Jackson Hole got interesting toward the end.
Former BOE Policy Maker Willem Buiter savaged Bernanke; here are a few excerpts:
"``The Fed listens to Wall Street and believes what it hears,'' Buiter said yesterday in a paper presented to the Fed's conference in Jackson Hole, Wyoming. ``This distortion into a partial and often highly distorted perception of reality is unhealthy and dangerous.''
No kidding? Not to mention Cramer. Oh wait - he's just a mouthpiece for people screaming on Wall Street when they're facing the possibility that they will have to stop lying.
Mishkin lashed out against Buiter's assertion that the Fed's rate reductions may cause higher consumer prices.
Mishkin has rocks in his head. "May cause"? What do you call the price spikes that have already taken place? Gee, there's a 100% correlation with the insane liquidity pumping.
Of course Mishkin can't admit that his staunch advocacy of "easy money" is wrong; that would be an indictment of his bankrupt policies and beliefs since he first gained a voice on this stage.
But the facts speak for themselves, irrespective of what Mishkin would like to believe. Asset bubbles are price inflation Mishkin! What do you call housing prices doubling in the space of four years? I call it price inflation!
What do you call it? I know, I know, its all ok because it wasn't wage inflation.
But that just means that ordinary Americans who can't ride around in limousines and fly in private jets get rammed while you sit back and lounge in the great view out there at Jackson Hole.
``You don't let your borrower determine the value of the collateral offered to you,'' Buiter said. ``That's just crazy.''
Talk about stating the obvious.
That this requires a paper to be presented at this conference and is considered "controversial" tells you just how entrenched and full of crap these so-called "policy wonks" really are.
The truth is that this entire charade is all about allowing banks and other institutions to lie about the value of their so-called "assets" by exchanging them for Treasuries and loans that the private marketplace would never support.
This isn't about "lack of liquidity." It is about an intentional act of avoiding price discovery - the anathema of honest and fair capital markets, being fostered and validated by our own Federal Reserve!
Never mind that the market says The Fed's happy-talk is a bunch of crap.
"``These problems going into year-end are likely to be worse this time round because of the amount banks have to refinance in December,'' Thomson said, citing a figure of $88 billion. ``The suspicion is that banks are still hiding losses. The banking system relies on trust and at the minute there quite simply isn't any.''"
Gee, who's responsible for that Ben-cough-Bernanke-cough-cough.
Does this bother Bernanke?
Clearly not.
Should it bother you?
Absolutely, because the longer this charade goes on, the more stress there will be in the system and the higher the probability that we get an outright explosion somewhere that does severe damage to you as a consumer.
That is, if you're not choked off by the rising price of everything you need to buy (like food and gasoline), plus the loss of your job, first.
Oh, but Ben is quite sure price inflation will moderate "over the medium term":
"Federal Reserve Chairman Ben Bernanke defended the central bank's decision to keep interest rates low even as consumer prices rise sharply, saying a weaker economy is likely to bring inflation under control in the medium term."
Riiight.
Just like you said "subprime is contained"? (3/07)
Or "we do not expect spillovers from the subprime markets to the rest of the economy or to the financial system"? (5/07)
Or "monetary and fiscal policies are in train that should support a return to growth in the second half of this year"? (4/08)
Or "our baseline forecast is for moderating inflation"? (7/06)
Or ".... expect energy and other commodity prices to flatten out"? (7/07, right before the insane run in these prices began!)
How can you be that wrong and keep your job?
How can The American People sit back and listen to you pontificate over and over and be nearly 100% wrong in your projections, time after time, and yet not form into groups millions strong to demand that you step down?
You think the American People are powerless?
They most certainly are not.
What prevents America from deciding that it has had enough Ben? What prevents the people from descending on Washington DC and camping outside your home, hundreds of thousands or even millions strong? What prevents The American People from deciding to go on a general "debt paying strike", flatly refusing to pay any principal or interest to any creditor, all of which are directly and indirectly your banking buddies, until you leave and we get someone responsible to take your job?
Nothing Ben, except that America, so far, has proven to be a bunch of sheep and you've had free run with the shears.
How much longer will that persist Ben?
The current official unemployment rate is near 6%. The real unemployment rate is 14%, if you count those people who are "discouraged" and have given up.
What happens when 14% of America shows up in Washington DC and says "you couldn't keep your job as a weatherman with your accuracy; you sure as hell are unqualified to head our Central Bank"?
Hmmmm....
Will America? Probably not, until they can't make the power bill so they can watch American Idol.
That's what you're counting on, isn't it Ben?
Well guess what - that day is coming, and soon, if you don't reverse your policies and start demanding that the truth be told, up and down the line.
Take responsibility for your mess Ben:
- The Fed created the loose money policies that have led to the asset bubbles - all of them - since the late 80s. The Internet Stock bubble and the housing bubble were not mistakes, they were deliberate acts.
- The Fed has been dead flat wrong in its public statements about the course of this credit mess, going back to at least 2007. Since your policy moves are based on your statements, those must also be presumed to be wrong.
- The Fed has refused to stomp on the necks of those financial institutions that have lied about asset values for the last eight years. Worse, The Fed, since establishing the TAF, TSLF and PDCF, is now enabling further lies through direct action. You're no longer just looking the other way - you've become an active participant!
- The Fed's unprecedented liquidity injections - approximately $400 billion dollars in the last year - have been directly responsible for an insane price ramp in the commodity space, as all that money goes "looking for a return" and finds it in places that do direct harm to American consumers. YOU are responsible for this Ben. Personally.
Now, instead of forcing institutions to take their medicine you are fostering the precise sort of consumer squeeze that is likely to lead policymakers in Congress and The White House come November to make the same mistakes that Herbert Hoover made 80 years ago.
You know what happened then, right Ben?
You must either own up to your mistakes and retract them, or you, along with the next administration, will be the ones who get "credit" for what will inevitably follow.
America will not forget - or forgive - when it does.
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