Monday, November 21, 2005

Bernanke Info

From Financial Markets Center:
The Book on Bernanke. This complete compendium of information about Dr. Bernanke includes speeches, testimony, financial disclosure statements, FOMC voting record, transcripts of previous confirmation hearings, academic/publishing background and selected reactions to his nomination as chairman.

Wednesday, November 16, 2005

Bernanke–What Happened to Humphrey Hawkins

Yesterday’s nomination hearing for Ben Bernanke, Fed Head to be, got me thinking about the Humphrey Hawkins Act (The Full Employment and Economic Growth Act of 1978) that expired a few years back. The act was meant to get the Fed to focus policy for the benefit of all Americans, not just the rich. The act also mandated that the Fed Head testify before Congress on a regular basis.

Clearly Bernanke’s myopic focus on inflation, he proposes inflation targeting (setting a target range for inflation), shows that he will not be much better than Greenspan on setting policy to help average Americans.

Greenspan focused almost exclusively on wage inflation. So he was always trying to snuff out any wage gains for average Americans. He ignored the rapid rise in PE ratios (Price Earnings, Stock Price /(divided by) Earnings), or stock market inflation under his tenure. The stock markets' PE has traded in the 30's, more than double the historic average, under Greenspan’s watch. This has lead to record wealth imbalance, made right wing think tanks and initiatives flush with cash as well as corporations. Democracy lost out.

Congress should reinstate Humphrey Hawkins and make the FedHead set policy with the interest of all Americans in mind.

Sunday, November 13, 2005

Another Greenspan Bubble

NY Times Says Corporate Buyout Market is a Bubble

The New York Times in ‘The Great Global Buyout Bubble’, Andrew Ross Sorkin, reported today (11/13/05) that there is a bubble in the Corporate Buyout Market. This is another example of how Greenspan’s easy money policy was irresponsible and wrong.

To quote the Times:

"A YEAR ago this week, Henry R. Kravis, the legendary buyout mogul who
invented the modern-day private equity industry, gave a rare speech to a group
of investors in a ballroom of the Waldorf-Astoria. In describing how far the
business had come, Mr. Kravis, a slight man with a dry wit, recounted how
difficult it had been for him to raise $355 million to buy one of his first
companies, Houdaille Industries, in 1979."

""The availability of financing was our biggest challenge," he said.
"Literally, we had to add up the potential capital sources at that time, which
consisted of several banks and insurance companies, and one by one go out and
raise the money."""

"Today, he has the opposite problem. Investors have been throwing money
at the red-hot leveraged-buyout industry - so much so that Mr. Kravis now has to
turn away some of them, rejecting their cash as a mere

"The trillion-dollar question is whether these shopaholics are setting
themselves up for a giant fall. If the market begins to show even the faintest
signs of strain, this bubble may pop, say many financial analysts as well as
private equity players themselves. If that happens, the leveraged-buyout boom
and bust that Michael Milken led in the 1980's could end up looking like a dress
rehearsal for the mess to come. As Mr. Kravis said during his speech:
"Unfortunately, there is a flip side to having access to plentiful capital. It
means that too many people without experience in building businesses have too
much money.""

How many bubbles are out there? Housing, Stocks, Debt, Buyouts.....Only a post mortem autopsy will tell us the answer. What is clear is that we are about to pay for the failed policies of Fed Head Alan Greenspan.

Wednesday, November 09, 2005

Medal of Freedom For Greenspan

Payback--Birds of a Feather–It Takes One to Know

Today in awarding the Medal of Freedom to the Fed Head President Bush said:

"The era of Chairman Greenspan will always be known as one of phenomenal
economic growth, high productivity, and unprecedented innovation and opportunity
for all our citizens. He is a believer in economic freedom, open and flexible
markets, and boundless human creativity. In his 18 years as Fed Chairman, he
applied those principles with consistency, with calm, and with wisdom."

It should have come as no surprise that President Bush elected Fed Head Greenspan for the Medal of Freedom, after all it was Greenspan that has helped Bush immeasurably. Consider:

Fiscal House in order. By persuading President Clinton to pursue fiscal austerity Greenspan prevented the Democrats from pursuing their ‘supposed tax and spend policies.’ This kept the budget in balance and paved the way for Republican plunder. It also got the Democrats to pursue Republican mean-spirited and tough love policies such as welfare reform.

Stock Market Bubble. The Greenspan bubble created a mood of irrational exuberance and moral hazard in the country. The business of America again became business as Hoover told us. It also made corporations and the wealthy flush with cash, who made right wing think tanks and right wing initiatives flush with cash. It also made the Treasury flush with cash and ripe for a tax cut.

Endorsed the Tax Cut. Fed Head Greenspan’s blessing of Bush’s 2001 tax cut helped its passage.

A Strident Voice for Business. Greenspan like Bush/Cheney has always been a strident voice for big business. When it seemed inevitable that business was going to succumb to new regulations, such as with the collapse of Enron, the Fed Head was there firmly defending free markets and preaching no intervention. This helped insure that if any of the Big Boys benefitting from Bush/Cheney fell off the wagon Alan was there for the rescue.

Bush and Greenspan are birds of feather who care little for the poor and push a hypocritical agenda of to the victor, or the victor’s friends, belong the spoils. So in a way Bush was rewarding a person who is a lot like him. Consider:

Keep the Poor in their place. Greenspan has overseen the greatest rise in disparities of wealth and income inequality in America’s history. Under him financial deregulation has morphed into a Jim Crow system of banking. The poor are now un-banked and are forced to depend upon pawnshops, payday loans, rent to own stores and check cashing outlets for their banking. By making wage inflation his bogey man Greenspan insured that wages would remain stagnant while he was Fed Head. Did Katrina expose Conservatism and Bush, or Greenspan?

Take care of your friends. Bush is noted for his loyalty to his staff and for political pay back to his friends and corporate sponsors. Greenspan has been the bailout king that has bailed out institutions and speculators beginning when he first took office with the stock market crash of 1987. Any whiff of trouble and Al would sluice the pipeline with easy money.

Secrecy. Both men shroud themselves in secrecy. Greenspan is noted for his Greenspeak and has been cited for not turning over the minutes of Fed Meetings, choosing instead to shred them.

There should be no surprise that Bush nominated Greenspan. They are both ruthless and meanspirited people that have forced their reckless vision of the world upon us.

Tuesday, November 01, 2005

Another Rate Rise, Another Mistake

The Fed's decision to raise the Fed Fund's rate to 4% today will only add pressure to an economy already suffering from other pressures. As we have been noting for several months the Fed is back at its old pattern or either being too loose or too tight for too long. Today's hike is more of them being too tight.

While recent statistics may be showing a stronger economy, I disagree. The economy is being pressured by higher oil, higher rates, etc. Credit cards are allowing lots people to keep on going despite higher gas and heating costs.

To read the Fed's statement.

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