Bernanke - Hero or Heal?

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After he left the fed, Greenspan joined with John Paulson's hedge fund company. . You know the guy that made billions betting against the mortgage market prior to it's collapse? Yes, that guy!
 
I'm sorry but this is a stupid question. Remember 2007-2009 and the panic/pain of a crashing market. There are real people barely hanging on. The only one's truly unhappy right now are those hedge fund managers who make a killing in a bear market...looking at you Greenlight and Einhorn...so I think Bernanke should get the Nobel. Will this be great in 5/10/20 years?...who knows. But for the 99.99% of us not betting heavily against the market, and with past ability to manipulate trading with short sells, I'm very happy.
 
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It seems to me the grade is really incomplete.

Yes Bernake, along with Geitner, Sheila Bair, Hank Paulson and other deserve some kudos for the adroit handling of the events of 2008 and 2009. Pretty much all of the many accounts I've read and watched of the crisis point out that situation could have been worse, much worse if things were handled differently.

My issue with Bernake is the continued qualitative easing from 2010 on. I think in the long run the country would have been better off with a return to normalcy. The free market should have set interest rates after the major crisis had passed. Rather than the heavy hand of the Fed keeping rates low and punishing savers.

Instead the Feb balance sheet is filled with trillions of dollar in IMO overpriced Treasury bills, Fannie Mae mortgages of dubious credit worthiness and who knows what else.

If Ben and/or his successor manage to sell the unprecedented amount of assets the Fed has purchased over the last 5 years, without sparking a huge increase inflation and/or interest rates, then I'll perfectly willing to call the man a hero.

If on the other hand inflation and interest rates spike as I fear, then the benefits of inflated our debt will be largely canceled by hurting the feds balance sheet as the trillions of dollars on the balance sheet shrink in value.

But my real fear, is that China and other countries decide that soundest of the dollar can no longer be trusted. Perhaps the RMB supplements or even replace the greenback as the worlds reserve currency. If this ugly scenario occurs in the next decade then Uncle Ben, deserves to be vilified not praised.
 
clifp said:
It seems to me the grade is really incomplete.


My issue with Bernake is the continued qualitative easing from 2010 on. I think in the long run the country would have been better off with a return to normalcy. The free market should have set interest rates after the major crisis had passed. Rather than the heavy hand of the Fed keeping rates low and punishing savers.
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Certainly agree with that.
 
AndrewJackson said:
Anyone who believes that Fed Policy is correct in any shape or form doesn't understand the dynamics of a free market. Outcomes will always end up worse when you have ONE man FIXING the price of the most abundant and important commodity on the planet, money.

If there were ever an honest chairman, here is what they would do:

1. Sell bonds to get balance sheet to pre crisis QE levels.
2. Forgive the remaining debt owed by the US that is held on its books.
3. Remove any operations to fix the price of money and let a completely free market take over.
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Unfortunately, we don't have anything that resembles a free market. The government is entangled in everything and thus the Fed has to work in that framework. It's easy to say that we should just allow deflation, but what do you do about the millions of government workers with constitutionally protected pensions? So you either have to whack the pensions or inflate everyone else's assets. It's not about creating efficient markets. It's about creating markets that are under the complete control of central banks and thus governments. It's a game. Play well. :)
 
Bernanke is an idiot. At least Greenspan made some of his own decisions, and din;t rubber stamp everything the Executive branch wanted all the time...........
 
As everyone should know by now...if you bet against the dollar YOU LOSE...the dollar remains the go to currency until we find life on some other planet. If you are crazy enough to go into the FOREX market without being one of the insiders, then bless you.
 
People have been predicting inflation since the crisis.

Even when deflation was a bigger looming threat.
 
explanade said:
People have been predicting inflation since the crisis.

Even when deflation was a bigger looming threat.
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So we can just keep printing money, and we will never have to pay the piper? Economic theory says otherwise.......;)
 
explanade said:
People have been predicting inflation since the crisis.
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They even have a name .. inflationista.

explanade said:
Even when deflation was a bigger looming threat.
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From the most recent CPI report, deflation remains a serious threat Consumer Price Index Summary
The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.2 percent in March on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.5 percent before seasonal adjustment.​
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Anyone who thinks we don't have inflation has got their head in the sand. Education, gas, health care, autos, homes, commodities, food, all up substantially in the past few years. And ALL those things are up due to government interference and or subsidies. When the Fed talks about deflation, he means that the costs of things aren't high enough to support the present level of government spending. I see no end but rather a time in the near future where those with skills will barter their services and scoff at the idea of providing a service in exchange for worthless currency.
 
So easy to be an armchair quarterback, but let's revisit. YOU are in a meeting with Wall Street [-]crooks[/-] CEOS, all who tell you that within days, if not hours, the entire banking system will collapse.

What will you do?

You have 60 sec...
 
HFWR said:
So easy to be an armchair quarterback, but let's revisit. YOU are in a meeting with Wall Street [-]crooks[/-] CEOS, all who tell you that within days, if not hours, the entire banking system will collapse.

What will you do?

You have 60 sec...
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I thought they did a great job in the face of the crisis with a few exceptions. But the bailouts have long since been repaid. The financial crisis caused by credit default swaps, etc. is history. Big Ben is still throwing Hail Mary's when we are now on to a whole different set of problems. Caused not by wall street but by government intrusion in the market.
 
Gatordoc50 said:
I thought they did a great job in the face of the crisis with a few exceptions. But the bailouts have long since been repaid. The financial crisis caused by credit default swaps, etc. is history. Big Ben is still throwing Hail Mary's when we are now on to a whole different set of problems. Caused not by wall street but by government intrusion in the market.
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I don't believe he's throwing hail marys at all. He's allowing underwater homeowners to re-fi and governments to finance debt at super low rates, etc. May or may not be the right thing to do, but I don't think it's equivalent to "punting". Pretty deliberate, IMO...
 
Well, I don't think any of us have our heads in the sand, even if we don't agree about inflation. When we look around we all see different things, that is why I don't trust my " inflation vision" and instead look for data.

If we had consumer inflation it should show up first in the CPI measure. Even if it did not, it would still appear elsewhere. Revenue growth of consumer staple producers, such as P&G, and retail leaders, such as Wall-Mart - but they are showing no pricing power at all, and no inflation. If the inflation were broad based it would appear as business to business revenue growth, like at IBM, which also has no revenue growth. If it were true economic inflation it would also push up price of labor, which is clearly not the case. Higher inflation would mean the nominal rate of GDP growth would need to be even higher than the anemic numbers we see now.

In a (mostly) self sufficient and competitive economy, broad based inflation just doesn't happen alongside declining wages unless there is a significant increase in credit. For the past 5 years the opposite has been happening, and there is no sign of change.

HFWR said:
I don't believe he's throwing hail marys at all. He's allowing underwater homeowners to re-fi and governments to finance debt at super low rates, etc. May or may not be the right thing to do, but I don't think it's equivalent to "punting". Pretty deliberate, IMO...
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Right. Deliberate, and also pretty straightforward.
 
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MichaelB said:
Well, I don't think any of us have our heads in the sand, even if we don't agree about inflation. When we look around we all see different things, that is why I don't trust my " inflation vision" and instead look for data.

If we had consumer inflation it should show up first in the CPI measure. Even if it did not, it would still appear elsewhere. Revenue growth of consumer staple producers, such as P&G, and retail leaders, such as Wall-Mart - but they are showing no pricing power at all, and no inflation. If the inflation were broad based it would appear as business to business revenue growth, like at IBM, which also has no revenue growth. If it were true economic inflation it would also push up price of labor, which is clearly not the case. Higher inflation would mean the nominal rate of GDP growth would need to be even higher than the anemic numbers we see now.

In a (mostly) self sufficient and competitive economy, broad based inflation just doesn't happen alongside declining wages unless there is a significant increase in credit. For the past 5 years the opposite has been happening, and there is no sign of change.

Right. Deliberate, and also pretty straightforward.
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Markets up AGAIN today. Someone out there is confident in earnings and revenues. They must be using different data than you.
 
Gatordoc50 said:
I thought they did a great job in the face of the crisis with a few exceptions. But the bailouts have long since been repaid. The financial crisis caused by credit default swaps, etc. is history. Big Ben is still throwing Hail Mary's when we are now on to a whole different set of problems. Caused not by wall street but by government intrusion in the market.
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+1
 
Gatordoc50 said:
Markets up AGAIN today. Someone out there is confident in earnings and revenues. They must be using different data than you.
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Businesses used the economic downturn to stockpile cash and get rid of a bunch of older employees that were making high salaries. Now they are flush with cash and increasing earnings. Plus, they got to refincnace all their 5 and 6% corporate dent to 2 and 3%. Again, a good thing for them. Greed and fear drive Wall Street, and it is nearly always a 50/50 proposition.

The only real way to fix the national debt is to allow interest rates to rise and inflate our way our of the problem. It will be painful. Or we can be like Greece and just default at some point in the future........:nonono:
 
MichaelB said:
Not sure what point you are trying to make.
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The data you present may not actually reflect what is actually happening. I don't agree that there is no inflation, Just measured in a way to reflect lower numbers. Funny at how you hear about our deflationary environment one day and the need for chained CPI the next. I also contend that the size of our underground economy causes GDP to be understated and unemployment to be overstated. In fact, according to some, the tax revenues from that economy would be enough to balance the budget. Sure, maybe the economy stinks like you say. Then why hasn't it "improved" with all the massive stimulus? Or maybe I am right. The economy is fine and the Feds actions are just a smokescreen that allows the government to continue to overspend and enjoy the benefits of financial repression.
 
I love these threads. they make it so easy to pick out new candidates for my ignore list.
 
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