Harry Truman said it best; there’s no such thing as the future, only history that hasn’t happened yet. Thanks Harry. Let’s take a stroll down memory lane, shall we?
March 28th, 2007-”at this juncture…the impact on the broader economy and financial markets of the problems in the subprime markets seems likely contained.”
October 15th, 2007-”It is not the responsibility of the Federal Reserve-nor would it be appropriate-to protect lenders, and investors from the consequences of their financial decisions.”
June 9th, 2008-”Despite a recent spike in the nation’s unemployment rate, the danger that the economy has fallen into a ’substantial downturn’ appears to have waned.”
July 16th, 2008-”[Freddie and Fannie]…will make it through the storm.” “[are]…in no danger of failing.”,”…adequately capitalized.”
September 8th, 2008-Fannie and Freddie nationalized.
All quotes above from Ben Bernanke as documented in “AFTERSHOCK” second edition.
Today Big Ben will speak to congress. This column is being written before Ben speaks, however based upon Ben’s record the outcome is predictable. Just as with Obama you can usually count on whatever they say the opposite will occur.
ZeroHedge’s Tyler Durden has a way with words and says it much better than I: Now that stocks are back to reflecting nothing more than expectations of how many times the Chairsatan dilutes the existing monetary base in a carbon copy replica of not only 2011 but also 2010… and 2009 (because contrary to what purists may believe, the only way to inflate away unsustainable debt in a growth-free economy is by destroying the currency), and manic pattern chasers have crawled out of their holes proclaiming the death of the bear market after a two day bounce, what is happening in the actual economy, no longer reflected by the market, has once again been pulled back to the backburner. Which is sad, because while ever fewer people reap the benefits of artificial, centrally-planned S&P rallies, the rest of the population suffers, and what is worse: hope for a quiet, middle-class life is now an endangered species.
That former San Fran Fed chairman Janet Yellen would demand more easing is no surprise: she used to do it all the time. That Fed Vice Chairman, and Bernanke’s second in command, Janet Yellen just hinted that she is “convinced that scope remains for the FOMC to provide further policy accommodation either through its forward guidance or through additional balance-sheet actions“, and that “while my modal outlook calls for only a gradual reduction in labor market slack and a stable pace of inflation near the FOMC’s longer-run objective of 2 percent, I see substantial risks to this outlook, particularly to the downside” is certainly very notable, and confirms everyone’s worst dream (or greatest hope assuming they have a Schwab trading platform or Bloomberg terminal) - more cue-EEE is coming to town.
Thanks Tyler, I think.
Why would we not expect Ben to follow up today to congress with code he will open the printing presses? Sure has worked great so far when combined with the Obama attack on capitalism.
Let’s see if we have this right. We have TARP to buy toxic assets which does no such thing, and ends up buying GM for the UAW, and bails out favored banks and Wall Street firms. Meanwhile Ben has the presses wide open in the background with QEI.
Then the plan of all plans by the economic brain trust from East and West coast Ivory Tower institutions of Higher Liberalism give us Romer, Summers, Ortzag, and Obama’s Stimulus that would prevent unemployment from rising above 8%.
Instead we got 10% unemployment, the worst recovery since the Depression, and shovel ready projects like studies on the sex habits of college freshmen after smoking pot, and turtle tunnels in Florida.
The progressive brain trust is astounded their spending binge didn’t work, Romer roamed back to California, Summers left for his next lucrative ‘I got connections in The White House’ executive position, and Ortzag to a private sector ‘opportunity’ while releasing a column this week on the left heavy Bloomberg News that we should have government spend more money and cut the deficit.
After the failure of the end all, save all Stimulus, Big Ben opened the spigot again with QEII to bail out the theory clashes with reality central planners.
Since Obama and Bernanke seem bereft of any workable ideas the smart money is betting on QEIII. In my world and yours this will become known as Hyper-benflation.
The only question left is; Will inflation and interest rates exceed those of the 1980’s? If you think housing has been bad since the meltdown, wait until Hyper-benflation takes full effect. Or as the Guess Who sang back in the 70’s; “You Ain’t Seen Nothin Yet”!
The opinions expressed here are solely those of Fritz Pfister or identified sources, and not necessarily those of RE/MAX Professionals of Springfield or RE/MAX International.