Money Game Wed 2010-09-01 10:53 EDT

Why Ben Bernanke's Next Round Of Quantitative Easing Will Be Another Huge Flop

There is perhaps, no greater misunderstanding in the investment world today than the topic of quantitative easing [QE]. After all, it sounds so fancy, strange and complex. But in reality, it is quite a simple operation...The Fed simply electronically swaps an asset with the private sector. In most cases it swaps deposits with an interest bearing asset...The theory behind QE is that the Fed can reduce interest rates via asset purchases (which supposedly creates demand for debt) while also strengthening the bank balance sheet (which entices them to lend). Unfortunately, we've lived thru this scenario before and history shows us that neither is actually true. Banks are never reserve constrained and a private sector that is deeply indebted will not likely be enticed to borrow regardless of the rate of interest...The most glaring example of failed QE is in Japan in 2001. Richard Koo refers to this event as the ``greatest monetary non-event''...Since Ben Bernanke initiated his great monetarist gaffe in 2008 there has been almost no sign of a sustainable private sector recovery. Mr. Bernanke's new form of trickle down economics has surely fixed the banking sector (or at least bought some time), but the recovery ended there. ..The hyperventilating hyperinflationists and those investors calling for inevitable US default are now clinging to this QE story as their inflation or default thesis crumbles before their very eyes...With the government merely swapping assets they are not actually ``printing'' any new money. In fact, the government is now essentially stealing interest bearing assets from the private sector and replacing them with deposits...now that the banks are flush with excess reserves this policy response would in fact be deflationary - not inflationary...

Ben Bernanke's; Huge Flop; Money game; Quantitative Easing.

Tue 2010-03-09 18:09 EST

Fed Audit Bitterly Opposed By Treasury

Ryan Grim

The Treasury Department is vigorously opposed to a House-passed measure that would open the Federal Reserve to an audit by the Government Accountability Office (GAO), a senior Treasury official said Monday... "It's interesting that the Fed regards the simple fact that people find out what it does as somehow being unduly restrictive. We are a government of laws, not of men," [said Representative Alan Grayson]. "It's certainly no surprise that banking insiders at Treasury don't want transparency at the Fed," said Jesse Benton, a spokesman for Rep. Paul. "They are wrapped up in the central bank shenanagins too, and do not want their wheelings and dealings out in the open any more than Alan Greenspan or Ben Bernanke,"

Fed Audit Bitterly Opposed; Treasury.

Fri 2010-02-12 21:22 EST

The eight days of the financial crisis : The New Yorker

James B. Stewart

...about the events of September 12-September 19, 2008, the week during which the U.S. financial system nearly collapsed. Writer gives a day-by-day account of events, with a focus on the roles played by Henry Paulson, the Secretary of the Treasury, Ben Bernanke, the chairman of the Federal Reserve, and Timothy Geithner, president of the New York Federal Reserve...

day; Financial Crisis; New Yorker.

Sun 2010-01-31 23:06 EST

The Formula for This Market Rally In Simple Terms

The first, most obvious trend is the Manic Mondays trend...for the 43 weeks ended Friday January 8, 2010, stocks have rallied on 30 out of the 43 Mondays...these Monday ramp jobs have contributed the bulk of the market rally's gains since March 2009...The second trend that has dominated this market since the March 2009 bottom is the Bernanke Options Expiration juicing. In simple terms Ben Bernanke has shown a REAL preference for pumping money into the financial system on the exact week when options are expiring...The final trend that has dominated this market is cousin to the Manic Monday Ramp Job. It is the Night Session Ramp Job...from September 13, 2009 until year-end, ALL of the stock market's gains occurred in the over-night futures session from 4:00 ET to 9:30 AM ET...So there you have it, the three most dominant trends of this market rally. None of them are pretty. None of them involve fundamentals. And ALL of them are directly related to the Fed's liquidity pump.

Formula; markets Rally; simple terms.

Ambrose Evans-Pritchard - Finance and business comments Thu 2010-01-07 19:00 EST

Global bear rally of 2009 will end as Japan's hyperinflation rips economy to pieces

The contraction of M3 money in the US and Europe over the last six months will slowly puncture economic recovery as 2010 unfolds, with the time-honoured lag of a year or so. Ben Bernanke will be caught off guard, just as he was in mid-2008 when the Fed drove straight through a red warning light with talk of imminent rate rises -- the final error that triggered the implosion of Lehman, AIG, and the Western banking system. As the great bear rally of 2009 runs into the greater Chinese Wall of excess global capacity, it will become clear that we are in the grip of a 21st Century Depression -- more akin to Japan's Lost Decade than the 1840s or 1930s, but nothing like the normal cycles of the post-War era. The surplus regions (China, Japan, Germania, Gulf ) have not increased demand enough to compensate for belt-tightening in the deficit bloc (Anglo-sphere, Club Med, East Europe), and fiscal adrenalin is already fading in Europe. The vast East-West imbalances that caused the credit crisis are no better a year later, and perhaps worse. Household debt as a share of GDP sits near record levels in two-fifths of the world economy. Our long purge has barely begun.

2009; Ambrose Evans Pritchard; Business Comment; ending; finance; Global Bear Rally; Japan's hyperinflation rips economy; pieces.

Wed 2009-12-16 12:30 EST

James Grant Mourns the Loss of the Gold Standard - WSJ.com

...There's no business value in financial safety when the government bails out the unsafe. And by bailing out a scandalously large number of unsafe institutions, the government necessarily puts the dollar at risk...Collateralize the dollar--make it exchangeable into something of genuine value. Get the Fed out of the price-fixing business. Replace Ben Bernanke with a latter-day Thomson Hankey. Find--cultivate--battalions of latter-day Hellmans and set them to running free-market banks. There's one more thing: Return to the statute books Section 19 of the 1792 Coinage Act...

com; gold standard; James Grant mourns; losses; WSJ.

The IRA Analyst Sun 2009-12-13 09:11 EST

Three Strikes on Ben Bernanke: AIG, Goldman Sachs and BAC/TARP

The Institutional Risk Analyst

To us, the confirmation hearings last week before the Senate Banking Committee only reaffirm in our minds that Ben Bernanke does not deserve a second term as Chairman of the Board of Governors of the Federal Reserve System.

AIG; BAC/TARP; Ben Bernanke; Goldman Sachs; IRA Analyst; striking.

zero hedge Mon 2009-10-26 09:28 EDT

How The Federal Reserve Bailed Out The World

The Bank of International Settlements [BIS] just released a major paper titled "The US dollar shortage in global banking and the international policy response" which goes on to demonstrate just how it happened that Fed chief Ben Bernanke in essence bailed out the entire developed world, which was facing an unprecedented dollar shortage crisis due to the sudden implosion of FX swap lines and other mechanisms which until that point were critical in maintaining the dollar funding shortfall for virtually every foreign Central Bank...When the financial system almost imploded in the fall of 2008, one of the primary responses by the Federal Reserve was the issuance of an unprecedented amount of FX liquidity lines in the form of swaps to foreign Central Banks. The number went from practically zero to a peak of $582 billion on December 10, 2008. The number of swaps outstanding was almost directly inversely correlated with the value of the dollar...what happened is that short-term sources to sustain the massive dollar funding mismatch disappeared virtually overnight, and CBs were suddenly facing a toxic spiral of selling increasingly more worthless assets merely to satisfy currency funding needs in an environment where all of a sudden nobody was willing to provide FX swap lines...had the Fed not stepped in, the rest of the world...would have simply collapsed as the $6.5 trillion dollar funding gap closed in on itself, causing a indiscriminate selling off of all dollar denominated assets. The implosion of the basis trade would have seemed like a picnic compared to what was about to ensue had the Fed not stepped in to perpetuate the Fiat banking way of life.

Federal Reserve bail; world; Zero Hedge.

Blog entry Tue 2009-10-13 20:30 EDT

Movement To Block Bernanke Gathers Steam

Isaiah J. Poole

The renomination of Ben Bernanke as chairman of the Federal Reserve should not be rubber-stamped by the Senate until Bernanke and the Fed are more transparent and accountable to the public, says a growing coalition of activists roused by Reps. Alan Grayson and Ron Paul, who have asked the Senate to put a hold on Bernanke's nomination...all it takes is for one member of the Senate to object to moving Bernanke's nomination to the floor of the Senate. The tactic of placing a hold on a Senate nomination has been frequently used by Republicans against Obama administration appointees for for less consequential reasons than what is happening with trillions of taxpayer dollars in the name of staving off the next Great Depression. What's unclear is whether a member of Congress will be bold enough to stand up to Wall Street and to what William Greider calls "the temple."

Block Bernanke Gathers Steam; blog entry; movement.

zero hedge Fri 2009-08-28 17:03 EDT

One Man's Critique Of A Loose Monetary Policy

It seems these days everyone is happy to blame Greenspan for creating the biggest housing/credit bubble in American history, yet few have the same problem when it comes to voicing their support of Ben Bernanke, who is repeating exactly the same monetary steps (mistakes) as performed by his predecessor. Proponents will say that this time the justification was to prevent a full financial systemic collapse, and the trillions of excess liquidity (an approach that even Greenspan did not embark on full bore) that drowned the capital markets were just what the doctor ordered. Whether that is true or not will be debated by historians who analyze the 2009 as the year when China, the US and the Eurozone let loose the most unprecedented monetary loosening in the history of...

loose monetary policy; Man's Critique; Zero Hedge.

Zero Hedge Wed 2009-08-26 15:52 EDT

The Goldman VaR Exemption Question Escalates

Tyler Durden

It seems only yesterday that Zero Hedge had some questions in regard to Goldman's VaR Fed exemption. No response was received from 85 Broad. Today it appears several Congressmen, lead by Alan Grayson, are willing to drive a sharp stick pretty deep into the hornets' nest, by sending a letter directly to Wall Street Don Ben Bernanke, demanding an explanation exactly to the question of Goldman's VaR Exemption. Posted 2009-07-27.

Goldman VaR Exemption Question Escalates; Zero Hedge.

Wed 2009-02-11 00:00 EST

Mish's Global Economic Trend Analysis: Open Letter To Congress On Sharing The Pain

``I call for the resignation of Fed Chairman Ben Bernanke, the abolishment of fractional reserve lending, and the end of the Fed itself''

Congress; Mish's Global Economic Trend Analysis; Open Letter; pain; shares.

Mon 2009-01-19 00:00 EST

The Mess That Greenspan Made: A cat fight at the Fed

Philly Fed President Charles Plosser has broken ranks with Fed Chief Ben Bernanke

cat fight; Fed; Greenspan Made; Mess.

Mon 2009-01-19 00:00 EST

Jesse's Café Américain: The Fed's Game Plan: What Ben Bernanke Is Thinking

Jesse's Café Américain: The Fed's Game Plan: What Ben Bernanke Is Thinking

Ben Bernanke; Fed's Game Plan; Jesse's Café Américain; Think.

Thu 2009-01-15 00:00 EST

The Institutional Risk Analyst: On the Prime Solution: Interview with Eric Hovde

The Prime Solution: Interview with Eric Hovde, by The Institutional Risk Analyst (IRA); ``he manifest statist, anti-market tendencies of Ben Bernanke and Tim Geithner should disqualify both of these men from future roles in the economic rebuilding effort''; FICO demise predicted; ``There isn't going to be any [real estate] development in New York once the current projects are complete. Nothing.''; Bear, AIG should all have been put into bankruptcy; ``the same economic team that lit this fuse and let this fuse go 12 years ago is now about to come back into power...It is stunning to me that we are not seeing a wholesale switch-out of these Goldman Sachs participants or their protégés''

Eric Hovde; Institutional Risk Analyst; interview; Prime Solution.

Tue 2008-10-07 00:00 EDT

The Institutional Risk Analyst: A Workable, Private Bank Assistance Plan or Why President Bush Should Fire Ben Bernanke and Hank Paulson

A Workable, Private Bank Assistance Plan or Why President Bush Should Fire Bernanke and Paulson Right Now, by Institutional Risk Analytics

Fire Ben Bernanke; Hank Paulson; Institutional Risk Analyst; President Bush; Private Bank Assistance Plan; Workable.

Mon 2008-08-04 00:00 EDT

London Banker: What's up with the covered bond push?

"Whenever Henry Paulson at Treasury, Ben Bernanke at the Fed and Shiela Bair at FDIC agree on anything, American taxpayers should check for their wallets...When the troubled bank nonetheless fails, our golden circle creditors get the good collateral in an expedited release from FDIC under its new policy statement. The FDIC is left with all the toxic waste assets and liability for depositor insurance claims, with no prospect of recovery"

covered bond push; London Banker; s.

Thu 2008-04-03 00:00 EDT

Winter (Economic & Market) Watch >> Ben Bernanke, Winker and Risklove Third Class

Winter (Economic & Market) Watch >> Ben Bernanke, Winker and Risklove Third Class; Andrew Jackson "vipers and thieves" quote

Ben Bernanke; classes; economic; Market; Riskloves; watch; winker; winter.

Tue 2008-04-01 00:00 EDT

Institutional Risk Analytics

Novated Bears & the Education of Ben Bernanke, by BSC sacrificed to rescue primary dealer community

Institutional Risk Analytics.