A Message To Our Senate: Defeat Bernanke
The Market Ticker ® - Commentary on The Capital Markets
Posted 2010-01-24 13:44
by Karl Denninger
in Federal Reserve
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A Message To Our Senate: Defeat Bernanke
 

The reaction from Wall Street and The White House should not have surprising when it comes to Bernanke's nomination.  We heard people like Robert Gibbs say:

Asked about the potential financial repercussions of the U.S. Senate voting against Bernanke, Gibbs said, "The best way to not have to deal with those repercussions is to support Ben Bernanke for a second term."

Gibbs said senators could support stability in the financial system by backing Bernanke's renomination.

This is a blatant and outrageous lie.

The historical record is clear and incontrovertible.  Ben Bernanke caused, both directly and indirectly, the housing bubble and as a consequence the inevitable crash. 

He has refused to take actions that would prevent it from happening again.  Indeed, he has promoted even more concentration of risk through intentional acts of aggregation of banking interests, taking "too big to fail" to a new level of "outrageously too big to fail."

And finally, he has argued for and fostered a ridiculously unsustainable spending binge by Congress which has destroyed The Federal Government's ability to effectively intervene when, not if, the next market crisis comes.

The facts are simple:

Bernanke intentionally allowed the growth of credit aggregates at rates of 50% to 100% faster than GDP over the last decade, a direct violation of the law governing The Federal Reserve and the underlying and necessary predicate for the bubble to occur.  Bernanke was, in fact, the loudest Federal Reserve advocate of Greenspan's "easy money" policies after the 2000 Nasdaq market collapse.

Bernanke has willfully and intentionally ignored basic mathematical facts related to the growth in credit aggregates - specifically, that permitting credit aggregates to grow faster than GDP always must eventually, if maintained, lead to a massive credit bust.  This is a function of basic mathematics - specifically, exponents.  All the fancy "econometric models" in the world cannot violate the basic laws of mathematics.

Bernanke refused to regulate lending and securitization by the banks during the housing bubble despite the fact that the FBI issued a formal warning of massive fraud in 2004 and both HUD and Corelogic issued studies in 2005 and 2006 showing nine of ten borrowers in "ALT-A" loans had lied about their incomes.  Without suckers to buy these worthless securities this irresponsible lending could not have taken place.

Bernanke's willful refusal to both conform with the law and regulate the banks fostered the environment in which they have and continue to asset-strip the citizens of this nation.  Bluntly put the big banks are paying out 1% of GDP to a few thousand people not due to hard work, industry and innovation but rather due to rank exploitation and deliberate mispricing of risk with the costs of these outrageous and intentional acts shifted to the citizens of this nation.

Bernanke has intentionally concealed the terms and beneficiaries of bailouts and handouts despite multiple requests from Congress and The Press, has fought FOIA requests, has ignored Congress outright and just recently failed to fully comply, in the opinion of Representative Darrell Issa, with the Congressional subpoena issued by the committee on which he sits.

Bernanke has in fact been dead wrong on virtually every pronouncement he has made over the last ten years on economic matters, including claims that there was no housing bubble as late as 2006, that subprime was contained, that we would not experience a recession, that his policy prescriptions would stabilize the economy and job market and that if EESA/TARP was passed the stock market would not collapse.  Each and every one of those claims was in fact wrong.  A weatherman would be fired for a predictive record far better than Bernanke's.

Bernanke claimed, in sworn testimony, that he would not monetize the debt.  While he was speaking - almost literally to the hour - The Federal Reserve was in fact monetizing $300 billion in Treasury debt and $1.2 trillion in Fannie and Freddie Securities - securities we now know are stuffed full of fraudulent mortgages that Fannie and Freddie bought during the bubble years.

Bernanke has refused to accept responsibility for his policies.  He gave a major speech in January in which he defended not only his record but also the willful and intentional misapplication of his favored policy "pointer", known as The Taylor Rule.  The author of that rule, a highly-respected academic professor, responded with a scathing (in academic terms) reply pointing out that "as written" Bernanke and Greenspan had held interest rates far too low for too long and thus fueled the speculative frenzy that led to this collapse.

Bernanke claims to have a plan to exit his "extraordinary measures" but has refused to explain that plan.  This is likely because he has not supported the mortgage-backed security market, he is, in fact, the market, having now bought literally more than the entire net issuance in 2009!  The reason Bernanke has not explained his exit strategy is simple: he doesn't have one.

Bernanke has willfully and intentionally ignored obvious and clear indications of front-running in the bond market while he has been running his "quantitative easing."  There have been inexplicable pricing moves in the Treasury Market in the very specific issues that were then bought by The Fed just hours or days later.  While there is no "smoking gun" proving that The Fed has communicated to certain market participants what would be bought, and then intentionally overpaid for those very same securities, it is impossible to look at this market's performance in an objective, statistical fashion over the last year and not reach the inescapable conclusion that someone, or a handful of someones, have been cheating.

The people have had it with Bernanke, the banks and The Federal Reserve's complicity and willful blindness in the looting of our nation. 

We the people are tired of being told that we not only must sit still for being looted on the way up but then must bail out those who get caught holding the bag when the inevitable bust follows the fraud-laced boom - a pattern of conduct that has been intentionally played out at the expense of Americans twice in the last ten years.

As a matter of public policy these actions are irresponsible, unacceptable and outrageous.  They constitute outright theft from the citizens of this nation both on the way up and on the way back down.

There are many who say that "there is no other reasonable alternative."  This is outrageously false as well.  Paul Volcker is one obvious choice, assuming he wants the job.  Another obvious choice would be John Taylor - author of The Taylor Rule and a highly-respected academic.  There are others, of course but these two are clear alternatives that make sense, with Mr. Volcker being arguably the best-respected central banker of the last 100 years and the man who singularly put a stop to what could have easily been a disastrous descent into monetary hell in the 1980s.

The Senate has 1/3rd of their ranks up for election.  Every Senator standing for election this year that votes for Bernanke is at risk of losing his or her seat, as Massachusetts shows. 

Remember Senators that Massachusetts saw a more than thirty point swing from Democrat to Republican - and to a near-literal unknown candidate - in less than thirty days time.

There is not one Senate seat that can survive such a swing at the polls. 

NOT ONE OF YOU HAS A SAFE SEAT.

Massachusetts was about much more than health care.  It was about the Democrat Majority the people put into power claiming that they would bring change to Washington DC - that "captains of industry" would no longer be free to loot and steal from the common man in all of its forms, whether it be in health care, offshoring jobs, passing 2,000 page bills in secret or predatory lending.  Instead of keeping that promise The Democrats instead increased the looting of the people, with big banks now paying out 1% of GDP in bonuses - $145 billion - to a few thousand people with each of those dollars literally stolen from the rest of us.

We the people have had enough and you are on notice: What happened in Massachusetts can and will happen across this land come November.  We, not you, are the ones with the power and we WILL dispossess you of your jobs just as you have allowed the banksters to dispossess us of our homes, our wealth and our jobs.

Remember well as you vote Senators, because we the people are damn tired of being looted, financially raped and robbed, and Ben Bernanke both put in place the conditions leading to and has in fact refused to put a stop to these acts!

IF YOU DON'T PUT A STOP TO IT HERE AND NOW WE WILL FIRE YOU AND REPLACE YOU WITH SENATORS THAT WILL.

That's a promise.

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User Info A Message To Our Senate: Defeat Bernanke in forum [Market-Ticker]
Mrbill
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Great summary! Puts everything all in one place.
Eaglewwit
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If we defeat BOB I will still believe in out democratic republic.
Blurtman
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Remember who voted to confirm Ben.

Remember who voted for the TARP bill.

Vote them out.

The status quo will continue. Platitudes will continue to be offered to the masses. The will of the people will continue to be trivialized as "populism."

Meanwhile anger continues to build.

It is not an issue of Democrat or Republican. It is not an issue of liberal or conservative.

It is an issue of the takers and the taken from.

Vote them out.
Inline

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I have a reading comprehension problem and the owner banned me for repeatedly displaying it after being warned.
Fisticuffs
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Gibbs' comments (which have been echoed by various pundits including economists and stock traders on CNBC) that we need to avoid a market meltdown by reconfirming Bernanke speak loudly to the concerns many of this country's leaders had in the past (i.e. Thomas Jefferson, Andrew Jackson, Teddy Roosevelt): that we cannot give to a banking cartel such great power that it can force the government to act in ways it desires. To say that the Fed shouldn't be subject to politics is laughable -- it has chosen to play politics; the TARP gaming shows you that! It's worse that, over time, so many citizens have had their financial well-being tied to the stock market which is in large part controlled by this banking cartel. Gibbs' comments serve as a reason why Bernanke must not be reconfirmed and an audit must be performed (perhaps leading to dissolution of the Fed in its current form). Do what we -- a banking cartel made up of the wealthiest people in the world -- demand, or else. I thought we didn't coddle terrorists...

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B(ern)ank(e)
Sharonsj
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You are absolutely right. The single reason why Dems and Independents are unfortunately turning back to the Republicans is no real reform. If the Dems had immediately begun prosecuting the investment banks, mortgage companies, appraisers and bond raters for fraud, we'd be electing more Dems.

The future problem will be if we send more Repubs back to Congress and they continue to favor Wall Street over Main Street. Then nothing will change and our situation will get worse (if that's possible).

Yes, we need to throw out many incumbents, but we need some genuine people running for office who aren't religious nuts or corporate *****s.
Gamma
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I'm still amazed at the figure for Wall St. bonuses...$145 billion....1% of GDP. That's a staggering number.

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This stuff we're going through, this is nothing compared to the Middle Ages.
They told me if I voted for John McCain, an idiot would be a heartbeat away from the presidency. Sure enough...
Buddy
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Great post Gen! Are you okay with people using the post as a template to send out to the senate. Thanks
Dji
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Time to find that Smoking Gun. Can We the People hire Mrs. Brooksley Born and Mr. Black? I won't be satisfied until ALL the crooks are in orange jumpsuits!
Am I asking for to much?

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Genesis
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Buddy, OF COURSE I'm ok with it!

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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Pika-steph
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Karl - I was looking for the Ticker that had the charts from 2008 along with the Slosh Report (back when it meant something) that showed clearly how Bernanke pulled liquidity when the EESA was being debated.

I wanted to put that up on my little article http://www.FedUpUSA.org about Gibbs' threats this morning.

I think the point needs to be made that they are literally using threats of financial terrorism.

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Stop the Looting; Start Prosecuting - http://www.FedUpUSA.org/
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"The only regulation that really works is failure."--Rick Santelli

Genesis
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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Pika-steph
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That's one of them....gimme a chart of the market response on the days after the drain.

I know you had another Ticker with the chart...and it was uh....quite obvious.

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Stop the Looting; Start Prosecuting - http://www.FedUpUSA.org/
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"The only regulation that really works is failure."--Rick Santelli

Genesis
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I'm not sure where it is..... I looked around in September and October of 08 and didn't find it immediately....

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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Pika-steph
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Yeah - it's obviously not labeled EESA or anything obvious....hmmm....maybe Bazooka?

I'd just settle for a SPX chart from immediately following the drain referenced in the Sept. 24 Ticker. Can you post one here? I think that's all we'll need.

(I'd have Randy do it, but he's not here....and I haven't mastered how to actually UPLOAD charts to FedUp....somehow I always **** it up.)

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Stop the Looting; Start Prosecuting - http://www.FedUpUSA.org/
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"The only regulation that really works is failure."--Rick Santelli

Genesis
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You mean like this?
Inline

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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Pika-steph
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PERFECT!

smiley

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Stop the Looting; Start Prosecuting - http://www.FedUpUSA.org/
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"The only regulation that really works is failure."--Rick Santelli

Pika-steph
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I just ****ed the Federal Reserve and Gibbs.

http://fedupusa.org/2010/01/24/robert-gi....


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Stop the Looting; Start Prosecuting - http://www.FedUpUSA.org/
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"The only regulation that really works is failure."--Rick Santelli
Clovis
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faxed this Ticker to WA senators Cantwell and Murray, as a follow-up to earlier emails sent. Also, congratulated Cantwell on her CNBC appearance last week talking about her bill to reinstate Glass-Steagall.
Genesis
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I'm right behind you.

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I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
Bustedbuck69
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Somethings missing here or maybe not? The nine bullet points in this Ticker (and many other Tickers) should be rebutted by the boyz who are so enamored by the Fed Chief and the Fed. Have any Ticker members, or you KD, received a rebuttal from our employees??? Nothing here. Lack of any COGENT rebuttal is very telling.

A salient rebuttal from the employees is NOT that Chairman Bernanke saved the world. Won't fly!! We RE-CONFIGURE the employee payroll come Nov.

Gen your message maybe getting through:

Quote:
The tally against re-confirming Ben Bernanke grew by one Sunday when Sen. John Cornyn, R-Texas, said he will vote "no" to a second term for the Federal Reserve chairman.

"The Federal Reserve will benefit from a fresh start," Cornyn told "Fox News Sunday." "I'm not saying Bernanke didn't do a good job, but I think he should have seen (the recession) coming."

Sen. John McCain, R-Ariz., said he is leaning against confirmation but would not give a definite answer.

"I'm very skeptical about his nomination," McCain told CBS's "Face the Nation. "Chairman Bernanke was in charge when we hit the iceberg and his policies were partly responsible for the meltdown. ... He should be held accountable."

Speaking Sunday on NBC's "Meet the Press," Sen. Mitch McConnell, the Republican leader, said he is confident Bernanke will win confirmation but would not indicate how he will vote.---
Fox News.com

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"---the politicians---they think the laws of mathematics are suggestions." K. Denninger

"The greatest shortcoming of the human race is our inability to understand exponential function." Al Bartlett

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Blurtman
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Clovis said: "faxed this Ticker to WA senators Cantwell and Murray, as a follow-up to earlier emails sent. Also, congratulated Cantwell on her CNBC appearance last week talking about her bill to reinstate Glass-Steagall. "
*************
Murray voted for the TARP bill. Please vote her out.

Cantwell did not vote for TARP. And kudos to her on Glass-Steagall.

But both Cantwell and Murray voted "yea" to confirm Geithner.

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I have a reading comprehension problem and the owner banned me for repeatedly displaying it after being warned.
Clovis
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Blurt - they both know how I feel about Geithner smiley
Mcmwest
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Western Kansas
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One small piece of evidence that this is gaining traction. Mrs McMWest has fired off letters to both her Senators after not being able to get through by phone. That is very unusual. She doesn't read the ticker.

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According to NBER the recession ended in June 2009 so if you're broke and out of a job its all in your head.- Jay Leno
Willy2
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Bad news for our ""friend"" Bernanke !!!

It seems his buddies Geithner and Summers are ""on the way out"" and it seems they're replaced by ....... Volcker and Donaldson.
http://www.businessinsider.com/henry-blo....

There was already in december a sign that Congress finally came to their senses. They wanted to buy $ 500 million worth of planes for the members of Congress but this was later halved to some $ 200 million.
http://latimesblogs.latimes.com/washingt....

and
http://gawker.com/5334848/congress-will-....
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