3 Things To Know About Bernanke

He has politicized the Fed more than any other Fed chair. He seems easily manipulated by politicians. His fate is entwined in the new-found populism of Obama. His compatriot in populist ire, Tim Terrific, may already be walking dead at Treasury. Yet he may be reconfirmed! Should he? 

1. He Was Behind the Bubble in the First Place

Greenspan takes blame for keeping rates too low for too long, and removing all sorts of restrictions on banks. It turns out the biggest cheerleader behind Greenspan was Bernanke, who was part of the FOMC before he became chairman; and when he took over, he continued the very policies which created the credit bubble. He gets credit for pushing liquidity out when needed after Lehman fell; but if he hadn't, he should have been fired on the spot. The central bank MUST do what Ben did under a fractional-reserve system. 

Bernanke knows he blew it on credit. He proffered a defense, arguing implausibly that the Fed had not caused the housing bubble, and claiming that under the Taylor Rule, rates weren't too low. Economists didn't buy it. John Taylor, the creator of that Taylor Rule, excoriated Bernanke: Bernanke had NOT followed the Taylor Rule, but had concocted a bastardized version of it. 

This does not sound like an independent Fed, but a highly politicized Fed trying to hide its mistakes. 

2. He May Have Caused the 2008 Crash

This is pretty shocking, and should immediately doom Bernanke: the Fed withdrew 65% of liquidity from the system in the four days after TARP was first announced to a very tepid reception, the same week McCain suspended his campaign and ran to Washington: Sep19-24, 2008. The facts are written in the record:

The market fell 500 pts in the next 10 days - it crashed! Check out this chart. 

 

Was it intentional? Karl Denninger thinks so. The legal doctrine of res ipsa loquiter (let the thing speak for itself) would concur. This draining of liquidity was precisely designed to panic Congress into passing TARP. Bernanke would use the Jack Bauer defense: it was necessary to torture the victim in order to achieve the result. As things turned out, TARP was not needed. In fact, it was a huge bait & switch: Paulsen turned around and used it for different purposes than he said it was for to Congress. It was not used to stabilize mortgage markets, but to use the AIG bailout as cover for funneling the funds to the over-stretched banks. Was Bernanke in on out, or a dupe? 

You decide: is this the type of independent Fed we want?

3. He is Fighting the Wrong War

First Anna Scwhwartz, Milton Friedman's co-author, and then John Taylor, Stanford economist behind the Taylor Rule for interest rates, criticized Ben as trying to fix the problems in the 1930s, not those of today. Now economist Steve Keen wrote a devastating dissection of Bernanke's thinking: 

Bernanke is popularly portrayed as an expert on the Great Depression—the person whose intimate knowledge of what went wrong in the 1930s saved us from a similar fate in 2009.

In fact, his ignorance of the factors that really caused the Great Depression is a major reason why the Global Financial Crisis occurred in the first place.

Steve tells the story of Irving Fisher, the American Keynes, who is oft used as a foil for this unfortunate quote, in October 1929, right before the Great Crash:

Stock prices have reached what looks like a permanently high plateau.

Irving went on to truly understand what drove the 1931-32 banking crisis and deep depression, and came up with his Debt-Deflation Theory of the Great Depression, still the best analysis. As Steve writes, his analysis

 [C]ompletely inverted the economic model on which he had previously relied. 

His pre-Great Depression model treated finance as just like any other market, with supply and demand setting an equilibrium price.  ...

[H]e realized that his equilibrium assumption blinded him to the forces that led to the Great Depression. The real action in the economy occurs in disequilibrium.

His debt-deflation theory is summarized in this chain of logic:

1. Debt liquidation leads to distress selling and to ...
2. Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes ...
3. A fall in the level of prices, in other words, a swelling of the dollar [we would call that deflation]. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be ...
4. A still greater fall in the net worths of business, precipitating bankruptcies and ...
5. A like fall in profits, which in a “capitalistic,” that is, a private-profit society, leads the concerns which are running at a loss to make ...
6. A reduction in output, in trade and in employment of labor. These losses, bankruptcies, and unemployment, lead to ...
7. Pessimism and loss of confidence, which in turn lead to ...
8. Hoarding and slowing down still more the velocity of circulation. The above eight changes cause ...
9. Complicated disturbances in the rates of interest, in particular, a fall in the nominal, or money, rates and a rise in the real, or commodity, rates of interest.

This sounds pretty close to what has been happening, again, 80 years later. 

Steve points out that Bernanke dismissed Fisher's theory because he presumed a form of equilibrium: 

[D]ebt-deflation represented no more than a redistribution from one group (debtors) to another (creditors).

This argument has been disproven by the very events under Bernanke's watch as Fed Chair: after a credit bubble, debt does NOT get repaid, it gets written off. Wanna buy some toxic debt? No one does. How about some subprime? This bad debt is being written off or rolled forward, despite Trillions in TARP & Bernanke's credit facilities. It is not being repaid, except to pick the pockets of the taxpayers and feed it back to Goldman Sachs and their ilk. 

Bernanke's views on the Great Depression are simply wrong, and proven wrong before our eyes. He learned nothing from studying it! His economic prescriptions are colored by his ideology. His economic assumption, of equilibrium, is stuck in 1928. Is this the type of leadership we need right now at the Fed? 

Steve's conclusion:

Bernanke, as the neoclassical economist most responsible for burying Fisher’s accurate explanation of why the Great Depression occurred, is therefore an eminently suitable target for the political sacrifice that America today desperately needs. His extreme actions once the crisis hit have helped reduce the immediate impact of the crisis, but without the ignorance he helped spread about the real cause of the Great Depression, there would not have been a crisis in the first place.

Comments

[joe]

"....without the ignorance he helped spread about the real cause of the Great Depression..."

I expected more from you - this is totally tripe.

Joe

[joe]

I will say this last thing about this Yelnik -

How do you prove a negative - you say his views are disproved by events - but if the events played out - how could you know how they would have come out.

Give me a f-ucking break - you know better than this!

If you really want a history lesson man, I did my "mid-life crisis" in that kind of thing.

Joe

[yelnick]

Joe, Steve Keen has his perspective, which I laid out. Mine is this:

(1) he had a year before Lehman to figure things out. Bear announced two funds gong under in July 2007, and failed in Mar 2008. Where was Ben from July 2007 to Sep 2008? Where was he from the Bear bankruptcy to the Lehman debacle?

(2) he pushed Greenspan to ease credit. Greenspan also eased a lot of normal restrictions on banks. These two were so convinced they could stave off a Kondratieff Winter that they went the the brink to try. At least Greenspan admitted that he was making a bet with history. He lost the bet. Bernanke instead tried to argue that they weren't responsible for the credit bubble. if he believes that, he is an ignorant fool; if he doesn't believe that, he is a political hack. Take your pick.

(3) if Karl Denninger is right and Bernanke pulled 2/3 of all liquidity out of the Fed system beginning Sep 19, the day before TARP was announced, he purposely manipulated the markets to cause a crash in order to get TARP passed. Think about that. Has any other Fed chair ever tried THAT?

[nspolar]

Joe, the world is full of parasites these days.

One has to be a bit careful, especially on the net, before they digest fully the content of what they read, let alone the intent of the author.

I see you are a bit careful.

nspolar

[DG]

How do you prove a negative - you say his views are disproved by events - but if the events played out - how could you know how they would have come out.

Almost anything can be rationalized using this logic, though. To take an extreme example, a drunk driver in a car with 6 passengers who kills 3 of them in an accident could argue that if his even drunker friend was driving all 6 would have been killed, so he "saved" 3 lives, which cancel out the 3 people he killed.

My main problem with Bernanke is that he should have come in to the job saying "If we don't do X,Y,Z, we will have a real estate and financial crisis in less than a decade" and then gone about doing X,Y,Z. Since he didn't say that, he either didn't foresee the crisis, in which case he's a worse prognosticator than those who were banging the drum on these issues for years before the subprime and other blow-ups or he foresaw it and did nothing. Either way, he's unqualified.

[joe]

Yelnik - "if Karl Denninger is right and Bernanke pulled 2/3 of all liquidity out of the Fed ..."

And if pigs could fly...

It remains - argument based on a double negative -

Tell me again - about the NRA - just how did that go until 1937 - a fateful year - wouldn't you say??

You tell me the fed chair is a political postion - I am shocked -totally shocked.

Joe

[Ego Lover]

And we live in a free and democratic world... yeah right! All this manipulation and schemings, lets stand united and revolt with our pitch forks against this monstrosity of a power.., the time has come!

[joe]

Uh-huh -

OK - prove to me that aliens don't exist.

I know - prove to me that Elvis isn't sitting on the right hand of the alien on the spaceship that just landed next to bigfoot -

You can never ever prove a double negative - get it??

I know what actions led to what DID happen - that is all you can know.

Joe

[Glenn Loser Neely]

#4
Bernanke is friend of the clown Glenn Neely.

#5
Bernanke is a subscriber of the NeoGarbage since 1987.

In sum, he is complete idiot!!

Glenn Loser Neely

[yelnick]

Joe, NRA was a disaster, and would not have been renewed by Congress even if the Supreme Court had not declared it unconstitutional. Most of the crap passed by FDR in his first 100 days were flops. The better stuff came in 1934 and 35. TARp was very much like a Hoover idea that failed. Hoover at least had the sense to replace it with the reconstruction company, which succeeded, and was the model of the S&L crisis. Point: Paulson et al. did NOT earn from history, not even the 80s let alone the 30s. Arrogant, or guided by some other goal, such as picking the taxpayers pockets.

BTW I do not see why you call it a "double negative" argument. Bernanke made huge mistakes - call that a simple positive argument. The Denninger thing is in the record. It did help crash the market. No double negative at all, just a question of intent. Pulling liquidity is a willful act of the Fed, not just a run on its bank! You would have to come up with some innocent explanation to explain it away. I leave that to you since I cannot think of it.

If you are saying we cannot rewind history, I agree; but the only act that Bernanke can point to that helped (and it did help) was providing a number of emergency facilities to banks and central banks. But as I said, that is what a central bank is required to do in a fractional reserve system - the cash is not in the banks, so the Fed provides it on an emergency basis to avoid runs. Ben also went one step farther and provided liquidity to players outside the Fed system. This was a mistake made in 1931, where the Fed then did not support State banks as outside their charter. In contrast, before the Fed, JP Morgan provided liquidity to a Trust in 1907 that he had no obligation to. In times of crisis, better to provide the facility and ask forgiveness later. I give Ben credit for that and have mentioned it several times in posts.

[joe]

Oh my god - a "tea party guy" - so let us stand against this "monstrosity of a power" - you know, the one we VOTED IN.

With pitch forks I am sure.

Joe

[DG]

So, joe, when everything is nationalized under DC's control and people complain in 50 years that we could have had a better half-century if we had kept free markets, are you going to tell those complaining that they can't prove a double negative and they should STFU and eat their government gruel and make sure to be extra productive on the government farm today or else?

Would you tell the people who lived under Communism in the Soviet Union that if it hadn't been for Stalin's benevolence, things would have been even worse? Would you tell the Germans that even if Hitler hadn't come to power, their country would have been destroyed anyway, so they shouldn't fret over it?

It's all well and good to use fanciful examples about Elvis and aliens and Bigfoot, but actual people have suffered tremendously under actual conditions because of actual policy mistakes undertaken in the face of opposition to those mistakes, which was ignored by policy-makers.

Some double negatives are proven intuitively by the odiousness of the realities of their opposite, especially when there is a compelling counter-explanation, as in the case of the debt-deflation analysis by Fisher, which I agree is more robust than the equilibrium analysis favored by Bernanke.

[joe]

"Joe, NRA was a disaster, and would not have been renewed by Congress even if the Supreme Court had not declared it unconstitutional..."

Really - ask your parents and they will not agree with you. And since they were there and you were not - it makes you a revisionist - doesn't it?

You really do not see a double negative argument in the - "well, it would have been better if this other thing happened instead of ..." crud. Really?? No double negative there, huh???

Joe

[joe]

"So, joe, when everything is nationalized under DC's control and people complain in 50 years...."

My first response is - hahahahaha.

My second response is - don't you ever bring up Nazi's again in this kind of discussion.

I am actually very moderate.

My father was not so moderate and he probably killed about 1,100 Nazi's on his own in the war - and would never even entertain this discussion about FDR policies. In fact, that is being kind.

I would leave that kind of hyperboyle behind if I were you.

Joe

[tom]

Joe,

Can you elaborate what you really think in details... instead of raising a one liner query or debate whether it is a double negatve and so on?

I trust you are very knowledgeable and I would like to hear more about your opinion on Yelnick's essay above.

Please explain it in a way a layman can understand without second guessing what you really mean.

thank you.

[DG]

Really - ask your parents and they will not agree with you. And since they were there and you were not - it makes you a revisionist - doesn't it?

What if my parents think that the everyday racism and sexism back in their days was justified? Since they were there and I was not, who would I be to argue?

You're really flogging this "double negative" logic far beyond its usefulness in debating political, not epistemological, topics. What's your next line of attack? "How do we know Bernanke really exists and isn't a figment of the imagination put in our minds by some God, who's an atom in the fingernail of another God in a completely different universe?"

You're completely cutting off any chance of actually learning from history and making the apologists' job simple. By your logic, all Bernanke has to say is "Well, the world didn't end during my first term in office, therefore I must have done well enough, so put me in for a second term, unless you want to increase the possibility that the world will end".

[joe]

What I really think??

If what I really think causes anyone to not second guess themselves - then it would be wrong to do so.

You have to think it thru yourself - that is what all the wars ever fought on your behalf entitled you to do.

My family has so much blood on so many fields - just so you could do this - think it thru. You don't have to agree - you just have to think. It is your responsibility - the debt you have to pay for what they did for you.

Joe

[DG]

joe,

This might come as a surprise, but I don't care what your father would and wouldn't entertain as a topic of discussion. Besides, how can you prove that I wouldn't have killed 1,200 Nazis if I'd been alive at the time? Or 2,200, making me twice as awesome as your father?

The whole worship of FDR's policies is classic "broken window fallacy" writ large. In other words, it's based on nonsense.

[joe]

Is that a fact DG??

How about - I think the fact is you would never go to a war to fight anybody - I know that - because you did not, right?? It is a good probability.

You have to go to war to kill - did you??

Now you call FDR policies - "broken window fallacy"

Really - how would you know?? Been there? Were you there??

I bet you were on the alien spaceship with bigfoot, though.

Come on DG.

Joe

[joe]

I was pretty harsh DG - I apologize for that.

Joe

[tom]

Joe,

You really lost me.

"You have to think it thru yourself - that is what all the wars ever fought on your behalf entitled you to do."

"It is your responsibility - the debt you have to pay for what they did for you."

Why do you link with yelnick's comment on Bernake to your family's involvement in past WARS?

And what DEBT do I have to pay for what they did for me? Exactly what have they done and what debt?

??????

[Bird]

I'm starting to think some of us have had even more wine tonight than I have. My question goes back to Fisher. Isn't he saying by his debt-deflation theory "we're f-ucked"? Aren't we saying that Bernanke has done everything he can do to forestall "we're f-ucked" but that ultimately he will fail? Well I kind of applaud his effort. I think he won't succeed. But the scary part is...we're f-ucked. No one really knows what it will be like when the bottom totally falls out (assuming that's what happens). Maybe it was a good thing to forestall it. It will be kind of hard to tell either way, because that is all that's happened so far. Strangely, the whole thing seems rather enlivening. Probably not unlike the feeling on the eve of a war. I'm not in favor of it. But I feel it.

[Bill C]

Joe, Like Tom I would like to hear you explain your critique because I am not understanding your argument. Thanks.

[yelnick]

Joe, my parents told me that FDR did not get us out of the GD, it took the war

[DG]

How about - I think the fact is you would never go to a war to fight anybody - I know that - because you did not, right?? It is a good probability.

You have to go to war to kill - did you??

In point of fact, during the Clinton Administration, I applied for a position in one of the branches of the military and was turned down, probably due to a combination of factors, including the fact that I was already about five years older than the norm for that particular role. Had I been admitted, I would happily have served. Were I to have been put in a position to kill others, I would have done so without hesitation. That I wasn't allowed to be in that position was a decision made by others, but I was willing to be in it. Be that as it may, I see no correlation between killing people and political insight. I'm sure that if you took a sample of the most decorated killers in US military history, they'd have a variety of political views. Also, I'm sure almost everyone in the US has a relative who killed some people in a war at some point. Does that make all those people with war veterans in their family right on every issue?

Now you call FDR policies - "broken window fallacy"

Really - how would you know?? Been there? Were you there??

Not everything has to be empirically experienced in order to understand how it violates sound principles of logic, just like I don't have to empirically experience being shot in the head in order to want to avoid it. People told Communists that their plan wouldn't work, not because those people had gone to the future and seen that Communism doesn't work, but because the logic of Communism was flawed. By your logic, those people who tried to stop Communism were wrong to do so because they couldn't know it would fail until it failed. You're subordinating reason to whatever unreasonable realities happen to exist at the moment.

You're trying to get a logical principle to do your arguing for you and it's a complete abuse of the principle to do so. It's also very Panglossian.

Heck, if you want to use logical principles to debate politics, you could make the case that Bush should never have left office because, if you just apply Zeno's Paradox of Time to the Constitutional law that a President only serves two terms, you can always find another subdivision of time in which those two terms haven't expired yet, so, logically, Bush should still be in office because by Zeno's logic you can't definitively say that 8 years have passed since Bush's election.

Anyway, I still say Bernanke should not be reappointed, for the reason I stated above, which is that he did not act quickly and decisively to reverse the policies that "everyone" now realizes were brewing for decades to create the current mess.

[joe]

Ok -

I'll try this.

He assumes that Bernake is the "lost cousin" to FDR policies - and that FDR policies in the end failed.

That would mean, it means, that the policies failed because the lack of confirmation that they did not fail was not there - a double negative implied by the comment. You cannot prove what does not exist.

As to my family - my family was 16 million strong at the time of FDR to me - my dad killed all those people I mentioned - but every single goddamn kid in that army was "my family" to me.

So - why do you think they fought exactly? I thought about that a very long time. They fought - so you could not fight - so that all of us could make reasonable and thoughtful decisions, and that the decisions we make would result in avoiding such a fight in the future.

I want to believe that could be true.

Joe

[yelnick]

Bird, Fisher would have said the way to deal with it is not to have the bubble in the first place! His point being the credit bubble inevitably leads to the debt-deflation chain of events. Now, you can say that isn't that useful once the bubble bursts, but actually it is very useful, since it means don't try to postpone the disaster with more debt. Attempts to postpone the inevitable simply make it worse. If we had taken the pain in 2002, it certainly would have been less of a debt-deflation spiral than in 2008, after a 4x increase over a 100 year trendline in real estate, or a 2x increase in total indebtedness from $27T to $53T.

Japan is a case in point of the perils of postponement. They are approaching a point of no return, where the interest on their deficit is higher than tax revenues, and they need to borrow just to pay interest. Of course that is not sustainable, and will spiral out of control. They have had no growth for 20 years, an aging workforce with increasing social burdens, and no ability to cover those unfunded obligations. What if they had taken the pain back in 1991-94? Joe's 'you cannot rewind history' notwithstanding, it is likely their GDP would be higher, their debt burden much lower, and their ability to meet the unfunded pension & medical obligations at least possible.

We at least can watch the Japanese story play out, and give ourselves about a decade advanced warning. So for Joe, maybe this time we will be able to rewind history.

[joe]

Best o fluck to you Yelnik - you really seem to be a decent guy to me.

Don't count on an ability to rewind history - it has not worked since Platea - and it won't now.

Best to just get the hell out of the way.

What is it that Mark Twain said - that if history doesn't repeat itself it certainly rhymns?? Something like that??

Anyway - I wish the best of luck to all here.

Joe

[yelnick]

Joe, thanks, that helps. Actually, I would say that Bernanke is the stepchild of Hoover in that Hoover was following classical theories of economics, that an economy natural is in balance. Bernanke is a neo-classicist.  Keynes also believed in balance, and his General Theory was about how to get back into balance when we get stuck too far one way. The core of his argument is the Paradox of Thrift, where fear drives increased savings, and savings lowers consumption, which causes a downward spiral in aggregate demand. Keynes wanted govt spending to make up for the drop in aggregate demand. He actually paid little mind to monetary policy, the realm of Bernanke. 

FDR met Keynes and the meting didn't go well. FDR wasn't following Keynesian policies, certainly not from 1933-1936, the heart of the New Deal. He actually pretty much continued most of Hoover's policies, much as Obama has not really changed Bush's policies, and aded a whole series of trial & error policies. He went off gold, and picked the new price of $35/oz pretty much out of the air. He flopped back & forth, and tried to balance the budget in 1937. 

Most people who adore FDR will find the prior paragraph objectionable, but they should sit back and read the history of the period dispassionately. Hoover increased Federal spending in peacetime more than any other President (in % of GDP) until Obama. Hoover got spending to a level in 1932 and 1933 (FY) that FDR essentially just continued. People who say FDR did a huge Keynesian spending program should look at the actually numbers as a percent of GDP. They will be surprised that there wasn't any great increase from Hoover's last two budgets until the buildup to the war. 

What both have in common with Bernanke today is an inordinate fear of deflation. Hoover fought the drop in prices & wages, and FDR continued those policies. (That is what the NRA was for.) This is probably the worst decision they both made, since it made it impossible for the market to clear. Where did high persistent unemployment come from? If companies are allowed to form cartels to keep prices high, and unions keep wages high, the supply/demand curve is stuck too high, and output falls, then employment falls. (Pretty much as Fisher described.)  What the war did was cause a huge reset; these policies were discontinued in 1946 and the economy began to boom, much to the surprise of the central planners. 

Bernanke's book on Fisher (excerpted in the Steve Keen link) show he believes in the Paradox of Thrift. That paradox is one of those things that academics love but real world people see through. "Savings" reduce consumer spending but replaces it with business investment, which is spent, and adds to "consumption" in GDP, or "aggregate demand" in Keynesian parlance. Savings goes into investment, to put it simply. Aggregate demand does not go down unless (a) the savings are squirreled away in mattresses or (b) they are sucked up by the government and then malinvested, for example as Hitler did to go to a wartime economy. 

This is vivid today. the Stimulus is rife with malinvestment. Stories are legion of how it has been wasted. How can wasteful spending and more debt be the foundation of a productive, growing country? 

Instead Keynesianism is a modern version of an old story, trying to get something for nothing. 

[DG]

In a more speculative vein, here is an attempt to understand the "why?" of all these policies:

http://www.zerohedge.com/article/scandal-albert-edwards-alleges-central-banks-were-complicit-robbing-middle-classes

[DG]

I was pretty harsh DG - I apologize for that.

No problem, joe. Apologies accepted.

[DG]

Bernanke's book on Fisher (excerpted in the Steve Keen link) show he believes in the Paradox of Thrift. That paradox is one of those things that academics love but real world people see through.

Someone commented the other day that the Federal Government's policy seems to be "If you people want to pay off your debt and won't allow yourselves to remain debt slaves, we'll go into more debt for you".

This bad debt is being written off or rolled forward, despite Trillions in TARP & Bernanke's credit facilities. It is not being repaid, except to pick the pockets of the taxpayers and feed it back to Goldman Sachs and their ilk.

Once they changed the accounting rules to allow "mark-to-fantasy", you knew the fix was in.

[joe]

You've run a business - we both know the true art is in the bull-shit. You say, "FDR wasn't following Keynesian policies, certainly not from 1933-1936..."

Maybe so - FDR's greatness was not in adapting the theory - it was in getting people to believe that it could work. FDR is said to have told Keynes - you have to be kidding about this - BUT HE DAMN WELL SOLD IT - to people - to people that needed to believe in something. To people that had to be ready for the great war that he knew was coming, really from the invasion of Manchuria.

You know all this Yelnik - I think you do.

Joe

[joe]

"Were I to have been put in a position to kill others, I would have done so without hesitation"

DG - no you wouldn't.

I knew many of those people that did - gravitated towards them sometimes. My mother and father are seriously decorated for doing that kind of business.

My brother used to work at a VA hospital after VN - I went every week to talk to the guys. So it is not just mom and dad and my uncles from the war - I wanted to know every thing I could. They mostly had no one else to even talk to - and I wanted to talk to them. Went on that way for years.

No DG - you you couldn't kill somebody on command - no more than I could. Not something you can take back - killing - and it did not go well for many of the guys -that kind of guilt. People that say differently - are liars or psychos.

Dad was 324th - about the most decorated fighter group from the war. What they don't tell you is about 3 in 7 of the survivors - good little christian/catholic boys - blew their brains out after that war.

It is true - I went to a lot of those funerals.

Joe

[joe]

I wish everyone here a lot of luck. I really do.

For myself - I see no point posting here anymore.

Joe

[Ego Lover]

get a life joe, every 2nd post is yours... don't you have anything better to do than critise others and write a book on this blog?

[DG]

DG - no you wouldn't.

joe, when I applied for that military position I mentioned, the initial evaluation they gave me indicated otherwise. Like I said, it wasn't a lack of willingness to do the job that kept me from getting the position.

What they don't tell you is about 3 in 7 of the survivors - good little christian/catholic boys - blew their brains out after that war.

That means 4 out of 7 didn't.

[joe]

I wrote a book - in fact I even have a degree in military history now - and all my prior work was in business school.

Everything I ever did seems back asswards to me.

I have absolutley no intention to criticize anyone - never did. And if I did, well, I sure didn't mean to.

Look DG - you take a job with a 50 % survival rate - and then find out you get a 50 % suicide survival rate (if you get to live thru the first phase) - let me tell you - get another job - and if you don't you get a 3 in 4 chance of not living to find one.

Joe

[joe]

"get a life joe, every 2nd post is yours... don't you have anything better to do than critise others and write a book on this blog?"

I was thinking - do you have a "life" - I mean really, I only post here when I have an open position and am watching trading - not that often.

Do you post here when you don't??

You are certainly free to - but jesus, I sure wouldn't comment on the frequency.

Joe

[yelnick]

Joe, I think FDR was one of our great presidents, especially for pursuing the war to unconditional surrender. I give him great credit for 'we have nothing to fear but fear itself!' We have lacked such a leader since Reagan. But whereas Reagan's policies reversed an awful decade, FDR's his policies did not get us out of the Great Depression. Restored confidence is not enough. Unemployment was 25% when he made that speech, and 20% six years later.

[joe]

Yeah -

I agree with you about Reagan - and that is about it.

I think you fail to appreciate just how close we came to losing that goddamn war - just what FDR meant to the guys when push came to shove - say, in a trench in the Bulge - in a fighter plane in 1944.

What is a president really elected for? To do what?

You think it is to advance some kind of econimic theory - it is not - it is to get the country to believe in that theory when it counts. It doesn't have to be right. It has to be agreed by the populace at a critical moment.

You selectively use statistics - I am an accountant - want to play with numbers??

Joe

[joe]

I justed baited you with a straw man argument. I didn't mean to and I rescind. It was a combined skill I learned from being in business and the sick skill one learns from spending too much time in grad school.

I pull back that baiting. I did not mean to go there.

Joe

[yelnick]

Joe, this isn't about FDR. He did a great job on WWII. No question. It is about what to do now. FDR's economic policies did not get us out of the GD. Obama's policies seem to be feckless - focusing on healthcare rather than fixing the banking system for example. And back to Bernanke, he may have pumped liquidity out at the time of crisis, but how did he get us there? And how will he exit? I would much prefer a Volcker than a Bernanke right now.

[joe]

Look man - FDR won that war by making the people believe in him. He did understand that we had to go fast or lose in the end. My mom was a very good catholic girl and she used to scream -if we we went any later to war we would have lost. She was just a nurse - but I know in theory she was very correct.

Obama's job to me - totally - is to protect the republic - if he does that, then he equals FDR - if he fails - we could really lose the country. not "tea party" lose- like really lose it.

Yelnik - I can make money long or short the cycle here - I really think - so what??

I really like Paul Volker - you will get no negative opinion from me - but man - when push comes to shove - he doesn't really count.

Joe

[joe]

A very intense 48 hours coming, I think.

Joe

[joe]

Best of luck to all.

Maybe we will need it.

joe

[Wavist]

A great job on WWII? Pretty appalling really by most standards, aside from not going to war until his country had just been attacked by which point anyone would have, Roosevelt did more than anyone else to hand half of Europe over to Bolshevism on a plate. And Reagan a great leader? If by great you mean supplying the illegitimate theocrats who had deposed her ally and invaded American territory with the military hardware that single handedly saved their government enabling them to become the single largest threat to world peace then sure that took some guts. But perhaps what you really meant was the economic leadership that created the deficit that caused the recession in the nineties but hell why not I mean we won't even be around when it needs paying back so let's delay the pain for whatever unlucky sod takes over to deal with. Always the charismatics who get praised for the good times regardless of how little they were responsible relative to global events and the stalwarts who follow.

[Wavist]

Probably wasn't the brightest idea attacking two of America's most revered presidents on a largely American blog so I I'd best not get started on the worst of all time (starts with a K). The best in my view are surprisingly amongst the less popular although Washington and Lincoln did pretty good depending on your support for their respective (arguably contradictory) cause.

[Wavist]

Back to the markets I observe that the overnight Dow has switched places and is now outperforming its European counterparts for the first time since the correction began. I'm wondering whether that's in anticipation of national events. Could someone confirm to me whether the coming speech by the President always leads to a spike higher? I'm considering whether to get out beforehand. Thanks

[trendlines]

Yelnick and co,

Bernanke pulling liquidity crashed the markets? Try telling that to EW guys! My view: Markets were gonna crash anyway, bernanke was just a tiny cog in the complex chain of events. I am pretty sure any Fed chair in the same chair would act pretty much the same way... he is forced to by the complexity of the universe! If Bernanke knew he had the power to crash markets, he would be a very rich man - if not a God. And not an exhausted man with a deep frown and greying hair.

Fact is, cycles and waves will always exist - whether we're able to predict them or not is a totally different issue. I side the EW guys on this one, sorry Karl!