No change at the Fed, or is there?
This has got to be one of those “Bizarro World” days for Fed chief Ben Bernanke, what with the Time Magazine “Person of the Year” award, word of growing distrust among the general population, and, just in the last hour or so, a major twist in his Senate confirmation process where Senator Jeff Merkley (D-OR) said he will vote against Bernanke when the Senate Banking Committee meets tomorrow.
This latest news is significant because Merkley is the first Democrat on the committee to announce his opposition to Bernanke and, while it is all but certain that the group will forward his nomination to the full Senate for a vote in January, a lot can happen over the next month.
In a statement, Merkley’s objections were squarely based on Bernanke’s failure as a regulator, noting, “For too many years, federal regulators turned a blind eye to signs of an impending financial crisis. Dr. Bernanke supported each of these decisions, failing to take the necessary precautionary steps that could have averted or mitigated financial collapse.”
As for monetary policy, what seems to be low on the list of Bernanke news today, the statement that was released following the FOMC meeting a short while ago had a good deal for people to talk about, even though the key phrases of “exceptionally low” short-term rates for an “extended period” were unchanged.
Below are the last two policy statements, side-by-side:
While the improving economy is acknowledged in the first few paragraphs and there are no changes to be seen for the ongoing purchases of mortgage backed securities or GSE debt, they seem to have gone out of their way to make clear that most of the emergency lending facilities will be winding down early next year.
That much should have already been clear to anyone looking at their balance sheet.
It appears as though it is taking markets a little while to digest this news, which, really doesn’t seem to be news at all.
ooo
Tim Iacono is a retired software engineer and writes the financial blog “The Mess That Greenspan Made” which chronicles the many and varied after-effects of the Greenspan term at the Federal Reserve. Tim is also the founder of the investment website “Iacono Research” that provides weekly updates to subscribers on the economy, natural resources, and financial markets.
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December 16th, 2009 at 3:54 pm
Bernanke’s not worryin’ – “the fix is in.”
December 16th, 2009 at 4:03 pm
Obama picked Bernanke for one reason- political cover. He will be confirmed and if shit goes south- all fingers point to Bernanke.
December 16th, 2009 at 4:14 pm
well, maybe half of the fingers. afterall, barry did make the re-selection…
December 16th, 2009 at 4:19 pm
let me clarify-
all of the administration’s fingers point to Bernanke
December 16th, 2009 at 4:20 pm
now we’re using the “right” digits!
December 16th, 2009 at 4:36 pm
CR on FOMC
http://www.calculatedriskblog.com/2009/12/comments-on-fomc-statement-time-cover.html
December 16th, 2009 at 4:41 pm
I’m glad he raised the point, as it really does need mentioning, but I would hope that he would think about the challenges that lie ahead and who the best person is to lead an exit strategy instead of focusing on past failures and/or his own re-election bid. But this is Washington.
December 16th, 2009 at 6:13 pm
Well duh, the Dems should be scared shitless over the 2010 elections. Period.
Thanks to sites like this and the web in general, BS Obama doesn’t fly.
And entirely too much info is publicly available on the web for the elites to ever expect to manage public sentiment with MSM BS.
Les Miserables
December 16th, 2009 at 6:37 pm
For Struggling Man,
Responding to:
“Can you answer me this???
I get vacinated against H1N1, and I am spared getting the H1N1 flu. Down the road, the bug mutates (as it apparently has). Will the the vacination protect me against the mutated version of the bug??”
It’s relative in that partial immunity should provide some protection but how much is unknown – it’s not all or none.
The current vaccine that is in the injectible form does not appear to be very effective against the sub-strain that has the D225G change – it was not developed against it. The testing to make this statement was limited, as far as I know, only one test result showed a lack of sufficient activity (i.e., only one test done that I know of). Maybe further testing has occurred since then. The Flu Mist should provide more protection because the D225G marker was present in the mix of viruses that were used in developing the Flu Mist vaccine.
“Or, second scenario. I don’t get a vacination, and do contract H1N1, and live through it. Will having had H1N1 make me resistant to the new mutated bug??”
That should provide you some degree of protection against a new mutated virus that is similar to the one you already contacted, but again the degree of protection is unknown. The immune response is complicated rather than an all or nothing phenomenon.
Hope that helps and sorry I didn’t check back sooner. My new article is here: http://philsbackupsite.wordpress.com/2009/12/14/evolution-of-the-swine-flu-virus/
Ilene
December 16th, 2009 at 7:28 pm
Is the banking sector behind Bernanke? If so, then he doesn’t have anything to worry about…nothing gets done in Washington anymore without the OK of the highest paying lobbyist.
December 16th, 2009 at 9:52 pm
Chris Whalen’s piece above says it all:
The FED is supposed to be independent of the banks but Bernanke is their bitch.
Congress gives it its power and Bernanke’s firing would be the first step congress needs to redeem their power and responsibility.
I’d rather have congress be subject to the politics of Congress than have a viper like Bernanke and his predecessor than as Bernanke has continued making it subject to the bank accounts of Lord Blankfien, Henry Paulson, Jamie Dimon and Timmay.
December 16th, 2009 at 10:08 pm
What happens to the mortgage backed securities then? I guess someone has to take them back. That explains the stock offerings and gov’t payback. No more insurance for these. It’s time to take the losses.
December 16th, 2009 at 11:53 pm
Two-time Fed chairman Bernanke is an American hero. So is two-time Commander-in-Chief (pending) Obama and his Treasury Sec. Geithner.
They saved American capitalism.
December 17th, 2009 at 7:19 am
There is no such thing Amerian capitalism. The financial ‘system’ in this country has several strata.
There is the everyday retail level of cut throat competition, pure capitalism as it was meant to be: One man, one dollar, one vote. Nothing could be more purely an example of Capitalism than this
There is the distribution network for products which in many industries is now an oligopoly. Try and find a price break on a product controlled by the primary distributors of a product when there is only one distributor.
There is another level for services such as law firms, employment agencies, Architecitural firms, Construction, etc and these too are primarily guided by Price fixing,informal but just as deadly to your pocketbook. Why does it cost the same to do a title search on the same property by the same title guaranty firm? Or even a different one? They fix the price at exorbitant rates when it should cost about fifty cents. The taking 5-10% of an estate for filing a few documents with the state and feds on the probate of a will, is another.
This hybrid economy that we and many other countries have is complex and awash in ignorance by a public that cannot possibly win.
But to call it capitalistic is to misunderstand both the nature of capitalism and its application.
December 17th, 2009 at 8:05 am
[...] First democrat opposes Bernanke nomination – Big Picture [...]
December 18th, 2009 at 4:08 pm
I think the large banks of New York, and lobby contingent in D.C., need to recheck their email filter settings…. apparently they are NOT getting the Memo from the American people:
Insert Ben Bernanke likeness: http://www.youtube.com/watch?v=Ka__dpN5548
They might also want to test their “Forwarding email” feature as well .. insert Tim Geithner likeness, or anyone from the last two Presidential cabinets.
Obama’s Christmas ode to Goldman Sachs…