Rebel Traders – Analysis Without The Hype

Federal Reserve Chairman Ben Bernanke has won a second term today. The Senate voted 70 to 30 to confirm Mr. Bernanke.

Prior to the vote there was a couple hours of debate on the floor.

“Nobody was more important in preventing the collapse of the financial system and rescuing the economy from what looked like imminent freefall than Chairman Bernanke,” said Senator Charles Schumer, a Democrat from New York.

My comment: Senator Schumer – You are so far up the backside of the banks I wonder if you can even see the light of day.

Rejecting Bernanke would “exacerbate economic uncertainty in an economy that needs confidence and stability, not volatility,” said Senator Robert Menendez, a Democrat from New Jersey.

My comment: Senator Menendez, from my own state, you say the market needs confidence and stability. So why did when the vote was final to give Bernanke another term did the credit spreads widen up a bit on the sovereign risk of a United States default? That does not sound like stability to me. Oh, by the way Senator Menendez, I’ll remember your vote today when I go to vote in November..

“From monetary policy to regulation, consumer protection, transparency and independence, Chairman Bernanke’s time as Fed chairman has been a failure,” said Senator Jim Bunning, a Republican from Kentucky.

My comment: Right on

To the uneducated or the naive, this whole issue of Ben Bernanke and his confirmation may appear to be a ‘so what’. But let this be a warning, the re-appointment of Ben Bernanke may end up being one of the most disastrous mistakes this administration has made so far. Time will tell if this will be true.

Only in Washington,D.C. can someone who missed all the warning signs (even when people shoved his face into the data he still did not see it) of the coming collapse gets re-appointed. Want to work in Washington? Be a failure at what you do and you are a shoe-in.

Ben Bernanke, the world is watching you. God help us all.

In just one more week Ben Bernanke’s term will expire. The confirmation of Ben to another term will reach fever pitch this week as the voting process gets underway. This morning one more Senator (John McCain) has indicated he will vote against Ben Bernanke’s re-confirmation.

Over the past few days the talk has turned to what would happen if Ben should lose his bid for a second term as the Federal Reserve chairman. Unfortunately, much of this talk is about what would happen in the short term, not long term impact. Some in Washington have stated that failing to appoint Bernanke to a second term would send the wrong message to Wall Street and the markets would react very negatively, and they could not allow that to happen.

Washington, and the Senate specifically, appear to only be concerned with what happens tomorrow, and not what happens months and years from now. I agree, if Ben Bernanke fails to win a second term the stock market most likely will react negatively in the short term. But, this would not be a reaction by the market thinking the economy could get much worse if Ben walks. No, the stock market reaction would be in response to the very real possibility that the transfusion tubes that are now connected between the tax payers and the financial firms would be severed.

As has been written by me, and many others, the rally in the markets witnessed over the past many months has, in part, been nothing more than easy money for Wall Street provided by the tax payers to the tune of nearly $1 Trillion dollars, and a safety net of trillions more again on the backs of the tax payers. Wall Street loves Ben Bernanke, he has enabled them to obtain money, much of it very cheaply through the numerous lending programs and bailouts. But none of this would have ever been necessary had the Federal Reserve been on the ball in the first place. Had the Federal Reserve been doing its job it would have maintained a stable financial system, albeit not as robust as some may have liked. Instead the Federal Reserve ignored the warning signs, contributed greatly to making the problems worse, and after the financial collapse responded in a manner which only puts the financial system at even greater peril instead of dealing with the root issues. But dealing with the root issues would not be popular in Washington because it would mean allowing the financial system to ‘reset’.

I don’t care about the near term impact on Wall Street, I care about what is going to happen 6 months from now, or 2 years from now, and even longer. Sure the markets won’t like it if Ben leaves, But that will only be because Wall Streets free lunch card will be in jeopardy of being torn up and wall street will be forced to earn money by actually earning it, not handed to them.

Ben Bernanke, through his massive and unprecedented quantitative easing has laid the groundwork for the an even larger financial disaster as the programs are merely an extension of what got us in this mess in the first place.

Ben Bernanke has failed to recognize, act upon, or even acknowledge that the Federal Reserve was instrumental in destroying the financial system which led to the stock market crash of 2008 and 2009. When housing prices were skyrocketing he claimed it was fine, even when others were screaming that it would lead to a financial meltdown.

A man who proclaims to be a student of the Great Depression, Ben Bernanke has only enacted policies that, if left intact, places the United States on a road to financial ruin. The United States can not keep borrowing to address the here and now without it having grave consequences down the road.

To claim that Bernanke rescued the financial system from collapse is akin to a firefighter who sets fires and then responds to help put them out. In the real world a person who does something like that goes to jail. But in the Government they are put up for another term. And was Ben really putting out the fires? No, he may have responded to the fire, but his actions only subdued the fire temporarily. And as we say in the fire service, the chances of a re-kindle are very high.

The long term health of our financial system is at stake. One should not be focused on what would happen the day after. Ben should not be re-confirmed no matter what the short term implications are. There would be some who say ‘oh no, the market nose dived because they failed to reappoint Bernanke, are they nuts?” The only nuts would be those who think that continuing the same failed policy of Ben Bernanke is the right thing to do. For me, I’m thinking about the financial health of the United States in the years ahead, and that is reason enough for me to urge the Senate to vote against re-confirming Ben Bernanke.

NO on Ben Bernanke for a second term

OilPrice.com Oil Market – Summary for 01/18/2010 – 01/22/2010

New measures by Chinese authorities to curb bank lending reversed a rally in energy prices early in the week, bringing West Texas Intermediate futures down more than 4% in the second half of the week to below $75 a barrel by Friday.

China continued its efforts to slow down its economy and prevent overheating, and told some banks to stop making certain kinds of loans. The Chinese move on Wednesday hit all commodities across the board, from gold to lead, with the prospect of slower economic growth in the country.

Not even the news that China’s oil imports in December exceeded 5 million barrels of oil a day for the first time could stop the decline.

U.S. data, meanwhile, showed that demand for oil had slipped 1.8% in the four weeks leading to Jan. 15 from the like period a year ago, when the U.S. economy was in the grip of a recession. Crude inventories declined in the week, against expectations, but gasoline inventories rose. Continued milder weather in the Northeast further dampened heating oil prices.

News that utilization of U.S. refinery capacity fell to its lowest levels since the 1980s drove home the point that demand for distillates was lagging. Refinery utilization in the previous week dropped 2.9 percentage points to 78.4% of the 17.6 million barrels per day total capacity, the lowest level in two decades except for periods when hurricanes shut down refinery operations.

The U.S. and China are the world’s top two oil-consuming countries, so the signs of weakening demand in both were bearish for energy prices.

As if all that wasn’t enough, the announcement by the White House on Thursday of tough new measures to limit banks’ proprietary trading threw a double whammy in energy markets. There were concerns that Wall Street banks, among the biggest energy traders, would have to cut back their activities. Plus, the news sent equities into a tailspin, and dragged down commodities prices.

The uncertainty about U.S. bank restructuring reversed the dollar’s climb against the euro, which had also weighed on crude oil prices. After dropping below $1.41, the euro bounced back up above that level at the end of the week.

But continuing concerns about Greece’s debt and new uncertainty about whether Ben Bernanke will be confirmed for a second term as Federal Reserve chairman supported the dollar and were likely to dampen any strong rise for the euro, analysts said.

Originally published at: http://www.oilprice.com/article-crude-oil-prices-fall-victim-to-china-syndrome.html

By Darrell Delamaide for OilPrice.com who have recently launched a Free Market Intelligence Report which focuses on unique Geopolitical and Investment News which enables readers to spot trends and events in the marketplace and reduce investment risk. To find out more visit: http://www.oilprice.com

Breaking…

Senate Democratic leadership has raised concerns that there may not be enough votes to re-confirm Ben Bernanke for another term as Federal Reserve chairman.

ABC News has learned that the Senate Democratic leadership isn’t sure there are enough votes to re-confirm Ben Bernanke for another term as chairman of the Federal Reserve. Bernanke’s term expires on Jan. 31.

The White House did not respond to many requests for comment. […] (ABC News)

Please, let this be true!

Ben Bernanke must NOT be reconfirmed.

Federal Reserve Chairman Ben Bernanke is in the middle of his confirmation process for another term as the head banker of the land. Yesterday it was announced that Time Magazine named Mr. Bernanke their “Person of the Year” for being someone who has made an impact on the past year.

Time Magazine depicts Ben Bernanke as an individual who has helped save the economy, ordered the mass printing of dollars to aid the banks, and was responsible in preventing another Great Depression.

The magazine does briefly mention the past, and how Ben Bernanke missed some of the signals that led to the catastrophe, but the only magazine cover that Ben Bernanke should be on is “Prison Weekly”, as its newest lifetime member to one of their fine prisons around the nation for running the biggest scam in this nations history.

Mr. Bernanke, before becoming the head banker of the land, was a professor at Princeton University where he touted himself as a leading scholar of the Great Depression. With all that knowledge of the past events why is it then that he could not see the developing events that ended up putting this nation into an economic tailspin?

If I were a member of the Senate confirmation panel I would ask Ben Bernanke the following:

Ben, as an expert in all things concerning the Great Depression, how is it that you failed to recognize the numerous warning signs that led to our current financial demise? Additionally, someone who is so knowledgeable in what led up to the Great Depression as yourself, would you not think that you should have been able to see the trouble before anyone else did? Even people who are not professors or scholars of the Great Depression saw this coming. Why is it Ben that you kept telling this Senate panel, and through other briefings in your first term that a housing bubble would not be a problem, why it was you said it would be ‘contained’, why there was no danger of a credit collapse, and why it is that you would not listen to so many on the outside who said you were, and now proven, to have been wrong in your assumptions of the situation?

Mr. Bernanke, you come before this panel seeking confirmation to a second term. Why should we feel any more comfortable with your forecasts and current assumptions of the economy when your forecasts and assumptions were proven to be so terribly wrong in the past?

How is it Mr. Bernanke that individual analysts wrote to us in 2007 and 2008 predicting what would happen and they were right, yet you still failed to recognize the issues? How can people who are not even professors understand the situation as it was about to unfold, but you still missed it?

Mr. Bernanke, you ask us to confirm you to a second term as the Chairman of the Federal Reserve Bank. If we were to grade you on your abilities to foresee problems then you have grossly failed. How then Mr. Bernanke should we grant you a second term? How do we know that your forecast and projections are any better this time? Are you telling us Mr. Bernanke that we should confirm you simply on faith?

Not only did Ben Bernanke get everything wrong in the early stages of the crisis, but he has since embarked on a path of borderline illegal activity under the umbrella of ‘exigent circumstances‘. The American people, and many in Washington wants a full audit of the Federal Reserve. But, Ben Bernanke continues to play the American people as being too naive to understand the facts of what an audit means. He continues to make the American people think that an audit open the door to Congress setting monetary policies. A scare tactic card being played by Ben as he knows the last people on this planet they want to handle money is Congress. But the truth is that an audit is not about getting Congress involved in monetary policy, it is simply wanting to know where the money went, a full accounting.

I for one sure would like to know just where the money really is Ben, who it went to, what the tax payers got in return, what are the assets being held as collateral, and what money was flowed to foreign countries all under that catch all ‘exigent circumstances’. Andwhy on Earth is Goldman Sachs still being granted bank holding company status? I don’t see any Goldman Sachs branch offices in my neighborhood, so why are the taxpayers still on the hook for their ‘easy withdraws’ from the discount window?

Ben Bernanke has failed in serving the people of this nation as the top banker. The only ones who want Ben Bernanke appointed to a second term are the Wall Street firms that he, along with Tim Geithner aid and abetted in what is growing into the largest ponzi scheme ever perpetrated on the American people.

Myself, and many others, reported on the flawed forecasts of Ben Bernanke even before the crisis became what we now know it to be. We sent faxes to Congress warning of the mistakes the head banker was making, warned that the credit crisis would spread, and no one listened. Instead the Government just went along with Ben Bernanke and the Treasury Secretary (Hank Paulson, and now his protege Timmy Geithner).

To the members of the Senate confirmation committee – You now know what so many of us out here in the ‘real world’ warned you about was true. You ignored us and now you see where that got this nation. You ignored the American people when the overwhelming majority asked you not to approve the bailouts and instead continued to rely on the individuals who led the nation into the crisis in the first place.Are you going to ignore the American people again by appointing Ben Bernanke to another term?

I am well aware that these problems started to fester before Ben Bernankes’ taking of the helm. But, like in a baseball game when the pitcher is screwing up you replace him. We replaced the ‘lefty Alan Greenspan’ with the ‘fastball king Ben Bernanke’, and ‘fastball Ben’ has, through his failure to recognize and acknowledge the growing problems has loaded the bases. I say it is time for another change on the mound before he completely throws the game, and this nation.

To the Senate I urge you to vote ‘no’ on the confirmation of Ben Bernanke, please, before it is to late.

The confirmation hearing for Federal Reserve Chairman Ben Bernanke began today, and among the many voices echoing how wonderful Ben Bernanke is comes one voice that speaks the truth.

Numerous senators spoke of praise and how grateful they are that Ben Bernanke was at the helm. Folks, the honest truth here is that while Ben Bernanke ‘may‘ have stopped the blood shed on Wall Street in the short term, his actions have planted the seeds of what may very well grow into even greater consequences. This time it is not systemic risk of banks or other Wall Street firms that is at risk, this time it puts in jeopardy the entire financial health of the nation.

Additionally, it was Ben Bernankes own actions of the past four years that was instrumental in creating the financial crisis in the first place. And this is reason for praise? Ben Bernanke should be sent back to Princeton!

Ben Bernanke may have saved Wall Street for the short term, but the cost in doing so has jeopardized the entire financial system of the United States.

It is very clear that those who praise Bernanke the most are those very same people who have the greatest connections with Wall Street firms and financial lobbyists. But, there are some lone voices who will stand up and tell it like it is. Thank goodness there are still some (not many sadly) in Washington who have not sold their sole.

You should listen to the words here very carefully…

Reprinted in entirety from Daily Kos:

This Thursday, the Senate Banking Committee will hold hearings on whether to confirm Ben Bernanke — who was appointed by George W. Bush — to another six-year term as Chair of the Federal Reserve.

Who is Ben Bernanke? Under his watch, the Federal Reserve turned over trillions of dollars in bailouts to big Wall Street banks and didn’t demand accountability in return. And Bernanke still refuses to tell Congress how those trillions of dollars were used.

This week, we have an opportunity that we won’t have again for another six years: to replace Ben Bernanke with someone who will help average Americans, not giant banks. But we urgently need your help.

Click here and tell the Senate to vote no on “Bailout Ben.”

We’ll give every petition signer a phone number to call to help make a difference right away — and we’ll deliver these signatures to key senators before the vote.

Just yesterday, Sen. Bernie Sanders (I-VT) went on national TV to announce his “no” vote — saying Bernanke was “part of the problem” facing our economy.

But many senators are on the fence. Sen. Chris Dodd (D-CT), the head of the Senate Banking Committee, called the Federal Reserve an “abysmal failure” but said he was “waiting to see how members react” before deciding whether to support Ben Bernanke’s reappointment.

We need to show these senators right now that it’s unacceptable for Democrats to continue George W. Bush’s failed policy of putting Wall Street first.  The Federal Reserve’s job is to promote “maximum employment.” But 15 million Americans are out of work — and the Federal Reserve is doing nothing to help.  Can you help by signing our petition, and then telling your friends?

Click here to take action right away.

Thanks, as always, for being a bold progressive,

–Aaron Swartz, Stephanie Taylor, Adam Green, and the PCCC team

(source: Daily KOS)

RT Note: It does not matter that Ben Bernake was a George W Bush appointee or not. The significant factor is how Ben Bernake has missed the entire problem. Put aside partisan politics, this is all about Ben Bernake and the Federal Reserve. I for one have submitted my say to stop the reappointment of Ben Bernanke.

Un Mask The Fed…

Click on the photo to send a message to your senator asking them to make Bernanke come clean before his confirmation hearing begins.

Video Update coming late again tonight, sorry about that folks.. But have things to take care of this evening.

Treasury Auction Results Were Misleading

Zerohedge, Chris Martenson, and Karl Denninger have all reported today the uncovering of evidence that the Federal Reserve has indeed gone against their own sworn statement to Congress that they would ‘not’ monetize the U.S. debt.

On July 30th, 2009 an auction for 7 year treasuries was conducted. At the time the auction results were viewed as being ’successful’. Meaning that there was good demand for the purchase of the treasuries. Essentially communicating that ‘trust’ in the U.S. was ‘good’

What has been uncovered today is that some broker dealers (who participate in the auctions) were reimbursed if you will by the Federal Reserve for their purchases. This is a significant event and one that must be exposed.

If these details are indeed factual, which they appear to be then it means that ‘demand’ for the treasuries was created artificially. Additionally, it reveals that Chairman Bernanke actually has lied to Congress that the Fed would ‘not’ monetize the debt.

Stop the presses… The Federal Reserve Lies!

From Karl Denninger:

Release Date: June 24, 2009

For immediate release

Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

My take on the statement:

The economy is still contracting albeit at a slow pace, but it is still contracting, no bottom yet. Businesses that are making adjustments to inventory levels in order to match sales suggests that companies do not foresee any significant growth in the economy and are hunkering down for a long spell of reduced sales.

The Fed said they anticipate that all of the quantitative easing will contribute to a gradual resumption of sustainable growth in the context of price stability. What? To say that they will measure economic growth as a measure of price stability says to me that as long as they keep flooding the market with money and keep prices ‘floating’ will equate to growth to them. This is ridiculous, how about organic growth Ben?

Inflation will remain subdued for some time suggests to me that they still anticipate deflationary forces outweighing the mass printing of dollars.

I’m coining a new term tonight and it is FEDGATE.

After the Federal Reserve was subpoenaed to provide documents relating to the Bank of America and Merrill merger some dirty laundry is coming out.

In emails obtained by the House Oversight and Government Reform Committee it would appear that Fed Chairman Ben Bernanke did put pressure on Bank of America CEO Ken Lewis to ‘keep quiet’.

E-mail messages from the Federal Reserve chairman Ben S. Bernanke and others indicate that executives at Bank of America were pressured to keep quiet about concerns over Merrill’s financial condition, according to a document written by House Republicans.

The documents, which were subpoenaed by the House Oversight and Government Reform Committee, were cited in a staff memo for Republicans ahead of a hearing Thursday where the chief executive of Bank of America, Kenneth D. Lewis, will testify.

One e-mail message shows pressure from the Fed on Mr. Lewis to stay the course on the deal, or have management removed.

In an e-mail from Jeffrey M. Lacker, the president of the Richmond Federal Reserve, speaking about Mr. Lewis’s intention to exercise a “material adverse change” or MAC clause to get out of the Merrill deal, Mr. Lacker said:

”Just had a long talk with Ben … Says they think the MAC threat is irrelevant because it’s not credible. Also intends to make it even more clear that if they play that card and they need assistance, management is gone.”

Mr. Lacker’s region includes Charlotte, N.C., where Bank of America is based.

Mr. Lewis has come under fire from investors wanting to know why the bank did not notify them of Merrill’s losses in December, when the bank told the government it would need additional support to ensure the merger would survive.

In January, Mr. Lewis told analysts that he was surprised to learn in December, three months after the bank snapped up Merrill Lynch, that the losses at the brokerage were far greater than expected. He said he had considered walking away at that point, but was persuaded not to, partly by regulators who feared that a failure to seal the deal could set off a new round of panic in the markets.

The decision to stick with Merrill despite its problems, he said, was patriotic. Source: NY Times

With Ken Lewis appearing before a hearing in Washington tomorrow it should make for a great ‘who said what and when’. And if Ben Bernanke did influence the witholding of material information then Ben will have some bigger problems than just the economy.

The Federal Reserve has released the results of their “comprehensive”, forward-looking assessment of the banks. (cough cough)

From the Federal Reserve:

For release at 5:00 p.m. EDT

The results of a comprehensive, forward-looking assessment of the financial conditions of the nation’s 19 largest bank holding companies (BHCs) by the federal bank supervisory agencies were released on Thursday.

The exercise–conducted by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation–was conducted so that supervisors could determine the capital buffers sufficient for the 19 BHCs to withstand losses and sustain lending–even if the economic downturn is more severe than is currently anticipated. In a detailed summary of the results of the Supervisory Capital Assessment Program (SCAP), the supervisors identified the potential losses, resources available to absorb losses, and resulting capital buffer needed for the 19 participating BHCs.

The SCAP is a complement to the Treasury’s Capital Assistance Program (CAP), which makes capital available to financial institutions as a bridge to private capital in the future. Together, these programs play a critical role in ensuring that the U.S. banking sector will be in a position of strength.

Ben Bernanke had this to say:

This afternoon marks the culmination of the Supervisory Capital Assessment Program. Three independent federal banking supervisory agencies–the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation–have worked closely and collaboratively since late February to simultaneously assess the financial conditions of the 19 largest bank holding companies in the United States. These institutions play a vital role in our economy, holding among them two-thirds of the assets and more than one-half of the loans in the U.S. banking system. More than 150 examiners, economists, accountants, and other specialists conducted a rigorous and comprehensive review of these firms, one unprecedented in scale and scope.

These examinations were not tests of solvency; we knew already that all these institutions meet regulatory capital standards. Rather, the assessment program was a forward-looking, “what-if” exercise intended to help supervisors gauge the extent of the additional capital buffer necessary to keep these institutions strongly capitalized and lending, even if the economy performs worse than expected between now and the end of next year.

The results released today should provide considerable comfort to investors and the public. The examiners found that nearly all the banks that were evaluated have enough Tier 1 capital to absorb the higher losses envisioned under the hypothetical adverse scenario. Roughly half the firms, though, need to enhance their capital structure to put greater emphasis on common equity, which provides institutions the best protection during periods of stress. Many of the institutions have already taken actions to bolster their capital buffers and are well-positioned to raise capital from private sources over the next six months. However, our government, through the Treasury Department, stands ready to provide whatever additional capital may be necessary to ensure that our banking system is able to navigate a challenging economic downturn.

The capital assessment results we are reporting today are just one important element of the government’s broader and ongoing efforts to strengthen the financial system and the economy. The current crisis has been one of the most challenging financial and economic episodes in modern history, but we face no problems that cannot be overcome with insight, patience, and persistence. The Federal Reserve, through its independent actions and in collaboration with the other agencies represented here, will certainly do its part in our common effort to restore stability and prosperity.

If you want to read the entire 38 page report click HERE