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

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.

Are you angry about Wall Street bailouts? Are you a Wall Street banker who enjoys looking down on the peasants from whom you have taken so much? Well now you can download an app for your iPhone and play ‘iBailout’.

Now you can be the Federal Reserve traversing your way through Wall Street eating money and chasing away angry citizens. The game progresses into citizens becoming mobs with pitchforks and torches going after the Fed. I want to see the XBOX 360 version!

Finally, the first really useful app for the iPhone.

iBailout:

Today the Federal Reserve issued a proposal to Regulation D (a.k.a REG D) to allow for a short term deposit facility.

[...]Term deposits would be one of several tools that the Federal Reserve could employ to drain reserves[...]

This, along with dry runs over the past several weeks conducted by the Federal Reserve (reverse repo operation), makes me believe that the Feds are getting nervous about the punch bowl being left out too long.

Federal Reserve Reg D Proposal

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.

When the Bank of Japan releases their meeting minutes it is often refreshing to read some straight forward language instead of word play that the U.S. Federal Reserve so much likes to do.

Bank of Japan minutes:

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.

Pete Boone and Simon Johnson have penned a wonderful article that looks at the Fed and ‘bubbles’ within the economy.

I highly recommend their article in “The New Republic”

To many observers, the Federal Reserve has never looked more heroic than it does right now. This past winter, America’s financial system faced the prospect of utter ruin. And, while the economy has suffered plenty in 2009, the worst did not come to pass. The banking system that lends to our employers, thereby allowing our economy to function, never did collapse. Now, many of the accolades for averting catastrophe are going to the Fed. President Obama himself ratified this analysis last week when he renominated Fed chairman Ben Bernanke for a second term. Bernanke, the president told reporters, had marshaled “his background, his temperament, his courage, and his creativity” to help prevent a second Great Depression. [...]

[...] ..Our banks have gotten into the habit of needing to be rescued through repeated bailouts. During this crisis, Bernanke–while saving the financial system in the short term–has done nothing to break this long-term pattern; worse, he exacerbated it. As a result, unless real reform happens soon, we face the prospect of another bubble-bust-bailout cycle that will be even more dangerous than the one we’ve just been through. If you’ve studied U.S. economic history, none of this will come as a surprise. We have seen this spectacle–the Fed saving us from one crisis only to instigate another–many times before. And, over the past few decades, the problem has become significantly more dire.[...]

Full article can be found HERE

The Federal Reserve has come out swinging at the judge who ruled in favor of Bloomberg News and their Freedom Of Information Act (FOIA) request.

NEW YORK (Reuters) – The U.S. Federal Reserve asked a federal judge not to enforce her order that it reveal the names of the banks that have participated in its emergency lending programs and the sums they received, saying such disclosure would threaten the companies and the economy.

The central bank filed its request on Wednesday, two days after Chief Judge Loretta Preska of the U.S. District Court in Manhattan ruled in favor of Bloomberg News, which had sought information under the federal Freedom of Information Act. [...]

“Immediate release of these documents will cause irreparable harm to these institutions and to the board’s ability to effectively manage the current, and any future, financial crisis,” the central bank argued.

It added that the public interest favors a delay, citing a potential for “significant harms that could befall not only private companies, but the economy as a whole” if the information were disclosed. [...]

And a group of banks that make up the Clearing House Association LLC has sent a request to the judge urging her to reconsider her ruling.

The Clearing House Association LLC, which represents banks, in a separate filing supported the Fed’s call for a delay. It said speculation that banks’ liquidity is drying up could cause runs on deposits, and trading partners to demand collateral.

“Survival can depend on the ephemeral nature of public confidence,” Clearing House general counsel Norman Nelson wrote. “Experience in the banking industry has shown that when customers and market participants hear negative rumors about a bank, negative consequences inevitably flow.”

The Clearing House said its members include ABN Amro Holding NV, Bank of America Corp (BAC.N), Bank of New York Mellon Corp (BK.N), Citigroup Inc (C.N), Deutsche Bank AG (DBKGn.DE), HSBC Holdings Plc (HSBA.L), JPMorgan Chase & Co (JPM.N), UBS AG (UBSN.VX), U.S. Bancorp (USB.N) and Wells Fargo & Co (WFC.N).

I guess judge Loretta Preska has received ‘the phone call’ telling her to back down. Today the judge has issued a stay to the order she issued just two days ago in order to allow the Federal Reserve time to put together an appeal. The judge has stayed the order until September 30th to appeal the Freedom of Information Act ruling.

It is tax payer money that is in question here and ‘we’ want to know how it is being used. The Federal Reserve continues to play games and is fighting every request to disclose anything about how the public funds are being used. Ron Pauls HR 1207 bill to audit the Fed will probably end up in the ‘do not call’ registry very soon as well.

Transparency? ha ha ha

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.

From the “Unbelievable File”…

June 5 (Bloomberg) — The Federal Reserve intends to hire a veteran lobbyist as it seeks to counter skepticism in Congress about the central bank’s growing power over the U.S. financial system, people familiar with the matter said.

Linda Robertson currently handles government, community and public affairs at Johns Hopkins University in Baltimore, and headed the Washington lobbying office of Enron Corp., the energy trading company that collapsed in 2002 after an accounting scandal. She was also an adviser to all three of the Clinton administration’s Treasury secretaries.

Robertson would help the Fed manage relations with lawmakers seeking greater oversight of a central bank that has used emergency powers to prevent Wall Street’s demise. While she wasn’t tied to Enron’s fraud, her association with the firm may raise questions, analysts said.[...]

[...]Robertson served under Treasury Secretaries Lawrence Summers, Robert Rubin and Lloyd Bentsen. She didn’t return calls seeking comment.

Robertson is likely to start at the Fed in July and have the title of senior adviser to the Board of Governors, the people familiar with the situation said.

She was considered for a senior post under Geithner at the Treasury but ran up against the Obama administration’s restrictions on hiring lobbyists, the people said.

[...]While Robertson’s Hopkins biography makes no mention of her work at Enron, federal disclosure documents show she joined the company in 2000 after working at the Treasury. Robertson, who signed some of the forms, said she lobbied on energy and tax issues.

The Federal Reserve taking on a professional lobbyist in order to sooth the relations with Congress is a disgrace to the American people. Just when tough questions need to be asked (and answered) about the Federal Reserves actions they will now use a lobbyist to smooth things over. This is simply unbelievable.

I guess the Federal Reserve does not want to see this happen again (see video below).