Federal Reserve Board and the Neverending Crisis
Your weekend home work assignment is Chris Whalen’s invective, I am Superman: The Federal Reserve Board and the Neverending Crisis:
This article asserts that, in dealing with the 2007-2009 financial crisis, the Federal Reserve Bank (Fed) has placed its role as monetary agency and de facto steward of the market for U.S. Treasury debt ahead of its statutory responsibility for ensuring the soundness of the private banks. This is not to say that the Fed supplies whatever credit the government wants — at least not yet — but in terms of both the provision of credit to the private financial system and the price of this credit, the growing fiscal imbalances of the U.S. government seem to be playing an increasing role in Fed policy decisions. This paper explores some of the issues involved in recent Fed policy decisions and draws some preliminary conclusions as to the conflicts between the Fed’s role as central bank and also as prudential supervisor.
Its must reading . . .
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August 29th, 2010 at 9:34 am
who runs bartertown …
the artists who shape dreams and perspectives
the financial guys who grab those ideas and put cash in play
the engineers who design the structures for the financiers
the laborers who build the structures
the masses who buy the structures that pay back the financiers
the thieves who get structures for dimes on the dollar
the judiciary who protect the structures from thieves and dims
the army who protect the big picture directed by
the artists who shape dreams and perspectives
The Neverending Story – sorta @5min Mountainman says “they look like good strong hands”
http://www.youtube.com/watch?v=kyng-irgmFE
August 29th, 2010 at 10:05 am
Looks like we have a new name to add to the Periodic Table: Patrick M. Parkinson.
August 29th, 2010 at 10:51 am
great stuff that’ll never make it to the headlines
August 29th, 2010 at 11:13 am
It’s a fine piece. In the discussion of Fed stuardship, I would have included some discussion of Arthur Burns, whose legacy of sychophany was passed through to us via his mentee, Alan Greenspan. Indeed, without Burns, it’s unlikely that Uncle Alan would ever have made it to the position of Chairman. As Burns was to Nixon, so was Greenspan to Bush.
I would also note, in passing, that Richard Shelby has opposed Obama’s nominees to the FOMC, saying that he felt that Peter Diamond was unqualified for the position! Mind you, this was the same Shelby who felt that Kevin Warsh, a Bush-hack extraordanaire, was emminently qualified.
August 29th, 2010 at 12:49 pm
What I mostly take out of this, is that the Fed like every other government institution is now owned by on oligarchy of financial interests and has little capacity left to actually Regulate anything. “Financial Reform” has done little if anything to stop the next financial crisis from occuring which if this author is correct will occur with greater frequency until this regime changes.
August 29th, 2010 at 5:37 pm
I haven’t read it and I’m not going to. Nothing Mr Whalen says seems to matter. I thought evidence of massive corruption at AIG, published by Whalen and others, in 2009 would be enough to cause the sort of revulsion that could bring down an entire financial system, but no, it wasn’t even enough to cause a slight wobble. Clearly the role of the Fed is to protect the big banks and juice the market. Chairman Bernanki was appointed because he has repeated expressed the opinion that it was a failure to protect banks during the great depression that caused it to be so deep and protracted. He has clearly and repeatedly expressed his determination to prevent deflation by whatever means are required. Why would the banking industry want anyone else? To hell with depositors. Who cares about their money. And to hell with correct capital allocation why worry about that that when you have the Benny and the Feds? And in actual fact to hell with the unemployed plebs on the street. When it comes to the crunch what really matters are the big banks. Am I right Mr B?
August 29th, 2010 at 7:21 pm
Thanks Barry!
And hey Simon, “Foxtrot-Oscar. ” Chairman Ben and the Big Banks you love so much are not driving the bus. And even superman can’t protect the banks from the effects of no duration. Like to rain for the grass this summer. Toasty.
As part of the homework Barry, I’d like the class to ponder the following vis-a-vis ZIRP:
NIM = duration
For further discussion:
http://www.zerohedge.com/article/bernanke-fed-drives-deflation-zero-rate-policy
Best,
Chris
August 29th, 2010 at 7:21 pm
Thanks Barry!
And hey Simon, “Foxtrot-Oscar. ” Chairman Ben and the Big Banks you love so much are not driving the bus. And even superman can’t protect the banks from the effects of no duration. Like to rain for the grass this summer. Toasty.
As part of the homework Barry, I’d like the class to ponder the following vis-a-vis ZIRP:
NIM ~= duration
For further discussion:
http://www.zerohedge.com/article/bernanke-fed-drives-deflation-zero-rate-policy
Best,
Chris
August 29th, 2010 at 7:24 pm
Oh, and we get into the Arthur Burns stuff a lot more in my book. Nouriel Roubini wrote a great intro.
http://www.amazon.com/Inflated-Money-Built-American-Dream/dp/0470875143
I am going to feature some excerpts on TBP.
Chris
August 30th, 2010 at 2:16 am
Great discussion/insight Chris, thanks. Just read the zero hedge link, brilliant…I believe this is destined to end badly no mater what. We can put up a fight {a la Bernanke/fed} and go kicking and screaming, or we can face the fact we are indeed in if not heading into depression. David Rosenberg has been spot on also. Chris,thankx again. Always look for you on “Fast”, is Terranova ever bearish/cautious? Wave “C” and down? I’ve been bearish and wrong,
August 30th, 2010 at 2:17 am
Great discussion/insight Chris, thanks. Just read the zero hedge link, brilliant…I believe this is destined to end badly no mater what. We can put up a fight {a la Bernanke/fed} and go kicking and screaming, or we can face the fact we are indeed in if not heading into depression. David Rosenberg has been spot on also. Chris,thankx again. Always look for you on “Fast”, is Terranova ever bearish/cautious? Wave “C” and down? I’ve been bearish and wrong, but the trend is down. My year end S&P target is 589.85 Be careful…
Jerry
August 30th, 2010 at 3:18 pm
So many devious characters in the world.
August 30th, 2010 at 7:43 pm
What’s amazing to me is how the political class has completely left the Fed to its own devices. Not a peep on what the Fed should be doing to boost the economy or placing of blame on them for not acting more diligently. I can only conclude the Democrats are clueless and the Republicans either clueless or conniving. They are so obsessed with turf battles and blaming each other, political posturing and intransigence, no one even gives a damn about the country anymore. A pox on both their houses.