FedUpUSA

Archive for September 8th, 2011

Contrary to popular belief, Detroit isn’t just the home of public union thugs and welfare queens.  There’s an entire population of people who aren’t trying to live off someone else or extort money from others.   So come on down to Detroit and let us prove it.  I’m sure someone will make sure Jimmy Hoffa, Jr. gets his invitation.

Please join Judge Michael Warren and his family on Sunday, September 11 (details below) to commemorate the 10th Anniversary of the terrorists attacks and the kick-off to Patriot Week at Historic Fort Wayne, 6325 W. Jefferson, Detroit, MI 48209.

The Patriot Palooza! is a most fitting way to mark this day in American history and renew the American spirit. This family friendly event will feature:

9/11 Commemoration, including tribute to first responders

7 student created presentations representing each day of the week

Historical re-enactors portraying the Civil War, Spanish American War, WWI, WWII, and other eras

Patriotic Music

Children’s activities, including a scavenger hunt

Tours of Historic Fort Wayne

Live cannon fire

Remarks by Congressman Hansen Clark, County Executive Robert

Ficano, State Senator Vincent Gregory, State Representative Gail Haines, County Commission Chair Kathy Vosburg, Judge Edward Sosnick, and emcee John McCulloch

Civil Rights march and re-enactment of Martin Luther King, Jr.’s I Have a Dream speech delivered in Detroit (performed by Bishop Edgar Vann)

Like everything else in Patriot Week, this event is nonpartisan.

Anyone who attends the Patriot Palooza! should leave with a richer and deeper understanding and appreciation of the First Principles, Patriots, key documents and speeches, and flags that make America the greatest nation in history.

As a free people, we need to reinvigorate our commitment to America, or our beacon of liberty will be extinguished. Grab this once in a lifetime opportunity to commemorate, learn about, and celebrate America.

God Bless You and God Bless America.

For information about September 11 and additional Patriot Week
events, visit  http://www.patriotweek.org/2011-public-events.html

Flier: http://www.patriotweek.org/docs/Patriot%20Palooza%20Flyer.pdf

This is one of the most-ridiculous speeches I’ve ever read, yet in it admission of culpability is found – if you read it carefully.

Chairman Ben S. Bernanke

At the Economic Club of Minnesota Luncheon, Minneapolis, Minnesota

September 8, 2011

The U.S. Economic Outlook

Good afternoon. I am delighted to be in the Twin Cities and would like to thank the Economic Club of Minnesota for inviting me to kick off its 2011-2012 speaker series. Today I will provide a brief overview of the U.S. economic outlook and conclude with a few thoughts on monetary policy and on the longer-term prospects for our economy.

The Outlook for U.S. Economic Growth
In discussing the prospects for the economy and for policy in the near term, it bears recalling briefly how we got here. The financial crisis that gripped global markets in 2008 and 2009 was more severe than any since the Great Depression.

Yes, after 30 years of permitting this to occur you might expect a crisis.  The only uncertainty was exactly when said crisis would erupt, not whether it would

Let me remind everyone who’s responsible for the amount of credit created in the economy:

Section 2A. Monetary Policy Objectives

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates

In other words, Ben Bernanke (aka “The Fed”) and his predecessors are directly responsible for the above chart.  They have the legal authority and duty to prevent that from occurring.  They have willfully and intentionally failed to exercise that authority.  This was the root cause of the crisis.

Economic policymakers around the world saw the mounting risks of a global financial meltdown in the fall of 2008 and understood the extraordinarily dire economic consequences that such an event could have.

All of those policymakers willfully and intentionally ignored the very evidence and statistics they collect and publish for thirty years.  Please note the source of the data on the above chart.

Governments and central banks consequently worked forcefully and in close coordination to avert the looming collapse. The actions to stabilize the financial system were accompanied, both in the United States and abroad, by substantial monetary and fiscal stimulus. Despite these strong and concerted efforts, severe damage to the global economy could not be avoided. The freezing of credit, the sharp drops in asset prices, dysfunction in financial markets, and the resulting blows to confidence sent global production and trade into free fall in late 2008 and early 2009.

A drunk cannot be cured by giving him more whiskey. The FOMC’s continued and intentional refusal to follow the law is responsible not only for the crisis but for the lack of economic clearing that must take place.

It has been almost exactly three years since the beginning of the most intense phase of the financial crisis, in the late summer and fall of 2008, and a bit more than two years since the official beginning of the economic recovery, in June 2009, as determined by the National Bureau of Economic Research’s Business Cycle Dating Committee. Where do we stand? There have been some positive developments over the past few years. In the financial sphere, our banking system and financial markets are significantly stronger and more stable. Credit availability has improved for many borrowers, though it remains tight in categories–such as small business lending–in which the balance sheets and income prospects of potential borrowers remain impaired. Importantly, given the sources of the crisis, structural reform is moving forward in the financial sector, with ambitious domestic and international efforts under way to enhance financial regulation and supervision, especially for the largest and systemically most important financial institutions.

Actually, that’s not true.  Something like $3 trillion has simply been transferred from the taxpayer through printed debt to the financial system in order to prop up these otherwise-insolvent institutions.  This too is clear – the amount of the fiscal deficit in the United States went from approximately $600 billion annually to $1,600 billion in 2008 and has remained there for three years.  Not-coincidentally the largest area of contraction in open credit in the Fed Z1 reports is found in the financial products credit, and it almost-exactly matches this printed-up and transferred indebtedness.

However, this has not actually solved the problem, since the debt still exists – we have simply changed who has to pay it down or default it.  In Europe we have found that the limits of this behavior have been reached, and the result is Greece.  In the United States we have not yet found that “corner”, but if we do there will be no means to recover from the events that follow.  Most-importantly no economist or analyst, myself included, can tell you with certainty where that line is or how close we may be to it, since when (not if) fiscal consolidation takes place government funding will of necessity decrease since decreasing deficit spending, whether by increasing taxes or cutting spending, must on an arithmetic basis reduce GDP (either “C”, “I” or “G” will contract.)  As such the debt coverage ratio (percentage of tax revenues compared to gross debt ot be services) will move the wrong way when this event takes place.  Since the magnitude of this move cannot be accurately ascertained nor can the public response be ascertained with certainty there is no way to know how close to the cliff you are until it is too late and you go off the edge.

Should this happen the very existence of the United States Government is called into question.

Nevertheless, it is clear that the recovery from the crisis has been much less robust than we had hoped. From recent comprehensive revisions of government economic data, we have learned that the recession was even deeper and the recovery weaker than we had previously thought; indeed, aggregate output in the United States still has not returned to the level that it had attained before the crisis. Importantly, economic growth over the past two years has, for the most part, been at rates insufficient to achieve sustained reductions in the unemployment rate, which has recently been fluctuating a bit above 9 percent.

That is in no small part because the FOMC has, through its policies, destroyed both return on honest savings and capital formation.  The prudent, primarily investors and senior citizens who did not lever up, did not take out home equity loans to buy Hummers and did not act in an extravagant manner have had their safe return capacity destroyed.  This in turn has resulted in the destruction of capital formation and consumption spending that would otherwise be possible from lending surplus.

For as long as real borrowing costs are negative — which means as long as interest rates remain near or at zero — this situation will persist and so will the economic malaise.

The pattern of sluggish economic growth was particularly evident in the first half of this year, with real gross domestic product (GDP) estimated to have increased at an annual rate of less than 1 percent, on average, in the first and second quarters. Some of this weakness can be attributed to temporary factors, including the strains put on consumer and business budgets by the run-ups earlier this year in the prices of oil and other commodities and the effects of the disaster in Japan on global supply chains and production. Accordingly, with commodity prices coming off their highs and manufacturers’ problems with supply chains well along toward resolution, growth in the second half looks likely to pick up. However, the incoming data suggest that other, more persistent factors also have been holding back the recovery. Consequently, as noted in its statement following the August meeting, the Federal Open Market Committee (FOMC) now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the June meeting, with greater downside risks to the economic outlook.

Absolute nonsense.  It is the intentional distortion in the market caused by The Fed that is preventing recovery.  By “protecting” the big financial institutions The Fed is starving the remainder of the economy.  The crumbs that remain are insufficient to provide a recovery and no such recovery will be obtained until and unless the boot of The Fed is lifted from the markets.

One striking aspect of the recovery is the unusual weakness in household spending. After contracting very sharply during the recession, consumer spending expanded moderately through 2010, only to decelerate in the first half of 2011. The temporary factors I mentioned earlier–the rise in commodity prices, which has hurt households’ purchasing power, and the disruption in manufacturing following the Japanese disaster, which reduced auto availability and hence sales–are partial explanations for this deceleration. But households are struggling with other important headwinds as well, including the persistently high level of unemployment, slow gains in wages for those who remain employed, falling house prices, and debt burdens that remain high for many, notwithstanding that households, in the aggregate, have been saving more and borrowing less. Even taking into account the many financial pressures they face, households seem exceptionally cautious. Indeed, readings on consumer confidence have fallen substantially in recent months as people have become more pessimistic about both economic conditions and their own financial prospects.

Abject nonsense.  There is no “saving” per-se; households are attempting to keep their heads above water in a world where there is no safe return available for money.  After driving everyone into the stock market — an act I remind you, Bernanke, you publicly stated was one of your goals and you took credit for it — the public has now again seen their investment returns destroyed and were you in any way “late” to buy back in after QE2 began you have lost money once more.

Compared with the household sector, the business sector generally presents a more upbeat picture. Manufacturing production has risen nearly 15 percent since its trough, driven importantly by growth in exports. Indeed, the U.S. trade deficit has narrowed substantially relative to where it was before the crisis, reflecting in part the improved competitiveness of U.S. goods and services. Business investment in equipment and software has also continued to expand. Corporate balance sheets are healthy, and although corporate bond markets have tightened somewhat of late, companies with access to the bond markets have generally had little difficulty obtaining credit on favorable terms. But problems are evident in the business sector as well: Business investment in nonresidential structures, such as office buildings, factories, and shopping malls, has remained at a low level, held back by elevated vacancy rates at existing properties and difficulties, in some cases, in obtaining construction loans. Also, some business surveys, including those conducted by the Federal Reserve System, point to weaker conditions recently, with businesses reporting slower growth in production, new orders, and employment.

Have you seen the high-yield market of late?

Why has this recovery been so slow and erratic? Historically, recessions have tended to sow the seeds of their own recoveries as reduced spending on investment, housing, and consumer durables generates pent-up demand. As the business cycle bottoms out and confidence returns, this pent-up demand, often augmented by the effects of stimulative monetary and fiscal policies, is met through increased production and hiring. Increased production in turn boosts business revenues and increased hiring raises household incomes–providing further impetus to business and household spending. Improving income prospects and balance sheets also make households and businesses more creditworthy, and financial institutions become more willing to lend. Normally, these developments create a virtuous circle of rising incomes and profits, more-supportive financial and credit conditions, and lower uncertainty, allowing the process of recovery to develop momentum.

That’s not recovery — it’s a Ponzi Scheme.  The places that “spending” goes in your dreamworld do not increase in utility value.  Only the presence of a new and bigger sucker makes this process “work”, and only until the suckers run out.

By definition an economic act that can only bring profit if someone else will pay for more for the same thing is a ponzi scheme as it requires an ever-increasing set of new buyers with more and more money or it collapses.  The Fed’s acts since the 1980s have been to serially blow these bubbles.  This is an intentional series of acts.

These restorative forces are at work today, and they will continue to promote recovery over time. Unfortunately, the recession, besides being extraordinarily severe as well as global in scope, was also unusual in being associated with both a very deep slump in the housing market and a historic financial crisis. These two features of the downturn, individually and in combination, have acted to slow the natural recovery process.

Notably, the housing sector has been a significant driver of recovery from most recessions in the United States since World War II, but this time–with an overhang of distressed and foreclosed properties, tight credit conditions for builders and potential homebuyers, and ongoing concerns by both potential borrowers and lenders about continued house price declines–the rate of new home construction has remained at less than one-third of its pre-crisis peak. Depressed construction also has hurt providers of a wide range of goods and services related to housing and homebuilding, such as the household appliance and home furnishing industries. Moreover, even as tight credit for builders and potential homebuyers has been one of the factors restraining the housing recovery, the weak housing market has in turn adversely affected financial markets and the flow of credit. For example, the sharp declines in house prices in some areas have left many homeowners “underwater” on their mortgages, creating financial hardship for households and, through their effects on rates of mortgage delinquency and default, stress for financial institutions as well.

The “housing market” had exactly nothing to do with anything sustainable.  You, Bernanke, opined in 06 and 07 that house prices would be “supported” by both economic and demographic factors.  You were wrong on both counts; a house never increases in utility value once constructed (unless you add to it later on) and in fact it is a sinking-value asset!  That is, it is a consumer durable good.

The intentional more than three-decade long credit expansion drove the housing bubble.  It was not an overnight phenomena and once the bubble reached the housing sector the outcome was certain.  We have not removed that excessive expansion in prices and until we do equilibrium will not be found.

As I noted, the financial crisis of 2008 and 2009 played a central role in sparking the global recession. A great deal has been and continues to be done to address the causes and effects of the crisis, including extensive financial reforms. However, although banking and financial conditions in the United States have improved significantly since the depths of the crisis, financial stress continues to be a significant drag on the recovery, both here and abroad. This drag has become particularly evident in recent months, as bouts of sharp volatility and risk aversion in markets have reemerged in reaction to concerns about European sovereign debts and related strains as well as developments associated with the U.S. fiscal situation, including last month’s downgrade of the U.S. long-term credit rating by one of the major ratings agencies and the recent controversy surrounding the raising of the U.S. federal debt ceiling. It is difficult to judge how much these events and the associated financial volatility have affected economic activity thus far, but there seems little doubt that they have hurt household and business confidence, and that they pose ongoing risks to growth.

We ran out of suckers.  That always happens when you run a pyramid scheme.  Welcome to reality Ben.  You presided over this implosion and worse, you were part of The Fed when Greenspan blew the last and biggest bubble (thus far anyway.)  The chart above does not lie – it’s YOUR data!

While the weakness of the housing sector and continued financial volatility are two key reasons for the frustratingly slow pace of the recovery, other factors also may restrain growth in coming quarters. For example, state and local governments continue to tighten their belts by cutting spending and reducing payrolls in the face of ongoing budgetary pressures, and federal fiscal stimulus is being withdrawn. There is ample room for debate about the appropriate size and role for the government in the longer term, but–in the absence of adequate demand from the private sector–a substantial fiscal consolidation in the shorter term could add to the headwinds facing economic growth and hiring.

Your bubble-blowing managed to entice state and local governments to join in the fraudfest.  As a result we have “disabled” firefighters who are able to run Ironman competitions and other similar outrages.  Unfortunately that “bigger sucker” also has disappeared and now the truth of these budgets — they were never able to be funded in the intermediate and longer term – has come to the forefront.

The prospect of an increasing fiscal drag on the economy in the face of an already sluggish recovery highlights one of the many difficult tradeoffs currently faced by fiscal policymakers. As I have emphasized on previous occasions, without significant policy changes to address the increasing fiscal burdens that will be associated with the aging of the population and the ongoing rise in health-care costs, the finances of the federal government will spiral out of control in coming decades, risking severe economic and financial damage. But, while prompt and decisive action to put the federal government’s finances on a sustainable trajectory is urgently needed, fiscal policymakers should not, as a consequence, disregard the fragility of the economic recovery. Fortunately, the two goals–achieving fiscal sustainability, which is the result of responsible policies set in place for the longer term, and avoiding creation of fiscal headwinds for the recovery–are not incompatible. Acting now to put in place a credible plan for reducing future deficits over the long term, while being attentive to the implications of fiscal choices for the recovery in the near term, can help serve both objectives.

Bah.  The longer we keep at this crap the worse the outcome will be.  The pain is inescapable.

We must take it now and cut off the gangrenous arm before we lose our life!

The Outlook for Inflation
Let me turn now from the outlook for growth to the outlook for inflation. Prices of many commodities, notably oil, increased sharply earlier this year. Higher gasoline and food prices translated directly into increased inflation for consumers, and in some cases producers of other goods and services were able to pass through their higher costs to their customers as well. In addition, the global supply disruptions associated with the disaster in Japan put upward pressure on motor vehicle prices. As a result of these influences, inflation picked up significantly; over the first half of this year, the price index for personal consumption expenditures rose at an annual rate of about 3-1/2 percent, compared with an average of less than 1-1/2 percent over the preceding two years.

Abject nonsense.  The biggest impact on automobile price inflation was in fact “Cash for Clunkers”, which destroyed the used car market for people of modest means.  The architects of that plan should be rotting in federal prison.

However, inflation is expected to moderate in the coming quarters as these transitory influences wane. In particular, the prices of oil and many other commodities have either leveled off or have come down from their highs. Meanwhile, the step-up in automobile production should reduce pressure on car prices. Importantly, we see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy.

Oh really?  You don’t get out much beyond the beltway do you?

Longer-term inflation expectations have remained stable according to the indicators we monitor, such as the measure of households’ longer-term expectations from the Thompson Reuters/University of Michigan survey, the 10-year inflation projections of professional forecasters, and the five-year-forward measure of inflation compensation derived from yields of inflation-protected Treasury securities.

How many of those are you tampering with (yields, etc)?

In addition to the stability of longer-term inflation expectations, the substantial amount of resource slack that exists in U.S. labor and product markets should continue to have a moderating influence on inflationary pressures. Notably, because of ongoing weakness in labor demand over the course of the recovery, nominal wage increases have been roughly offset by productivity gains, leaving the level of unit labor costs close to where it had stood at the onset of the recession. Given the large share of labor costs in the production costs of most firms, subdued unit labor costs should be an important restraining influence on inflation.

Right.  So as prices on things like gasoline and food go up, there’s no spiral.  Therefore, no “huge” inflation spiral as you can’t couple it back to wages (thank Clinton, Bush, and now Obama for all the offshoring to China!) – the consequence instead of a 1970′s style inflationary spiral will be the decimation of everyone in the bottom three quintiles of Americans.

This too is an intentional act and this too you are responsible for.

Monetary Policy
Although the FOMC expects a moderate recovery to continue and indeed to strengthen over time, the Committee has responded to recent developments–as I have already noted–by marking down its outlook for economic growth over coming quarters. The Committee also continues to anticipate that inflation will moderate over time, to a rate at or below the 2 percent or a bit less that most FOMC participants consider to be consistent with the Committee’s dual mandate to promote maximum employment and price stability.

Read the top quite from your web site on the your responsibilities again.  STABLE prices are unchanging prices.  It is specifically your refusal to follow the damned law and Congress’ refusal to shove that law up your backside that led to the bubbles and now the economic pain we must endure.

It cannot be avoided.

Given this outlook, the Committee decided at its August meeting to provide more specific forward guidance about its expectations for the future path of the federal funds rate. In particular, the statement following the meeting indicated that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. That is, in what the Committee judges to be the most likely scenarios for resource utilization and inflation in the medium term, the target for the federal funds rate would be held at its current low level for at least two more years.

In other words as I noted at the time you forecasted that the economy is going to suck and those prudent actors in the economy, including Granny, are going to continue to have their ability to survive destroyed.

How The Fed survives in that environment is beyond me, given that Seniors tend to vote rather often.  I suspect the only way your institution makes it is if you manage to continue to lie about how it all happened and people forget their 5th Grade Math.

You might succeed at that, given America’s preoccupation with the NFL and Dancing With The Stars.  If you do, we as Americans deserve what we get.

In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus. We discussed the relative merits and costs of such tools at our August meeting. My FOMC colleagues and I will continue to consider those and other pertinent issues, including, of course, economic and financial developments, at our meeting in September and are prepared to employ these tools as appropriate to promote a stronger economic recovery in a context of price stability.

None of your other “Tools” have worked so why would they now?

Conclusion
Let me conclude with just a few words on the longer-term prospects for our economy. As monetary and fiscal policymakers consider the appropriate policies to address the economy’s current weaknesses, it is important to acknowledge its enduring strengths. Notwithstanding the trauma of the crisis and the recession, the U.S. economy remains the largest in the world, with a highly diverse mix of industries and a degree of international competitiveness that, if anything, has improved in recent years. Our economy retains its traditional advantages of a strong market orientation, a robust entrepreneurial culture, and flexible capital and labor markets. And our country remains a technological leader, with many of the world’s leading research universities and the highest spending on research and development of any nation. Thus I do not expect the long-run growth potential of the U.S. economy to be materially affected by the financial crisis and the recession if–and I stress if–our country takes the necessary steps to secure that outcome. Economic policymakers face a range of difficult decisions, and every household and business must cope with the stresses and uncertainties that our current situation presents. These are not easy tasks. I have no doubt, however, that those challenges can be met, and that the fundamental strengths of our economy will ultimately reassert themselves. The Federal Reserve will certainly do all that it can to help restore high rates of growth and employment in a context of price stability.

There is not a snowball’s chance in Hell that the political process will yield actual productive results.  The only “strength” our economy has had for the last 30 years has been in the area of financial fraud.

In a just world that would lead to indictments and handcuffs.

Obviously, we don’t live in such a world.

This is pure gold.  Rick Santelli can’t seem to get Mr. Friedman to define ‘Ponzi Scheme.’  You know, if it walks like a duck and quacks like a duck…..

CNBC

Gee, where are the jobs?  We know where they’re not – in the US.

In the week ending September 3, the advance figure for seasonally adjusted initial claims was 414,000, an increase of 2,000 from the previous week’s revised figure of 412,000. The 4-week moving average was 414,750, an increase of 3,750 from the previous week’s revised average of 411,000.

That’s nice.  You don’t need the DOL report to know there are no jobs, you only need to get outside of the damned Washington DC beltway to discover this.

The futures, after tanking some on the Euro rate decision, dropped another half-percent on this release.

The simple fact of the matter is that this is not about tax cuts (for the rich or otherwise) or any such thing.

The problem is that zero interest rates have destroyed capital formation, destroyed reasonable returns for prudent people who have actually saved their entire life and thus collapsed their income, and as a consequence spending from surplus output and new business formation has collapsed, transferring the only remaining factor for consumer spending to Ponzi-style government deficit spending and credit used for consumption and speculation, none of which is capable of producing prosperity.

Those of you who don’t get this damned well need to wake the f^#k up.  A prudent middle-income individual who saved $500,000 over their 45 year working life (about $10k/year) and had it in CDs @ 5% had a nice $25,000 a year safe income.

Now that same CD earns 1% or less, under the rate of inflation, and as a consequence that prudent person has less than $5,000 a year in income to spend and a deteriorating cash position in purchasing-power adjusted terms.  In addition those who are not in retirement but have amassed similar amounts of money no longer have any meaningful risk:reward incentive to use those funds to form capital and start new businesses as their wealth is being serially and intentionally destroyed.  This leaves them with only one path available that makes sense – speculation or “going Galt” and telling the business world and government to go screw a pig.

Bernanke’s claim that this outcome is “good” because it made the stock market go up has been exposed as a bald Ponzi lie.  Yeah, it went up (from last fall to this summer) for a while, just as did Charles Ponzi’s returns. 

How’s that working out for you now, suckers?  ALL pyramid schemes eventually collapse as you always run out of suckers.  It is just a matter of figuring out when.

You won’t hear that from Obama tonight, just as you didn’t hear it last night from any of the Republican candidates.  Yet the truth of this is evident in the actual data, if you bother to look at it – which nobody wants to do with a dispassionate glance, say much less study.

All we have left is speculative capital flows from one nation to another looking for the next “safe” place to try to steal a few percent of return – for now.

There is no “safe place” including metals.  This is a fools game that will ultimately destroy your wealth and leave you destitute.  The only means of success is to demand that the politicians cut this crap out and enforce that demand, removing the artificial constraints holding down interest rates and allow the general market principle to re-assert itself that borrowing money must always have a cost in real terms, not just nominal ones and the more-dangerous your intended use for the funds (such as consumption or speculation) the more it will cost!  Yes, this means that those who got over-levered will be wiped out – bankrupted – by their folly.  That’s good, not bad, as removing excess systemic debt is necessary to restore balance to the economy.

Until this happens there will be no meaningful job growth and nobody – other than myself and a few other intrepid bloggers – are willing to discuss these facts on the national stage.

It does not take a genius to understand why consumer spending is weak.

1. Unemployment rate is 9%
2. Real wages are falling
3. Income advances go to the wealthy
4. Middle class is shrinking
5. Jobs hard to find
6. Approval ratings of Congress and Obama at record lows
7. Consumers have high debt ratios
8. Home prices are still falling
9. Homeowners are trapped in their homes, unable to refinance
10. Boomers need to save for retirement

However, those simple facts are far too complicated for a PhD like Fed chairman Ben Bernanke to figure out.

Please consider Bernanke puzzled by weak consumer spending

Federal Reserve Chairman Ben Bernanke says he is surprised by how cautious consumers have been in the two years since the recession officially ended. But the Fed chief offered no hints of any steps the Fed would take to boost the weak economy.

Bernanke says a number of factors are keeping consumers from spending more, including high unemployment, a temporary spike in energy prices, falling home prices and high debt burdens.

Bernanke said the Fed will consider range of policy options at its next meeting later this month without offering any clues to what it might do. His comments were familiar to ones he gave last month in Jackson Hole, Wyo.

Note that Bernanke even cited some of the 10 factors I mentioned, yet he is still surprised. What a dunce.

Is it any wonder his policies are so counterproductive when he cannot figure out simple things the average person can see clearly?

Mike  “Mish”  Shedlock

Global Economic Analysis

That was an interesting “debate” last night.

I put the word “debate” in quotes because we haven’t had an actual debate in my sentient lifetime.  Going all the way back to my youth, all I’ve ever actually seen in our Presidential contests (or any other political contest for that matter) have been gabfests and scripted crap.  An actual debate, where the formal rules of such are observed and the moderator flags off anyone who pulls the sort of crap that is usual for these media confabs, has never been held.

I guess I shouldn’t be surprised at this, given our nation’s inability to focus and expend intellect in a meaningful fashion.  After all, the NFL season is about to start and Dancing With the Stars is soon to be on, right?

But enough on the intellectual vapidity of the American Public – we get the government we deserve, and as such we have little room to bitch in this regard. Instead I’d like to focus on some of the actual “meat” in the “debate” last evening – there actually was some, much to my surprise.

Bernnake’s days are numbered as ChairSatan should a Republican win the White House.  There was near-unanimous consent that he had to go, with the opinions running the gamut from not renominating him to an outright assertion by Newt that he’d fire him.  (Newt either ignored or didn’t care about the fact that the President can’t fire him, although he certainly can bring political pressure and could attempt to foment impeachment proceedings.  Whether impeachment is actually available is an open question but I see no particular reason to believe it’s not, given my understanding of the law.  The FOMC could also be dissolved or modified by legislation which the President could send up to a receptive House, of course.)  The audience reaction to these pronouncements was strong and consistent.  Short form: Bernanke ought to be hiding under the desk this morning given the political winds that are blowing; if he isn’t he’s dumber than a box-o-rocks.

My problem with this (well-deserved) anger aimed at Ben is that it’s focused in the wrong place.  Give anyone unbridled authority and it’s only a matter of time before it gets abused.  I have frequently quipped at Libertarian meetings and over beers with compatriots that you could appoint me Emperor for a couple of hours and I’d fix it all.  That suggestion brings instant gasps of terror, and with good reason.

The solution to the Federal Reserve problem is not, as demanded by Ron Paul and others, to “audit The Fed.”  That’s another useful idiot suggestion that relies upon the idiocy of the American people to generate faux rage that will never, ever amount to anything.

No, The Federal Reserve Act in fact contains all of the necessary strictures to prevent the games that have been played.  What it lacks is the same thing that allows the FDIC to keep insolvent banks running for months or even years under the premise that “it will all be ok”, subsequently resulting in losses of 40% of the asset valuation claimed on the balance sheet just days or weeks before.

That is the lack of an “or else” clause in these so-called “laws.”

Nobody – absolutely nobody – on that stage suggested actually correcting that problem.

Why not?

That’s easy.  If you fix this problem then you fix all the problems – all at once.  All the “Uncle Fraud” games disappear immediately as now people go to jail when they pull crap like bailing out European banks in secret and intentionally debasing the currency, or for that matter allowing banks to operate with a known negative capital position – either by adverting one’s eyes or active cooperation in book-cooking (as is alleged to have happened with IndyMac.)

So why not do it?

That’s simple: Every single one of the crooks standing on the podium last night – including so-called Dr. Paul – has profited tremendously in their political life by not having the threat of an indictment hanging over their head when, not if, they ignore and twist laws to their own ends.

And we, the people, sit for it.

Oh yeah, Dancing With The Stars is on again… never mind.