One Clap for Bernanke Reappointment

Posted by: Michael Mandel on August 26

I’m a bit late to the party here, partly because I don’t view Bernanke’s reappointment as a particularly important economic event. The central bank did what it was supposed to—when faced with a burning financial crisis, throw liquidity at it until the crisis is under control. In that sense, Bernanke deserves a medal as a top firefighter. Other potential Fed Chairs might have done much worse.

However, just like firefighters don’t rebuild homes, the Fed has very little role in rebuilding the economy. I’m concerned about a whole range of economic issues—innovation, healthcare, manufacturing, trade, education, etc—and the Fed has very little do with any of these.

So from that perspective, the Bernanke reappointment is a bit of a distraction.

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Reader Comments

Eddy Alvarez

August 26, 2009 01:52 PM

but aren't firefighters 'heroes'?

joe

August 26, 2009 02:05 PM

the Fed has very little role in rebuilding the economy...good thing they did what they did, or there would be little left to rebuild...

Tim Miltz

August 26, 2009 02:06 PM

You make a very good point here.

I too place higher value on education. As to healthcare I can not observe any effort sought through healthcare would be sensible so long as we ignore potential for health, through coal. Just last week EPA announced mercury from coal is everywhere such that every single fish they caught contained mercury this year. Ignoring causal factors that lead to detriments in neurological capacity and function probably undermines any chance at even having a decent worker, free of neurological deficits in the work place.

Alan Greenspan pointed out in the late 1990's that Education is the only path to the United States having a future, and the ability to compete in global job markets. Alan was so right.

People tend to blame more when they understand less.

I too commend Bernanke for doing all he really could do. Personally, I argue he's right about zero rates until end of 2010. People use their homes as credit cards. This is the real source of many small businesses, HELOC's, second mortgages. So long as housing prices are down, often less than what people originated the mortgage product at ? Not only will people lose their homes, be locked out of any credit/loans from their home, but banks too, such as Bank United and 200 more according to FDIC in 2009 alone will continue to fail. They will fail not because they engaged in sub prime loans- they are failing because the assets on the books, the mortgage backed securities merely look bad, and come time for Sheila Bair, Chair of the FDIC to review them, awe gee, they don't have their minimum capital on hand, and they get the letter and visit on any given Friday by the FDIC where workers are told - enter the building, clear out your desk, leave the building. So keeping interest rates at zero is the only way to encourage housing.

Remember - it wasn't 0 % rates that got us into this... It was Bush in 2002 saying - everyone - go get your home, forget the down payment, and there was Fox News with the Countrywide ads to make it happen, NO questions asked. No job ? why ? no problem.

Remember the Comptroller of Currency points out Countrywide didn't go to the banks, CW went right to the investment banks on Wall Street.

THIS was the poison dart that started the collapse.

GOOD banks are failing merely because they have real estate on their books.

So, indeed, Bernanke has recognized housing has to recover before anything else. Jobs can come out of ventures through HELOC's and mortgages, the way many small businesses start.

For those that don't see the 50,000 foot view, ask yourself... Which would you rather have ? Some migratory inflation from 0% ? or housing that will continue to bring more foreclosures and more good banks dying simply because their assets have less value ?

Inflation can be met any time in the future - you can't undo a home loss or bank closing.

Looks like housing data is in - looks like we're finally starting to see the 0% approach to spur housing back is working.

Past that - I agree, Bernanke has little impact.

Here big coal- go coat the world with mercury - now let's talk health care to deal with little bobby's neurologically deficit autism caused by mercury ?

As Elizabeth Warren says:

"That can't be right"

Najeeb Haddad

August 26, 2009 02:19 PM

Hero!! did he put himself at risk to save us from this disaster that only happened because they were asleep in their jobs?

Jim L

August 26, 2009 02:24 PM

I think the real issue with the re-appointment is transparency. Does the Fed provide adequate transparency in exchange for the powers they enjoy? Has Bernanke been deliberately obscurring the details of how and where he threw the liquidity during the crisis?

BubbaRight

August 26, 2009 03:29 PM

We'll the Fed may not have much to do with rebuilding the economy but Bernanke sure can take credit for tearing it down with his expansionist policies of keeping rates artificially low that contributed the real estate bubble that eventually burst and took the economy with it.

johna1350

August 26, 2009 03:32 PM

The Fed reacted and we went from fire to smoke, now that the banks are happy and STILL not loaning money to business or distressed homeowners, I would put my money on bank stocks, record profits are soon to show. As for the Fed if MJ's chimp was available he could do the job as well.

Professor Bear

August 26, 2009 04:18 PM

"but aren't firefighters 'heroes'?"

Not the ones who start fires. These are known as 'arsonists.'

Tim Miltz

August 26, 2009 05:49 PM

I do like to write, and often the things I wish to write about I have to squeeze into a comments section on a blog, for I always figure if I pick a home to blog ? How would anyone find it ? Except by chance of googlebot on a keyword.

But I was JUST thinking here about the comments above and the role of the Federal Reserve, and I do like the point that the Federal Reserve has one function typically, and there ARE so many other issues at hand that are key to a functional society promoting itself.

I was thinking about an idea I was going to add to my notepad list of ideas/inventions/services I've always thought would be pro-active for society.

In the past I've not published it thinking, oh, someone will come along and 'take it'.

HOWEVER, the top winners in capitalism -take Bill Gates and Warren Buffet - both say, it's about us, not me. Neither of them are leaving behind mountains of money for their families/children.

Buffett really hit the nail on the head when he said when asked "Why are you giving all your money away when you die ? " Warren goes "Because... It was never mine, it was societies money".

I learned that money culture IS shared and made real by everyone collectively through Jacob Needleman in his book Money and the Meaning of Life. Needleman gave up world religion and philosophy to study the philosophy of money, and in so many ways, money succeeds at the root of religion, Relegare- 'To unite' more so than religion does. To that I once thought, gee, I should go to Vegas, that MUST be the religious capital of the world.

BUT- my point here is that... Capitalism is FINE, and can serve humanity. HOWEVER, IF we take an isolationistic stance in this world ? we WILL be left with hording our ideas and gems to offer up, thinking 'mine, all mine, I came up with it', and then enter absurdity of patents. I note that Einstein worked in a patent office, but he claimed no patent on his offering of mass equivalence theory, e=mc^2. Nor do I with my settling on g / sqr(e) = c^2/m.

Hey I could be wrong on that, thanks to my Verizon phone bill and a night of heavy drinking, I awoke from a dream with that in hand, and it all works out when I check it- ANYWAY.

I think the Gates(ian ? ) and Buffetian approach to capitalism is the healthy one, the one that keeps in mind that collectively we make the entire culture (shared meaning) work. Needleman points out that we willingly 'believe' in currency for the model to work, so goes with capitalism.

So, what does this have to do with the Federal Reserve or the move towards Globalism from Nationalism ?

I'm just suggesting that if ONLY we could get past the isolationist modality of capitalism, which in part IS nationalism that says - 'me vs them' or 'us vs them' ? And instead invite say- Darwin to the Financial Services Roundtable ? where I draw from Darwin a GREAT message which simply says- here, EMPIRICAL EVIDENCE - all life is related, e.g. genetics. A message missed while everyone goes off on whether there is teleological commitment to god in that distraction of creationism vs evolution, which clearly- both are part of the same model.

So, ending here, I suggest instead of the greedy isolationist wall street investment bank model, we invite Buffet's view on capitalism, and my view on patents and ideas here, which is - is it NOT through each other we accomplish the platforms to which we reach higher and higher from ? collectively ? shared ? rather than the 'mine, mine, all mine, in fact, leverage out some more to 50 to 1, I want more more more' ? With 110 million bonuses being paid because someone figured out a way to exploit the frozen orange juice market ?

Where is this direction - perhaps moral direction to come from ? that invites us to a more collective, as I like to call it 'responsible capitalism' ?

One thing for sure, nationalism stands in the way right now as it offers a fragmented view of the world, and ANY economy subject to a nation state model, as George Lucas has C3PO putting it - "we're doomed".

Sometimes I capitalize nationalism, sometimes I don't, but I don't promote nationalizing capitalism !

Perhaps this is what we're missing to celebrate a planetary societal model, that we still nationalize capitalism, when humanity and as Darwin might say- is a global collective (possibly even bigger, but who knows what's circling all those stars out there that might be bipedal and close in resemblance ).

to the author of this blog - hey- cool with me if you don't publish it - hope you did get a chance to read it, for whatever reason, I find typing things out in some formal structure benefits me, MAYBE others, heh, some might say - no no - please - type no more ! heh.

I've also had it with the larger corporate media resources that sometimes have conflicts with my views on coal and oil when their main advertisers are coal or oil - then it's - hey dude, where's my post ! (movie 'hey dude, where's my car !)

on that, perhaps people will wake up realizing Bank of America is bigger than America and go 'hey dude, where's my nation state' ! L)


Tim Miltz

August 26, 2009 06:00 PM

Professor Bear
August 26, 2009 04:18 PM
"but aren't firefighters 'heroes'?"

Not the ones who start fires. These are known as 'arsonists.'


End paste:


Professor Bear, many have suggested Greenspan's zero percent rates provided the oxygen for the fire.

I argue - it was Bush + Countrywide (which for some reason, took over lease I research from Lockheed Martin, what's THAAAYAT all about) + Fox News = the gasoline.

Watch this one:

http://www.youtube.com/watch?v=kNqQx7sjoS8&feature=channel_page

There are others, with different back drops - but am I the ONLY ONE who sees this was the gasoline on the bon fire to start it ?

Comptroller of Currency Dugan makes a GREAT point that Countrywide didn't GO through the banks to launder these zero equity loans- later to be rubber stamped by Moody's - then wrapped up - obfuscated, sold off to unsuspecting third world countries (poor Iceland, they lost their entire nation on them) ? only to find ? ZERO EQUITY ? What ?

Bush explicitly states in 2002- Forget the down payment requirement.

Forget the fine print, we can change that.

And Professor Bear ? you blame Greenspan or the Federal Reserve here for zero percent interest rates ?

No, this was intentional abuse and misuse OF that scenario.

Greenspan promoted a house is something you live in- you don't buy it to flip it, it's not a 'stock'.

Bush, with CW's zero equity, no job requirement ? my god - you'd have to believe it was the end of the world to GRANT such a loan, OR believe it's the end of the world to TAKE a jumbo 600k loan when you know you have no job, and won't be able to pay after the 5 years, no money needed, just re-fi in 5 years says the real estate agent who was HAPPY to take the commission.

no, the Federal Reserve is not an arsonist here, the arsonist was Bush - and I STILL Ask - and get NO response in any media outlets - why ? out of the blue ? did bush decide ? hey hey hey - let's just tell everyone it's their American right (after Fox pumped up 'With us or yer a terrist' message, not to mention the racial profiling to help prop up a manufactured pseudo-religious war to help out Cheney's corporation's bottom line) to own a home, so go 'git it' ?

If only Bush family had a track record of over 1 trillion abuses of the banking system, I mean, if ONLY say he had a brother Neil who through Silverado - and others - racked up a cleanup bill for Savings and Loan to the tune of OVER 1 trillion, I MIGHT say - Bush is capable of doing the same - with the same greedy- disconnected - (and what is racism if not severe disconnection from the entire species ? ) mindset.

Clear to me Prof. Bear, it's not Greenspan or Bernanke, it's what those who ABUSED their delicate processae they em/deployed to remedy as best as one can remedy a nation state economy amidst a REAL - LIVE - global economy.

Bush + Countrywide abused and took advantage of crazy Alan's low low low rates. Sorry Alan, you're not crazy, I've learned a lot from you.

I have more - but I can't publish it - I'll get in trouble, but I have forwarded it to Barofsky's office.

Tim Miltz

August 26, 2009 07:28 PM

In part because I stumbled across this today, businessweek.com that is, which I've not been to, AND I like the article title.

The list above:

innovation, healthcare, manufacturing, trade, education, etc—

I'm tempted to say education leads to innovation, and manufacturing would lead to trade.

But I haven't been able to let go of a realization as of late which ties into energy policy.

That is, I find fostering a living environment that allows for mere potential of health seems upstream from healthcare.

For example. Dr. Patterson I observe brought us the lead isotope- which was strong enough empirical science to even force the oil refineries to produce 'de-leaded' gas (I still don't understand why it's still on the pumps, I recall this when growing up, the switch- MIGHT explain some of my own neurological deficits !), I read of a Dr. Blum ( http://pubs.acs.org/doi/full/10.1021/es802623b?cookieSet=1 ) that is working on the isotope for mercury. This SHOULD put a cap on it -possibly on our electric bill- instead of the gas pumps - it will say 'de-mercur... hmm - perhaps mercury-free'. Heh, and not so much heh.

Seriously, I've looked into the carbon sink maps released from Woods Hole showing the greatest carbon sinks in the nation, this is where you would find the highest methyl-mercury, and go figure - I looked further into autism maps and hey hey hey - they match up. It's no joke. I honestly believe some of the neurological diseases we are seeing in the elderly are contributed to by mercury. I went to Univ. of Calgary brain surgery section for their medical students and watched a video of what a neuron looks like AFTER being exposed to mercury - realtime, it's not pretty, it's mangled for life. It may be the neuron that says 'hey, let's avoid causing irreversible damage to our nervous system and brains by capping mercury, or capping coal'.

Yet ? #1 user of Bush campaign jet in 2000 I see was TXU - renamed now - Big texas coal (lower case T there) (they were invited to Cheney's closed door energy policy meetings, remember ? Exxon came, Exelon, Enron, TXU ) #2 user ? Enron.

What we NOW know about Enron ? And this was a family friend of the alleged president Bush ? I checked in Texas, around the stacks TXU has, GO FIGURE, there is HIGHER autism. Bush grandfathered many TXU stacks before leaving Texas so they don't HAVE to comply with mercury capping - That spews up the US East coast. EPA comes out last week saying mercury found in EVERY FISH they tested in US streams, lakes, and rivers.

So, health care ? I'll settle for MERE potential for health. Coal didn't take off until 1950's- so I see in charts showing coal plants. I get this feeling nationalism really ended on August 7th (I say 7th, because I realized the other day - it was the 7th in Japan when it was the 6th, to that 'text book author' above in comments, hey, maybe we should honor the Japanese and make it the day it was IN Japan when Hiroshima bomb hit), AND possibly ? we've all just been rolled by big energy since for the last 60 years, fed with useless politics that never mattered because no way in SANITY can living WITH threat of nuclear weapons to defend ? what ? land we TOOK from people before us ? who didn't even claim ownership ? and considered themselves caretakers ?

Maybe that was an open sentence- but Healthcare is downstream from energy policy.

While I would accept Obama simply because I didn't want a religious extremist - Palin - having access to the nuclear launch codes ? I DID see Obama DID take over $100,000 from Exelon SUCH that he ALSO voted allowing Exelon to set the rules on their tritium leak in his state- giving Exelon FINAL say - over local OR state authorities as to settlement or risk (people have gotten sick from the radioactive tritium entering wells I read), so, I can't understand how anyone can promote healthcare while ignoring health deficit from big corporate energy.

That said - I think education in that list above is key for all of it.

I noticed when researching Chevron's loss in a bizarre 1700's anti-pirating law called Alien Tort- allows foreign nations or citizens in foreign nations to sue company/corporation in their native nation, people of Myanmar (I also noticed Chevron sat next to Mrs. Bush at a white house dinner during this mess, and yet ? she comes out to speak up for the people of Myanmar ? )- the FIRST thing the SLORC (the military regime in place now) did was shut down the universities.

Technically this summer, the Federal Student Loan program went broke, thanks to the poison from Bush + Countrywide infecting the lenders- even Citi Financial's student loan program just died, gone, never came back).

So education I think is key.

I'll up the former president of Harvard's line "If you think education is expensive, try ignorance" to:

"If you think education is expensive, try religious fundamentalists like Palin having the launch codes".

I watched a video of Palin standing up at her church in Wasilla, there they are - on stage- stating it's End Days, and how don't worry, Alaska is one of God's THREE chosen refuge states, I think Wisconsin was one, I forget the other, MY GOD, or OUR GOD - augh! Forget University of Chicago on Cuban Missile Crisis saying we came came REAL close to nuclear mayhem - we almost hit it again, all under guise of some dejected brand of religious fundamentalism destined to divide the species. I don't even know if Palin would accept globalism, I'm guessing it would be considered some Islamic threat. When wikileaks.org posted Palin's emails - I couldn't help but hit groups.google.com for some of the names on the contact list, REAL strange- WHOLE lotta Zion this, Pro-Israel- must stop the Islamic terrorists web sites connected to her 'contacts' - What was or is THAAAYAT about.

Either way - Education from the list above is the key.

Thankfully - examples like MIT's free courseware- the global media share- the internet - our first taste of seeing the world as one - enables us.

HOPEFULLY we can find access to higher education using the internet - but as a professor once put it to me - the function of the University for the undergraduate is to experience and witness diversity in culture, shared meaning.

So to this blog/article written here ? I think I weight on education as the most important.

Without education, we'll retract 2,000 years to pre-copernicun views- I'm not even sure Palin would promote the earth actually goes around the sun, who knows, people who become accustomed to parent/provider model - or who don't reach as Jung would say -individuation ? and hang on to infantilism ? probably DO prefer the dime-store cliff notes dogma of some relic left over from an era such that it no longer serves humanity.

People need to take the 'Are we global yet' litmus test. I think it would be fun to create such a test, then they can lift up their keyboards, mouse, carpet, drapes, car parts, shoes, shirts and see 'Made in China' or frankly 'Not Made in the USA' and realize- it doesn't have to be.

Technically even the USA isn't 'made' in the USA- at least the currency - I'd argue each bill should say just like the American flag I got handed out to me last year on 4th of July "Made in China" upper corner. That one was a real eye opener.

Education ! Innovation will follow- manufacturing will follow innovation, trade will follow manufacturing.

Bottom line- I agree- there are more interesting and pressing subjects at hand for humanity than conveniently thinking one person - Bernanke is responsible for everybody's desire to be less accountable personally, and quickly project that inadequacy onto someone else. Seems we do it with nations as well as with Bernanke - or religions.

Once we realize everything comes from exploding suns, including suns, we could all go back and re-explore the Egyptians model ! And no, I don't mean gold either, I just think they probably had something good going there worshiping the sun. As to gold -as one fellow in a youtube video explaining history of banking and the gold standard put it -if you were on a plane that was about to crash, and had two islands to land on, one full of gold, the other full of highly innovative, creative people -with services, jobs, ideas, science etc, which would you want to land on ?

That one is to all the gold heads out there that somehow magically think if we just returned to the gold standard, we could pretend the real issue isn't a divided economic model through nationalism struggling to integrate into a global economic model, which is where we are at.

I apologize for going out of thread context here on several issues ! I just like to write. Short of this, I just like to develop software, it's creative, rewarding- and requires humility of intellect when bugs show up ! And they always do. Yet another red flag on the religious extremists who proclaim righteousness with no chance for rain, er, heh, reign in Palin's case (I will chime in, THANK GOD on that one)- or error. Many Christian fundamentalists go to Alaska with the very same mindset as some who go to CAVES it seems.

LAO

August 26, 2009 07:40 PM

I've come to feel that the strongly hinted Larry Summers alternative is best left to gamble with other people's lives and money, so Bernanke will do. Summers openly wanted the job, but since he appears to have played a role in losing a big chunk of Harvard's endowment, not to mention that he has never to my knowledge backed down from promoting off shoring of American jobs, I'm mightily relieved that Obama was not tempted.

Some here seem to have forgotten that Bernanke slowly raised rates -- legitimate behavior to cool an overheated economy -- and chided traders for reacting so strongly to each increment, also that he was well known as a Depression theorist. For President Bush to urge a deeply indebted population to buy homes and spend because it's patriotic, for Greenspan to openly promote ARM's at a time when they were guaranteed to reset at higher rates, and to bring in Mr. Risk Goldman Sachs Paulson and Bernanke the Depression fighter just altogether is too coincidental for me to ever believe all the surprised ignorance that has been expressed all around. Somebody's been keeping secrets, but I don't happen to think that it was Bernanke at the core of it -- he most likely was simply viewed as a smart technician. I thought Business Week once reported that he said he didn't expect to stay, which would have made sense if he thought he was simply hired to put out the conflagration that the insiders were setting up, so to see him begin to rise to the job at large makes me hope that he might not represent that polluted core of selfish power mongers.

Tim Miltz

August 26, 2009 07:42 PM

re-reading my post above ?

I do say- To issue mortgage products with zero equity ? no job requirement ?

Is it possible ? We have witnessed the effects of 'End Days' mindset applied to nation state economics ?

I mean - over 150 Regent's from Pat Roberston have made their way inside the beltway under Bush - Bush even hired the Vice President of Roberton's openly professing 'End Days' are here - law school. Ashcroft scarily teaches there. Remember Ashcroft ? Said for Abu Ghraib "now the Iraqi's can get a taste of American justice and ideals" - Monica Goodling - out of Regent hired one Lane McCotter - on record in the US ? the most abusive prison warden - the only warden to LOSE a suit by the federal prisoners in Texas - it's THAT bad - I checked him out - the list of suits by inmates is so long ? I think it broke my browser ! Monica brought us Abu Ghraib with FULL intent of what happened, I tell ya- this 'End Days' mentality- just opens the door for people to do anything they darn well please- and afterwards ? Why ? They're saved- they're in the book, doesn't matter, they're saved, and they're of course on the 'right' side.

We're in trouble that in the US we came THIS close to having religious fundamentalists take office - go figure- justifying the necessity to be in power- why ? Why to go fight the religious fundamentalist extremists that match their own lackey dime-store ideologies, pettily used to justify flat out - selfishness, arrogance, insolence - all in the name of Jesus (or Allah I suppose) though ! ugh!

I DO mean to respect all who DO derive an integrative modality in being from any religion, after all- the idea IS to bring together- to bind, the 'Christos'. Looks like someone personalized this message somewhere along the way- no wonder it's the most dangerous ones who claim 'Jesus Christ is my PERSONAL savior' I mean, right off the bat - it's non-integrative, then comes the 'MY pesonal afterlife plans' never 'ours'.

I denote Darwin to bring forward the best message- EMPIRICALLY - genetics reveals ALL life is connected. Even makes eating religious, plant or animal.

My perfect world ? Gandhi and Darwin would have met up and authored a book. I once read Gandhi saying "I can not separate myself from the most wicked soul, for humanity is one" Darwin could have upped it to "life is one" but then we'd be back to the wisdom of Black Elk and Chief Seattle- who were here before we claimed these lands as territories then states under guise of being united.

I mean, BOTH Black Elk and Chief Seattle warned - 'ya gonna ruin it'.

I think we've become Enron nation. Rove no doubt did some shredding, you don't just LOSE a mail server with the contents wiped so clean even the best forensics can't pull that data off the drives. We'll never know will we.

I think we can all get a pretty good idea - we've been rolled in the name of protect the nation state model that gives the kids such wonderful marks on their psyche such as 'live in fear of nuclear weapons' - meanwhile- big energy meters away and hey - that's okay isn't it ?

Tim Miltz

August 26, 2009 08:06 PM

Off topic: Having stumbled across Michael Mandel here today... I decided to read up some and watch what's out there on youtube with Mandel.

http://www.youtube.com/watch?v=eSeHXt0SD9o&feature=related

This one has me shocked.

It's opened my eyes to the Trade deficit- of which I hate to say- I know so little about.

Thanks there Mr. Mandel.

I CRAVE the 50,000 foot view, then the 60,000 onward. I sometimes get the top view okay, but I KNOW I usually don't have the time or expertise to really fully construct it without the low level, finer granularity hard work that often boils up, or down to the 'big picture'. Seems you have a good way of sharing macro view such that it's clear.

I also crave the ability to say something in 3 sentences- and NO MORE - your videos are very short there, but indeed- packed with insights and data behind them I gather.

Now, heh, on your Jan. speculation that all is well with stimulus IF unemployment doesn't get out of hand, I'd be curious to hear your insights on that subject now that it has.

I'm going back to work ! But I'll be sure to check businessweek.com in the future.

You seem genuine - simply about reaching a better understanding. I do say I like that.

Would have sent this but no email the author link ! Maybe skip printing this since it doesn't really apply to anyone else.

Kartik

August 26, 2009 09:58 PM

Michael,

Regarding 'Cash for Clunkers'..

Your point on high-tech stimulus is well made. However, take heart in the fact that each new car in this day and age has about $4000 worth of electronics + software in it.

For each car sold, more revenue is going to semi and software companies, than is going to steel or rubber companies.

So it is not a total loss.

Ben 'BEER'nanke

August 26, 2009 10:46 PM

It's time for a 'COLD ONE'. That was one heck of a fire!!!

Richard Michael Abraham

August 26, 2009 10:51 PM

Wall Street Up To Its Old Tricks/Fed Bernanke Joins In The Frey

Since March 15, 2009 to present, the DOW has gone from 6,500 and projected to climb to 10,000.
This will represent a 54% gain. My view is that this DOW increase is based on P.R. and sound bites of Secretary Geithner and most recently, FED Chairman Bernanke in concert with Wall Street players and insiders. The fundamentals do not exist for the stock market's mysterious climb.

30,000,000 jobless and growing...1,400,000 foreclosures in 2008...1,800,000 foreclosures in 2009...50%-80% of all Existing Home Sales are Short Sales in Florida, California, Nevada, Arizona...Little Consumer Confidence...No Consumer Spending...Significantly Increased Bankruptcies...Little or No Business Investment...Huge Deficit Spending...Record Defaults on Credit Cards, assuredly coming INFLATION, etc.

Fed Bernanke sought re-appointment (and got it) after his profoundly self-serving statements, "The U.S. and Global economy appear to be leveling out." Such unfounded sound bites assured him re-appointed, but Mr. Bernanke is now, nothing more than the current front man for another U.S. Government misrepresentation of the economic facts. Real estate home prices fell 30%-60% due to Wall Street's corrupt mortgage backed securities. Billions were made by Wall Street. And the U.S. Government bailed out the Wall Street Banks and does little for Main Street America.

If you believe in Wall Street and Bernanke and invest in stocks now, (at their highs) your upside is that stocks might go up another 4%-6% but your downside is that you will face possibly as much as a 54% loss of your money.

Since the rally is not based on GDP growth or economic fundamentals but rather on P.R., fueled hope or wishful thinking, (often called a sucker's rally) there is a greater chance the market has lots of room to fall. Even if it gives up just half it's gains, that could mean a 27% loss for you.

I agree, no more than one clap for Mr. Bernanke.

In real life, it's hard to earn money. It's easy to give it away, and print more. Bernanke has once again inflated the balloon. This time, to keep his job. And while this balloon may seem firm tonight, in the morning it too will go limp.

Warmest,

Richard Michael Abraham, Founder

The REDI Foundation www.redii.org info@redii.org

Joe Cushing

August 27, 2009 01:01 AM

Today I listened to the authors of ``The Road Ahead for the Fed'' discuss the book. Yes That's a book but I don't have the underline feature on here.

The main conclusion I got from the talks was that it's less important who is in charge of the Fed than the rules under which they operate. The Fed was created during the gold standard. Now that the gold standard is gone, we need rules to guild monetary policy. One of the authors was John Taylor who of course has always been in favor one the rule named after him.

John Taylor says that the reason we had the great moderation is because the Fed, in effect, followed his rule and that the reason the great moderation ended is because the Fed stopped following his rule around 2003.

I agree with these views.

beedi

August 27, 2009 09:46 AM

@ Militz: quit typing articles and "share" some of your wealth. i'll take it, even though i suspect its origins.

Thank you for your interest. This blog is no longer active.

 

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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