Simon Jonson has suggested that (ultra liberal inflationist and debt multiplier) Paul Krugman be made Fed Chairman – instead of the bankster Bernanke.  Bernanke definitely needs to go …but to replace him with Krugman?  Simon Johnson has gone nuts and his sidekick Kwak has such a liberal political bias that it gets in the way of economic common sense.  Even Krugman says it’s a crazy idea. The guy just fell several notches in credibility advocating that sort of dribble…

Where there is smoke- there’s fire. Where there is obfuscation – there is something to hide.  Bloomberg’s effort to make the FED disclose firms benefiting from the bailouts is being dragged out by the guilty FED and its chief, Ben Bernanke.   This is why we need to pass Paul’s Audit the FED bill post haste.  We need to know what’s going on with the FED.

Bernanke and Geithner both argue that the FED should be free from congressional audit review.  While this “freedom” is in effect, the FED is truly free to do whatever its owners, the banks, tell it to do.  Minyanville has a great piece that argues that “the Federal Reserve has been responsible for every financial crisis in the United States since 1913″:

“The facts prove beyond a shadow of a doubt that the Federal Reserve has failed in every one of its mandates: Inflation has destroyed the value of the dollar. Interest rates and employment have been violently erratic. The Fed has been manipulated by politicians, showing a complete lack of independence. And only two of the fourteen Chairmen have been truly independent and competent — Paul Volcker and William McChesney Martin. The incompetence and arrogance of the other Chairmen have brought the country to its knees.

The final chapter is about to be written.

Our fiat currency system has proved to be a wretched failure. Within the next five years, a final crisis will bring an end to this diabolical experiment in hubris. Man is not smarter than the free markets. The US dollar is a piece of paper. It only has value because people have trust that the government issuing the paper is financially stable with rational fiscal policies.

This doesn’t describe the United States of today. When the next crisis causes the dollar to collapse and uncontrollable inflation to result, abolition of the Federal Reserve will become feasible. Average Americans have been victims of the boom and bust caused by the Federal Reserve policies. The sole beneficiaries have been bankers, politicians, the military industrial complex, and the super-rich elite.

Geithner is interviewed below by and WSJ (ht zerohedge). If you can stomach listening to this guy, you can hear our banker-owned treasury secretary assert that auditing the FED would be “problematic for the country”.  It’s not problematic for the country – it’s problematic for the FED and its co-conspirators…   Geithner offers this argument for FED independence as if Bernanke and his co-conspirators are benevolent gods who smile down on America with only good intentions, infallible actions and limitless love for their ignorant, dependent people. What a crock and what a bunch of crooks!

Mish reminds us that In his public meetings to defend his actions in late July, Ben Bernanke said:

“It takes GDP growth of about 2.5 percent to keep the jobless rate constant. But the Fed expects growth of only about 1 percent in the last six months of the year. So that’s not enough to bring down the unemployment rate.”

As Mish also points out, if we don’t get 2.5%, then unemployment will not only NOT come down…it WILL CONTINUE TO RISE.

Pray tell what happens if GDP can’t exceed 2.5% for a couple of years? What about a decade (or on and off for a decade)?  If you have come to the conclusion that we are going to have structurally high unemployment for a decade, you have come to the right conclusion. Ask yourself: Is that what the stock market is priced for?

The Federal Reserve itself has said that they expect unemployment to remain high for as long as 10 years.  Those unemployed consumers aren’t gonna be able to increase their consumption.  It will have to be the bank employees who get all the bonuses who lead us out of recession.  Are there enough of them?

Click the button below to hear Dr. Marc Faber tell the truth about Bernanke and Geithner (from Kingworld News):

Picture 24


See Clusterstock post here . Something tells us the Bernanke, Paulson, Ken Lewis conspiracy is just the tip of the iceberg.  We’ll be needing current Treasury players under oath too soon.

“Hank Paulson has recanted on what he  told Andrew Cuomo, which was that Ben Bernanke asked him to threaten to oust Ken Lewis and the Bank of America board if Lewis decided not to go forward with the Merrill deal.”

and here:

“So far, all we have is the Bank of America (BAC) CEO’s story, but if Attorney General Andrew Cuomo is actually serious about figuring out what happened, then he has to get both Ben Bernanke and Hank Paulson under oath. And if there are serious disagreements between what they say and what Lewis is saying, then someone’s committing perjury.”

As Bill Black said:

“This whole bank scandal makes Teapot Dome [of the 1920s] look like some kid’s doll set. Unless the current administration changes course pretty drastically, the scandal will destroy Barack Obama’s presidency.”

Well, its official, we lost $28% on commercial loans and 38% on residential loans…about $4.5B, so far. Bernanke knowingly sold us a bill of goods…with no due diligence and violated the FED’s charter to boot.

Ben Bernanke on Tuesday again warned that without improvement in the banking sector there can be no recovery.  Martin Wolfe in FT today, although arguing that the US has not yet become the new Russia, tends to agree with Simon Johnson that the bank oligarchy in the US must be broken up in order for the banking sector to improve and the economy to recover (we added the emphasis).

“[Prof. Johnson] argues that the refusal of powerful institutions to admit losses – aided and abetted by a government in thrall to the “money-changers” – may make it impossible to escape from the crisis. Moreover, since the US enjoys the privilege of being able to borrow in its own currency it is far easier for it than for mere emerging economies to paper over cracks, turning crisis into long-term economic malaise. So we have witnessed a series of improvisations or “deals” whose underlying aim is to rescue as much of the financial system as possible in as generous a way as policymakers think they can get away with.

I agree with the critique of the policies adopted so far. In the debate on the Financial Times’s economists’ forum on Treasury secretary Tim Geithner’s “public/private investment partnership”, the critics are right: if it works, it is because it is a non-transparent way of transferring taxpayer wealth to banks. But it is unlikely to fill the capital hole that the markets are, at present, ignoring, as Michael Pomerleano argues. Nor am I persuaded that the “stress tests” of bank capital under way will lead to action that fills the capital hole…

Yet decisive restructuring is indeed necessary. This is not because returning the economy to the debt-fuelled growth of recent years is either feasible or desirable. But two things must be achieved: first, the core financial institutions must become credibly solvent; and, second, no profit-seeking private institution can remain too big to fail. That is not capitalism, but socialism. That is one of the points on which the right and the left agree. They are right. Bankruptcy – and so losses for unsecured creditors – must be a part of any durable solution. Without that change, the resolution of this crisis can only be the harbinger of the next.”

We agree. But will the administration and congress forego the political contribution flow from the big banks to accomplish this necessity? It does not now seem likely. The socialism of too big to fail seems to be preferred by the powers that be – on both principle and political expediency.

From FP Comment:

“One test of whether we are witnessing the end of America is how many more times Americans put up with congressional show trials of individual business people and their employees, slandering and vilifying them for their actions and motives. And for how long will they tolerate a President who berates business and corporations as dens of crime and malfeasance?  If the majority of Americans come to accept the caricatures of business as true, then America is closer to the end of its life as a global leader, as a champion of markets and individualism.”

“…the Fed will have to be prepared to absorb all the excess money it has poured into the U.S. economy. It will be a technical and political challenge unlike any central bank has ever undertaken. The future of America is at stake.”

We at think the odds of successful removal of those reserves once loaned out is a very long shot indeed.

Mike Whitney at Market Oracle comments on a WSJ article describing Bernanke and Gethner’s 2 trillion dollar TALF and associated private/public partnership program:

“The Fed’s culpability in this boondoggle is undeniable. Bernanke and his wily friend at Treasury have given their full support to a plan that does nothing but move trillions of dollars of toxic waste from one balance sheet to another while foisting the liability onto the American taxpayer. And don’t be misled by the term “trust” in the Journal’s report. In this instance, “trust” refers to an Enron-type, off-balance sheets Structured Investment Vehicle (SIV) which is designed to keep investors in the dark about the real condition of the financial institutions that run them. SIV’s are the banks sausage-making units which hold hundreds of billions of dollars of undercapitalized complex securities, like mortgage-backed securities (MBS) and collateralized debt obligations (CDO). These are the same debt-instruments which greased the skids for the current downward death-spiral.”

This program is not going to solve the banking crisis and it may very well make it worse…

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