BERNANKE SPEECH ANALYSIS: Systemic, academic, optimistic, pathetic .

Bernanke…blue skying while in the red

Memo to Obama: fire Bernanke

‘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. We will continue to consider those and other pertinent issues, including of course economic and financial developments, at our meeting in September, which has been scheduled for two days (the 20th and the 21st) instead of one to allow a fuller discussion. The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability.’

The paragraph above is pleasing to me in one tiny, egoistic sense…it is exactly what I predicted Fed Chairman Ben Bernanke would say at Jackson Hole: nothing. The bloke took the above long and rambling yes-and-no-with-reservations paragraph to do it, but in the end what we were left with was a vacuous summary of what we knew already. It was tame, lame, and more of the same.

Looking back at the text, there is the overwhelming sense of reading something by a system-obsessed academic with little or no connection to the real world or the human species – in short, an economist. And yet when it came to that system overall, Bernanke had nothing to offer in the way of useful analysis as to how it might be changed – or morphed into something better. Everything, it seemed, was just fine with the car, but we needed more work on why the wheels kept coming lose.

Every glimmer of hope was presented as sunlight drifting gently across the uplands of Sugar Candy Mountain. Ludicrously, the Fed Chairman said the US trade deficit had narrowed markedly. Well, if nobody’s buying imported goods on Main Street Ben, that’s gonna happen. Commodity prices were falling, and so this would reduce pressure on the price of importing stuff. Bollocks: the value of the Dollar is decreasing far more rapidly. While the recovery was ‘less robust than we had expected’, the ‘traditional forces’ would soon get to work building on that recovery. Without $2.8 trillion thrown at the economy, there would’ve been a slump: where have these traditional forces been over the last three years?

Next came a moment of pure Peter Mandelson: ‘let’s not talk the US down’. It still had, Ben mused, ‘the biggest and most diverse economy in the world’. Er…and the biggest debt, the dumbest politicians, the greediest banks, and the most overpriced stock market. From Mandelson, he switched to pure Brown, looking to put the blame elsewhere: after all, Europe was in the doo-doo, and if the backwash of contagion from there got into this thriving, diverse economy well – it could ruin all the Fed Chief’s carefully laid plans. Oh…and another thing: those pesky guys in Washington arguing uphill and down dale about a $13trillion deficit. They might screw things up too. Boy, did they need to get their act together.

But it was one short vapour trail halfway through the address that caused the hairs on the back of my head to prickle menacingly. This was the point at which Ben Bernanke briefly went into Christine Lagarde mode, asserting that

‘…acting now to put in place a credible plan for reducing future deficits over the longer term, while being attentive to the implications of fiscal choices for the recovery in the near term, can help serve both objectives…’

It was almost word for word the same primary school ‘Janet & John Play House’ that Lagarde had served up in the Financial Terms eleven days ago. The very same ‘If Dad gets a better job and we buy from Aldi not Waitrose, we can save the house’. Once those traditional forces get to work cutting prices and finding Dad a job, of course.

The bottom line (in dayglo red) was that the Fed Chairman had supreme confidence in a system that had blown away trillions in tax dollars, brought the global banking system to the verge of collapse, done nothing to address the real problems, resulted in a 30% cut in living standards for most Americans over 12 years, increased the gap between rich and poor, and produced an outcome whose baseline for success was the lunatic idea that if we all just keep on spending and getting deeper into debt, there’ll be nothing to worry about – the system will self-correct and off we’ll go again.

Which always leaves me with the same question: if the system solves itself anyway Ben, why do we need people like you?

The People don’t need the Ben Bernankes of this world – the folks with the benign smile and the carefully eccentric beard. It’s the political set, multinational business, and the banking spivs who need people like Ben: people too wrapped up in their charts, models and projections to ever become a nuisance. People to give the whole khazi a look of respectability. Those former Goldman Sachs people who thrust Bernanke at a grateful Bush as the best guy to make madness look like a science – they need him. The same crooks who told Obama to keep him on, with which the President complied because he had come to Washington in order to make change we can believe in.

In a pre-Election year, there is no way a limp wrist like Barack Obama is going to fire the helmsman. So our situation remains the same: we have a profound problem, and no radical creativity to hand. Oh dear. (Or words to that effect)

The full text of the speech is here.

Related: The triumph of impotence over importance.

Crash 2: How we got here

26 thoughts on “BERNANKE SPEECH ANALYSIS: Systemic, academic, optimistic, pathetic .

  1. Someone on Sky News summed it up by describing BB being like Vicky Pollard “yeah but no but, yeah”. I think I would trust Vicky more with the economy.

  2. Ben Bernanke is like a tottering drunk.oblivious to the world,muttering to himself as he heads towards the smelly ditch,before the final,ignominious fall,head first into the slime. He muttered I dont where it all went wrong,its Murky and Sarcastics fault,or those Chinese.

  3. BB fancies himself as something of a wordsmith. I’d bet that he rates himself on how many superfluous adjectives he can include in any given narrative where the sum total of meaning is zero.

    • IMV one of the most significant comments apparently made by BB in his diatribe is this (my boldness added):

      “Mounting debt exacerbated—and not relieved—by unchecked consumption, spiraling interest rates, and the grim realities of an inevitable worldwide energy crisis are projected to leave our entire economy in the shitter for, like, a generation, man, I’m telling you.”

      Oil prices have only come down since 2008 because of reduced demand following the near-collapse of Western economies. IF the US/UK/Europe ever recover from this econmic mess the oil price will once again rise relentlessly and likely plunge us back into debt/recession.

  4. C’mon Benny boy, fire up dem helicopters. Those lovely sovereigns I first bought for £4 are now £265. You know you can do better! How about £500?

    • Couldn’t agree more. Peter Schiff is going to be proved right when 1 oz of the golden stuff is one -to-one with the Dow. I few spivs got their fingers burnt when Crimex raised margin calls this week but those in physical quickly benefited from BB’s words of wisdom.

  5. Mr Bernanke is all too aware that QE was the mechanism by which liquidity was pulled from the lower tiered banks and given to the TBRF.Subsequent QE did the same even more so and QE3 or whatever POMO or aphabet soup of hell economics will do the same.Clever people ought to know that repetive actions and failure are NOT going to result in positive events.Use QE3 to give taxes back to the American people,minimum $50,000,and actually get tax cuts-then watch America bloom-if only!

  6. Biden goes to China to say the dollar is fine (or they told him it had better be, more likely).

    Bernanke says no more QE.

    Could these events possibly be connected?

  7. First we had the Greenspan put,post 1987,and that ended in disaster: now we have the Beenwanking put with the same outcome.MarK is following in their footsteps.

  8. So I was right .A drunk in charge of the lunatic asylum.Perhaps we ought to keep him p-ssed,then we would know the true state of the US economy.

  9. Well done, John. A marvellous piece of purple-faced, foam-flecked, bollocks-spitting ranting, and not only a wonderful example of the genre, but in parts very amusing indeed. Sadly, as far as an analysis of the speech is concerned, it’s almost completely useless. But why spoil the fun? Let’s heap the steaming manure on everyone, horrendously dim Obama, unbelievably stupid Bernake, ugly dumpy cerebrally challenged Hausfrau Merkel, totally brainless Lagarde, cretinous Cameron and all the other ghastly degenerates save God – and between you and me, I’m beginning to have serious doubts about God, and whether he’s any better than John Ward. A topic that’s being reserved for the next rant, perhaps?

    • I’m glad you appreciate my full worth, Triestino. Some people think they know better, but I can see that’s not so in your case.
      You are, however, quite mistaken about God: she doesn’t exist, whereas I do.

      • My God, John! She, eh? Don’t say you’re a fluffy feminist! that way, you could lose half of your fan club…..

  10. Mr.Bernwank should learn that the definition of insanity is to do the same things over and over again yet expect a different result.

  11. For me the most interesting comment that came from the weekend talkfest was C Lagarde’s comment that taxpayers should be ready to fill the boots of the bankers again so that they can help growth in their economies.

    Please God let us not fall for that one again.

    • It does not matter how much QE is done to feed the banks insolvency (they pretend it is a liquidity problem to fool the fools in government). All they are doing is creating more ponzi money which will eventually disappear. The taxpayers cannot pay it back, the bankers do not have it. It is all a figment of the banks (and stupid governments) imagination.
      There WILL be debt forgiveness (which will vanish the money) or default (which will vanish the money) eventually. The pain will exist until this time through inflated prices for ordinary folk along with the disappearance of savings and investments (which are based on ponzi/pyramid – trickle down schemes). Usually in hard times dividends take a bit of a slashing but the Global model insists that bigger divvies are paid every year whatever the economic situation of a company. This extra money is part of the ponzi money supply and each time an unrealistic divvi is iincreased the value of it goes down. It is an illusion just as government competence is an illusion. Blow away the smoke and break the mirrors and the scenery is a lovely clear view.

  12. Got gold? Got silver? I bought silver several years ago at $12 per troy ounce, now it’s around $41. I’m not selling yet as I think it’s still undervalued versus the dollar. Cheers! Peter Schiff was beating the drum even back then – right on the (real) money.

  13. Memo to US Taxpayers – Abolish the Federal Reserve

    All governments want to keep every citizen/taxpayer in debt indefinitely. The major “Central Banks” want all governments in debt indefinitely. They cannot fathom anything being debt free it does not benefit them. As Liz O’Donnell pointed out they keep repeating this same crap every time and expect a different result. Allow me to paint a picture…each paragraph is going to highlight many different topics.

    The Federal Reserve System has never EVER done what it was designed to do, which is to stabilize the economy. The System has failed it’s stated objectives since early 1900′s. It is incapable of achieving its stated objectives because, they were never it’s true objectives. It is just a government facade. It is far from being the protector of the public, it is a cartel operating against the public! The public will always be sacrificed. It is a farce!

    The Federal Reserve is a legal private monopoly of the money supply operated for the benefit of the few under the guise of protecting and promoting public interest. Since it’s inception in 1910 it has presided over the crashes of 1921 and 1929; the Great Depression of ’29 to ’39; recessions in ’53, ’57, ’69, ’75, and ’81; a stock market “Black Monday” in ’87; and a 1000% inflation which has destroyed 90% of the dollar’s purchasing power.

    When banks or any large business become insolvent who is standing by with a checkbook? The Federal Reserve, “the lender of last resort”…but not without the business/company taking a sob story (like, massive job losses and cause great economic strain across the country, blah, blah) to Congress first. But there has been a time when they did bypass Congress. (Think S&L Fiasco – Congress was quiet for a reason. Many of their benefactors were people in S&L.) They bailed out Penn Central, Lockheed (1970), NYC (1975), Chrysler (1978), Commonwealth Bank of Detroit (1972), First Pennsylvania Bank (1980), Continental Illinois (1980′s), Subprime Meltdown (2008), Bank Bailout ($700 Billion was really $5 Trillion), Auto Bailout….

    Nationalization has become a reality. This new business model in America is becoming recognizable. The dominant feature is the merger of government, real estate and commerce into a single structure controlled tightly at the top. It is the same model used in Soviet Russia, Nazi Germany, Fascist Italy, and Communist China. Does that blow your mind?

    Another thing…what was IMF (International Monetary Fund) Strauss-Kahn doing in USA recently before the rape accusations? Their sole goal was to terminate the use of gold as the basis of international currency exchange and replace it with politically manipulated paper standard (which slowly happened by 1971 – thank President Nixon specifically to US only) Beside the point…why was he here in this time of financial chaos? I suspect to make sure all the gold is liquidated from every company/person and maintain control in the near future. To make sure gold is no longer in supply?

    Go read about the Fabian Society. The Hidden Agenda is World Socialism. And don’t be fooled…it has nothing to do with our “Mother Earth” it is about control. It’s starting to sound like a Gene Roddenberry world when you think about it.

    Ever hear of “Daddy Warbucks”? The name is a play on a real name of Warburg. Little Orphan Annie’s dad was the presumed benevolence of Paul M. Warburg. There was also a brother named Max Warburg that was the financial adviser to the Kaiser who became the Director of the Reichsbank in Germany. This was of course the Central Bank, and it was one of the models used in the construction of the American Federal Reserve System. Incidentally a few years later the Reichsbank created massive hyper-infaltion that wiped out the middle class and the entire economy as well. Gee that means the same can happen with our Federal Reserve Bank? Again and again and again…Fu*k you, Senator Aldrich, Fu*k you, Mr. Warburg and Fu*k you, Congress! Abolish the Federal Reserve Bank and allow free markets to flourish. Why are we letting these buffoons run the country? They never get fired for doing a lousy job…they just say, “The taxpayers will cover it!” Maybe they all need to read Dan Ariely’s, Predictably Irrational.

    Times are changing. We no longer are flourishing in a indebted world. I’ll give you one example of a debt free company that is flourishing. Apple, Inc. They are a vertical integrated company thus we are in a Vertical Market world because Microsoft, RIM (Research in Motion), Nokia are not doing well (the horizontal integrated companies). The financial climate is changing and needs to keep up with the times and the old tried methods are not working anymore….it has compounded the problem over time and it has gotten worse every time. Fancy book keeping and moving of the numbers in ledgers is no longer going to do the trick anymore this time or the near future. We are slowly moving away from a labor based economy to a service based economy, social norms have begun to replace market norms. We are in a social world right now and we spend so much time on Facebook/myspace or other forms of social networking…its changing right before our eyes and our government’s dont like it. Entire industries exist solely because money exists (mortgages, finance, banking to name a few) and you can bet your last dollar they’ll do everything it takes to make sure money keeps on existing. This is a time for a free market world. There is a bigger picture here, we no longer need the Cartel of Banks.

  14. Pingback: CRASH 2: John Wayne knew that a man who hasn’t a clue what to do must still do what a man must do. | The Slog

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