So Much for the Sugar High

The Case-Shiller index of housing prices has turned down again, contrary to the expectations of Ben "Let's Try Throwing 2.7 Trillion at Housing" Bernanke. This would be a double-dip in housing prices, which obviously does not bode too well for the economy. As the author points out, if you take out the Fed's 2.7 trillion "sugar boost," housing has been dropping for 3 years straight. All Mr. Bernanke did was delay the inevitable bottom while adding 2.7 trillion to future liabilities for we the tax payer (thanks so much Chairman Ben).

Iraq to US - You Owe Us 1 Billion Dollars

One billion dollars seems to be the damage done to Baghdad by the U. S. invasion. Of course we are going to have the last laugh. Ben Bernanke and his cohort at The Fed, will print one billion more worthless dollars and ship them to Iraq. Net cost to us? Zero. The bills are worthless anyway.

More Nitwittery from the Fed

I'm not sure why I keep posting these criticisms of the Fed because they all seem to read the same way and it's a bit like pounding my head against concrete. I may think it is necessary, but it's not going to make me feel any better. History will look back and point out the Fed's many missteps (both from Greenspan and Bernanke) which made the difficulties we faced even worse than they were. As I felt at the start of this financial crisis (well, actually before it) government intervention is predictable and will make a situation which might have caused us a year or two of severe grief, into a situation that will affect us for decades to come as the powers that be fight the inevitable all the way into the economic dump heap of history.

Jon Stewart and Ben Bernanke and QE2

Wow! Jon Stewart catches Ben Bernanke in an outright lie. Got to love The Daily Show.

Bernanke: "Gentlemen, Fire up those Printing Presses"

As expected QE2 is good to go and ready to launch. The Fed will print 600 billion worth of worthless dollars to buy government bonds to drive down the value of the dollar because this will SAVE THE ECONOMY! Yay! Thank you so much, Mr. Bernanke. You are a genius! Brilliant! You single-handedly saved the...but wait...huh? Why is it named QE2? Because they already had QE1? But if QE1 worked, why do we need a QE2? QE1 certainly worked because this article says it did, well, Mr. Bernanke in this article is quoted as saying it did. Here is indisputable visual evidence:

"This approach eased financial conditions in the past and, so far, looks to be effective again," Mr. Bernanke said in an opinion piece scheduled to be published in Thursday's Washington Post.

There you have it. All the evidence you need. QE1 worked just perfectly which is why we need QE2 so that can work perfectly as well. Then next will be QE3 and QE4 and THOSE will work brilliantly as well.

This has all been tried before and failed (as I've pointed out previously). QE2 will work for a while, then, like gasoline tossed on a fire, the fuel will burn out and we will be worse off then before. Thus the need for QE3...and 4...etc. etc. If history is any guide, these interventions will be less and less effective for a shorter and shorter time. Don't believe me? Read Fiat Money Inflation in France. Yep. Tried before. Failed. Actually failed disastrously.

QE2: Disaster in the Making

This article in the Asia Times does a good job of explaining why QE2 won't work and the great damage that the Bernanke led Fed is doing to savers, while rewarding speculators, who got us into this mess in the first place. Way to go, Ben! Nice job ruining the American economy and destroying the thriftiest of us. It's a piece that Paul Krugman should read, but won't; not that it would do any good for him anyway. Mr. "Print Money as fast as possible" Krugman seems to be blind to the demonstration that his recommended policies have already failed.

From the article:

It would be unfair to claim that Bernanke's policy did not make some of us happy. As before, his policy has been most propitious for speculation. It has been almost a free lunch for borrowers and speculators. Hedge funds reported their biggest gains of the year in September 2010. Managers assumed more risk in the context of abundant cheap liquidity and more quantitative easing in sight.

Fed: Fire Up the Printers, Baby!

QE 2 is coming! That would be Quantitative Easing to you peasants out there (who will bear the brunt of the Fed's missteps. Eat Cake! Peasants). Having tried QE 1 (and succeeded for a short time), the Fed is going to fire up the printing presses and fix the problem for once and for...going to fix the problem for...a short time anyway, before that gasoline burns itself out and we are in an even worse mess. Then we'll try QE 3, etc. etc. If you want to know how this will end find the free ebook Fiat Money Inflation in France and read it. That pretty much sums up where things will end, since this has been tried (and failed) before.

I particularly love this quote from the brilliant Christina Romer, who, frighteningly enough used to be the White House economic adviser:

"There's a lot of questions about quantitative easing and how it works and how communications policies work, but they need to be tried because this is still a crisis," she said.

In other words, we have no idea what will happen, whether or not it will make things better or worse, but we need to try something. (And if, in the process, it destroys you peasants and ten or twenty third world countries with 25% unemployment, so be it, at least our bankers and hedge fund operators will still be able to summer in the Hamptons).

Fire up the press, Mr. Bernanke. Get the helicopters ready to dump money everywhere!

2.4 Trillion worth of Quantitive Easing Didn't Work? What Next?

How about 5 trillion! If at first you don't succeed, keep printing money because that is the obvious answer to Mr. Bernanke, nitwit Fed Chief.

Bernanke Nomination Put on Hold...for Now Anyway

Nice to see that someone is trying to put the brakes on the nomination of Ben Bernanke to a second term as Fed Governor. A little transparency, please, Mr. Bernanke, then we will see if you deserve a second term.

Dear Chairman Bernanke

From the Wall Street Journal, tongue-in-cheek letter from the Chinese. Funny, but sadly too true.

Nitwittery Run Rampant

A brilliant compilation of quotes that Austrian Filter put together demonstrating either how clueless Bernanke and Paulson were in the leadup to the financial meltdown, or that they were simply lying.

A couple of favorites:

October 15th, 2007 – Bernanke: "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."

February 28th, 2008 – Paulson: "I'm seeing a series of ideas suggested involving major government intervention in the housing market, and these things are usually presented or sold as a way of helping homeowners stay in their homes. Then when you look at them more carefully what they really amount to is a bailout for financial institutions or Wall Street."

August 10th, 2008 – Paulson: ``We have no plans to insert money into either of those two institutions.” (Fannie Mae and Freddie Mac)

September 8th, 2008 - Fannie and Freddie nationalized. The taxpayer is on the hook for an estimated 1 - 1.5 trillion dollars. Over 5 trillion is added to the nation’s balance sheet.

Out of Airspeed, Out of Ideas

It seems to be that we are rapidly approaching the endgame in our handling of the financial crisis, the endgame being buying our own debt (which simply means printing the money we need). Ben Bernanke, erstwhile head of the Fed, seems to think we can do that with no dire consequences. We shall see. Any situation in which one gets a quote like that appended below, cannot end well.

We just have to hope that G20 creditors agree to put a clothes peg on their nose and keep buying Western debt until the crisis passes, for the sake of the world.

Alrighty then. Sounds like a good plan to me.

Automaker Bailout and Uncovering TARP

This is an interesting argument about why the government should not bailout the automakers. The most fascinating part, however, was a summation of the $700 billion bailout and what a disaster that has been. I append his bullet point summation:

Since $700 Billion Bailout Passed

• The S&P collapsed from 1114 on October 3rd to 848 on November 17th. This is a drop of 24%.
• Paulson did not use the funds as requested.
• Bernanke promised to disclose how taxpayer money would be used but has refused to do so.
• Bloomberg has filed a lawsuit against the Fed under the Freedom of Information Act to find out just how Paulson has used the money.
• Not a single job was created with the money.
• Fannie Mae has announced it may need another $100 billion.
• Freddie Mac proclaimed it had negative net worth.
• AIG received another $37 billion.
• Cities and Auto companies now want a share of the $700 Billion.

There was not a single positive result out of the money that was spent.

The Foolishness of Keynes

This post is for those who know a little economic theory history, it won't make sense to anyone else. A great article on why Keynesian economic theory is so incredibly stupid, and yet almost everyone is returning to it.

Simple logic would dictate that excessive spending and loose lending standards caused this crash so excessive spending and loose lending standards cannot possibly cure it. Indeed it is axiomatic that the problem cannot be the solution. The concept is so simple that Keynesian demagogues cannot see it.

Just so. I can't believe the idiots who keep throwing money at this crisis and when it doesn't work (and indeed, makes the situation worse), they decide that they must not have thrown enough money at it. Laughable.