Edited by Rogerdodger, 21 January 2011 - 09:07 AM.
The Fed's Secret Plan
#21
Posted 21 January 2011 - 09:05 AM
BIGGEST SCIENCE SCANDAL EVER...Official records systematically 'adjusted'.
#22
Posted 21 January 2011 - 10:28 AM
Really good comments.
My only real add on is in two points:
1) This may not work or work out as expected (the latter is almost inevitable).
2) What disturbs me most is what these folks will try to do afterward if it DOES work.
Mark
Agree completely. The reverse wealth effect of a market decline will be more brutal if the Fed treats a reducton to 7-8 % unemployment as more prescriptive and self-sustaining than it really is, which I can definitely see as a possibility.
The people on the Fed board don't strike me as counterintuitive thinkers. This is one of those times they have to focus on the unobvious more, so that they can make the connections to what's really going on with the obvious and see the whole pcture.
#23
Posted 21 January 2011 - 11:45 AM
If the world didn't suck, wouldn't we all just fly off?
#24
Posted 21 January 2011 - 12:43 PM
Edited by spielchekr, 21 January 2011 - 12:45 PM.
#25
Posted 21 January 2011 - 01:28 PM
Greenspan understood the value of "surprising" the market. I remember the Fed announcing surprise rate cuts on option expiration fridays. Bernanke is less creative there. The one thing you don't want to do is become predictable, and Bernanke has made the Fed very predictable.
Entre, this is easy to say, but how can you possibly inject hundreds of billions these markets need in any other way than pre-announcing it? If Fed's intention is to buy ahead of everyone, I would agree it should be the tactic, that's to buy while everyone is selling, but I think Fed is not trying to "time the market"...
In that sense, Fed's last intention is to get the best possible prices for the public dollars. They just want the private sector to feel comfortable and overpay for what they have to offer and hence bring in some sort of "recklessness" into the game, some sort of speculative frenzy, some sort of bubblish behavior.
Why would you want to do so? This is beyond me, obviously we would not be here unless this has been the practice since 1998 LTCM bail out. These bankers are always feeling like they are entitled to the public money, this has to change and I doubt it will change with Bernanke or the rest of the Fed's board members. They are just too used to looting the public dollars...
Edited by arbman, 21 January 2011 - 01:28 PM.
#26
Posted 21 January 2011 - 03:00 PM
#27
Posted 21 January 2011 - 03:27 PM
I think the Fed could get more bang for the buck if they were more imaginative, like timing their injections just when shorts short on "confirmation" when a short-term support level breaks.
Not that Fed has not done what you said since 2009, but I think the hatred against the bankers grows so much that they may also end up with another October 2008, if they don't do it just right. The memory of helplessness from the second half of 2008 and the fragility of the situation are still too fresh in Bernanke's memory, he cannot go there, the market has been calling him whenever he pretended to be tough, then every time he showed his hand that he was bluffing...
I think Fed should gradually let the banks with bad assets fail and let them sold in pieces to the public at dirt cheap prices, if the public should own them, they should own them at the right price and that they are WORTHLESS. In the mean time, all these banks can be kept operational in order not to cripple the economy as they love to threaten us about it. The next time they threaten the country about taking down with them, Fed should step in and throw out all of their executives doing so and demand back their fat bonuses (that's right all, all of their 2009 and 2010 bonuses for doing ABSOLUTELY NOTHING), replace them with the executives offered a $150-200k salary and 10% year end bonus only --there is an army of people competent enough for the job, they should be paid like the rest of the country. If you are going to make a lot of money, you might as well risk your own and partners assets, not by appropriating the public dollars among themselves.
What is so f'ed up about is that they take the govt Treasuries sell it back to the govt and make 5-6% from this everyday that Fed prints money. That's $5-6B for every $100B as if they are doing any real work and the economy has to grow by that amount only to pay their FEE, this is BEFORE EVEN ITS INTEREST! Talk about looting and easy life while many people live on food stamps in the very same country!!!
That's right, but the proper fixes will never happen until these people are taken to the streets and hung to the electric poles and they are pushing for it, they will eventually get it. I would actually put all of them involved in jail including Henry Paulson (and have him pay all back taxes due on his ill tax-free earnings when he became Treasury Secretary, make a complete fool out of that traitor) to save them from the public brutality --when the public explodes, they won't be able to run away with their billions, but I know I am going too far with my imagination. If these people had not known that their Ponzi scheme in the credit mania would not collapse by any stretch and it had been surely coming while they were trying to cash out as much as possible, I would cut my penis. Sorry for the extremes, but this is the HARD reality.
Edited by arbman, 21 January 2011 - 03:30 PM.
#28
Posted 21 January 2011 - 05:00 PM
I think the Fed could get more bang for the buck if they were more imaginative, like timing their injections just when shorts short on "confirmation" when a short-term support level breaks.
Not that Fed has not done what you said since 2009, but I think the hatred against the bankers grows so much that they may also end up with another October 2008, if they don't do it just right. The memory of helplessness from the second half of 2008 and the fragility of the situation are still too fresh in Bernanke's memory, he cannot go there, the market has been calling him whenever he pretended to be tough, then every time he showed his hand that he was bluffing...
I think Fed should gradually let the banks with bad assets fail and let them sold in pieces to the public at dirt cheap prices, if the public should own them, they should own them at the right price and that they are WORTHLESS. In the mean time, all these banks can be kept operational in order not to cripple the economy as they love to threaten us about it. The next time they threaten the country about taking down with them, Fed should step in and throw out all of their executives doing so and demand back their fat bonuses (that's right all, all of their 2009 and 2010 bonuses for doing ABSOLUTELY NOTHING), replace them with the executives offered a $150-200k salary and 10% year end bonus only --there is an army of people competent enough for the job, they should be paid like the rest of the country. If you are going to make a lot of money, you might as well risk your own and partners assets, not by appropriating the public dollars among themselves.
What is so f'ed up about is that they take the govt Treasuries sell it back to the govt and make 5-6% from this everyday that Fed prints money. That's $5-6B for every $100B as if they are doing any real work and the economy has to grow by that amount only to pay their FEE, this is BEFORE EVEN ITS INTEREST! Talk about looting and easy life while many people live on food stamps in the very same country!!!
That's right, but the proper fixes will never happen until these people are taken to the streets and hung to the electric poles and they are pushing for it, they will eventually get it. I would actually put all of them involved in jail including Henry Paulson (and have him pay all back taxes due on his ill tax-free earnings when he became Treasury Secretary, make a complete fool out of that traitor) to save them from the public brutality --when the public explodes, they won't be able to run away with their billions, but I know I am going too far with my imagination. If these people had not known that their Ponzi scheme in the credit mania would not collapse by any stretch and it had been surely coming while they were trying to cash out as much as possible, I would cut my penis. Sorry for the extremes, but this is the HARD reality.
It's likely that the outer doll of Ben and bankers is going to have to be shattered in some way as you indicated. But that only allows us to see more clearly the next doll underneath, and perhaps even get a glimpse of the 'saxophone' underneath it all. In the not so distant future, there will be little gainful employment for enough humans to support a wage-based global mass market economy. The gyrations in economies and markets as we move to that point are considerable enough but layering on long-cherished value systems, politics and just hyper- dishonesty and greed makes it absolutely impossible for most to see let alone grasp the inevitable trend let alone begin to think about how to deal with it.
It's only for my amusment that I think perhaps some base level of dividend-paying stocks, with some sort of incentives (replacing wages) to get more than baseline (because unequal income is not an evil, it is an absolute must in a functioning market economy) might do the trick. But i think we are much more likely to return to a feudal society arrangement. If that's the case, keep guessing right on the markets - its better to at least be a lord or even the grounds keeper than the serf. All the king spots have already been spoken for.
Edited by salsabob, 21 January 2011 - 05:01 PM.
If the world didn't suck, wouldn't we all just fly off?
#29
Posted 21 January 2011 - 06:03 PM
Wow, this board has come a very long way. Back in the day (like up until QE2), the idea that Fed manipulation like this could exist would have been ridiculed with no mercy as Conspirathink. Not only is it now accepted as fact, everyone has moved on to worry that the conspiracy might not work.
BIGGEST SCIENCE SCANDAL EVER...Official records systematically 'adjusted'.