it, we are happy with our mundane lives. we like to think we are rebellious as a society because we like to break with socially acceptable behavior: South Park, Family Guy type humor, a disdain for nobility, etc. In reality, what we have done is substitute the old type of nobility (based on birth or class) for a new one (based on wealth, political power) that controls how this country operates (and most other countries as well). The sign something has changed will come from the streets.

  52. S Brennan says:

    Barry,

    My oposition to the bill is based on the fact that it won’t improve the current situtition, but rather it will enshrine the worst aspects of the worst medical system in the world today.

    “…in Europe I encountered repeatedly was the sheer perplexity at why people are protesting health care coverage for all. One fund manager said to me in Berlin, “You give trillions to rogue bankers, yet you have 40 million uninsured American. Why is that?”

    In every area that he has focused this administration, Obama has created future disaster.

    Obama is Bush’s third term…we’ve seen this movie before.

  53. some_guy_in_a_cube says:

    Until you understand who owns the Fed, you will continue to be mystified by events surrounding it. Once you understand, their actions make complete sense.

  54. Zenster says:

    Although I’m a regular reader, I’m an infrequent commenter. Today I have two. First get the December 10, 2009 Rolling Stone, issue 1093. In a powerful about face the Editor’s Notes are entitled “Doubting Obama” which sets the stage for Matt Taibbi’s article “Obama’s Big Sellout.” A portion of the following brief quote may come to rival Tabbi’s “…giant vampire squid wrapped arounf the face of humanity” in the number of times it is quoted.

    “Obama should start on the road back to sanity by making a long-overdue move: firing Geithner. Not only are the mop-headed weenie of a Treasury secretary’s fingerprints on virtually all the gross giveaways in the new reform legislation, he’s a living symbol of all the Rubinite gangrene crawling up the leg of this administration.”

    My second comment is to support the comments that recognized the extent to which we are stuck in thick corruption until the politicians can no longer be financed by lobbyists or special interests. THE COUNTRY NEEDS PUBLIC FINANCING OF NATIONAL CAMPAIGNS ASAP.

  55. DiggidyDan says:

    yeah, i read this the other day and posted it late last night under the O RLY? column. I don’t know whether to be glad or insulted that they are finally owning up to the obvious to the general public. Luckily, i’m friends with captain obvious and bought into his ideas that there will be bifurcated reflation back in March/April. If you can’t beat em, join em.

  56. Zenster says:

    Dylan had an interview with Taibbi on the article this AM. http://vodpod.com/watch/2576091-video-obamas-big-sellout

  57. philipat says:

    By not only keeping rates so low, but also broadcasting it, the Fed is really in the Rosenberg/Roubini camp that the economy is truly and right royally fu**ed. But they perhaps feel that putting it like that might not be very diplomatic?

  58. steve says:

    Could someone please tell me, or direct me to a site to explain why interest rates are low. If what Alan Greenspan did, keeping interest low for to long an put the USA in the shiter What in hell will this do. I understand that it creates demand abroad (makes things cheaper there, employing people here) makes housing cheaper(cheaper house payment) a higher stock market (if the dollar is worth zero, what stocks worth) but at what cost?

    Why is there not more people in jail, for hell a least a bank robber use’s a gun.These people make Jesse James look bad.

    ~~~

    BR: Rates are low because the Fed doesn’t want to pay the price for their prior excesses.

    Hair of the dog that bit ya . . .