Facial hair, of the ‘stache variety. One used to have an epic handlebar, as evidenced by his Harvard yearbook photo and the other wears a fake and goes around asking Deutsche Bank investor relations bunnies if he can interest them in a ride. Continue reading »
The Beard
The Senate just voted 96-0 to impose a one-time audit of the Federal Reserve’s emergency actions during and after the financial crisis.
As a part of our “All Beard Wednesday” programme, we would like to call your attention to a Reuters piece so bold as to compare the Fed Chairman to Clark Kent and Superman.
True, the piece badly mixes metaphors, implying Superman was some kind of “swashbuckler,” and lamenting that Bernanke might lose some of “his swashbuckling spirit.”
The Fed has every reason to be politically intimidated. Relations between lawmakers and the Fed are close to an all-time low.
Much congressional ire has been focused on the Fed’s role in bank bailouts. There has been nervousness over its expanded balance sheet, which more than doubled during the crisis to around 14 percent of GDP.
For some Republican Senators such as Jim DeMint, the Fed’s purchase of U.S. Treasuries has been aiding and abetting “reckless” spending by Obama. DeMint is not alone in believing that credit easing is a covert means of devaluing the dollar. In the House an increasing number seem willing to listen to obsessively anti-Fed Congressman Ron Paul.
It is not surprising that correspondents for foreign outlets might be desirous of a more activist and powerful Fed. They, after all, seem less blinded by the trappings of power and can therefore, see what a pack of knee-biting wild dogs Congress is, and how completely they will destroy the United States if permitted to tinker with the structure of the Fed- much less continue to meddle with the economy.
Bernanke: Back to Clark Kent [Reuters]
“Hey, Ben. Get to the spending, already. Let’s go! That balance sheet is shrinking. Do you think we are paying you to shrink the balance sheet? No sir-ee, Bob. Expansion. Expansion. Ex-pan-sion. Aggressive… aggressive… let’s be aggressive. Right? Get it?
Let me put it in terms you can understand. If the Fed’s balance sheet doesn’t hold one third of all corporate debt by this time Monday, you’re fired. [Aside] What? How? Four years? Oh. [To Speakerphone] I mean, you won’t be looked upon favorably for reappointment in 2010. You get the idea. [Aside] He get’s the idea.”
Chairman Ben S. Bernanke and Federal Reserve policy makers may have to ramp up their purchases of mortgage securities and other assets after the economy and job market deteriorated further since they last met.
The Federal Open Market Committee, gathering today and tomorrow in Washington, needs to redouble its efforts after the central bank’s balance sheet shrank 17 percent from a $2.3 trillion December peak, Fed watchers said. The retreat came even as Bernanke acknowledged the chance that the unemployment rate will exceed 10 percent for the first time in a quarter century.
Bernanke May Need to Ramp Up Fed’s Asset Purchases [Bloomberg]
The list of alternatives is quickly deteriorating and if the Fed doesn’t come up with something that at least sounds new, we might end up with several days of interventionless economics. Wouldn’t that be a frightening prospect?
Unless you’ve been sleeping under a rock at the bottom of a yet to be dug coal mine, you have already noticed that the Fed’s number one bicycle pump, interest rates, are already blowing air into leaky tires all over the country.
A recovery, he added, would be “out of reach” until officials stabilize the financial system, and even if that happens the recession will persist until “later this year.”
Adding a dose of humility to his assessment, Mr. Bernanke conceded, “My forecasting record on this recession is about the same as the win-loss record of the Washington Nationals.” The Major League Baseball team had 59 wins and 102 losses last year, the worst in baseball.
Fed Considers Its Next Actions [The Wall Street Journal]
Gentle signs of Japa-nic are beginning to show, don’t you think? What with the Fed poking around and toying with things like buying up Treasuries (drives the yields down you know) and convincing the Euro folk that “cool kids lower rates.” (New Zealand is very unpopular right now).
In another sign of its focus beyond conventional policy, Mr. Bernanke on Thursday called for aggressive new actions by the government to help homeowners avoid foreclosure. One approach, he said, could involve having the U.S. buy delinquent mortgages and refinance them.
He called for revisions to a federal program called Hope for Homeowners that might encourage more participation. It is designed to help borrowers refinance with the help of the Federal Housing Administration.
Fed Weighs Its Options as Europe Cuts Rates [The Wall Street Journal]
Certain seals-of-approval have vastly diminished in the last 36 months. Rumsfeld’s Iraq suggestions: low approval. Fannie Mae policy papers: low approval. Dick Fuld’s Feng Shui guide: low approval.
Others, however, have grown rather substantially in the public eye. Your mother’s paranoia about debt: high approval. Your father’s advice to become a doctor and ignore that banking thing: high approval. William Ackman’s advice on anything: high approval.
So when Ackman gives the Fed Reserve a gold star, well, you just want to smile at Beard after weeks of cat-calling him. Don’t you?
What I like is I think stocks are cheap and I think the Federal Reserve has taken some very important steps that will improve liquidity–the banking system–and that in turn will help the economy,” Ackman said on CNBC. “I think the most significant thing the Fed has done is committed to putting $250 billion in the banking system. I think they’re doing it the smart way.
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