Bernanke blasted after surprise no-taper decision

[katsung47]

Bernanke blasted after surprise no-taper decision

The decision cost investorswho bet on a stimulus cutback hugely, though benefiting many with longpositions in global stocks.

Many blamed Bernanke andfellow members of the Federal Open Market Committee (FOMC) for having since Mayrepeatedly suggested a September taper of the quantitative easing (QE) program.

Yahoo!

Do you know why Bernanke broke his repeated suggestion?

 

[ttwtt78640]

To keep things looking as rosy as possible until after the debt ceiling increase and another year of borrow and spend by Obama/congress would be my guess. I would assume that this easy money deal will be kept going until at least the 2014 mid-term elections, after that Obama could probably care less.

 

[Fenton]

Because the 2014 elections are around the corner and a sell off in a already depressed economy would look bad for ALL Democrat candidates ?

 

[greengirl77]

Because the 2014 elections are around the corner and a sell off in a already depressed economy would look bad for ALL Democrat candidates ?

And Republicans as well! Oh I forgot they are the responcible party! LMAO

 

[specklebang]

I know that it seems like a compulsory reaction to blame Obama for Bernanke but really:
"Bernanke then served as chairman of President George W. Bush's Council of Economic Advisers before President Bush appointed him on February 1, 2006, to be chairman of the United States Federal Reserve. Bernanke was confirmed for a second term as chairman on January 28, 2010, after being re-nominated by President Barack Obama."

So, if we can take a few minutes away from the endless, tedious Obama bashing, we can discuss what is really going on here. I'll try to keep it simple:
1) Bernanke "prints" billions and "gives" them to banks.
2) Banks lend the money back to Bernanke
3) Banks get interest on the money they lend Bernanke.
4) Banks buy stocks with the basically free interest they get on the money that was created in the first place. The rich get richer.

It's actually pretty obvious (IMHO) what is going on here. They count on the animosity toward Obama (or Bush) to obfuscate the reality that they are giving free money to bankers. After cursing Bush for his terrible policies, Obama hired the exact same guy. Doesn't that seem a bit revealing?

Instead of bitching about this blatant theft, I have to listen to the dreadful sorrow that these poor bankers have to pay FIT when they are obviously the "wealth creators" and should not have to be burdened with these taxes.

:roll:
good grief©

 

[Helix]

Do you know why Bernanke broke his repeated suggestion?

Bernanke wants to keep pretending that liquidity is the root problem, so the solution to that is to print money. He knew that a surprise extension of QE3 would be like giving the junkie one last snort of coke on the way to rehab, and it was. Unfortunately, this won't fix the problem.

 

[donsutherland1]

Do you know why Bernanke broke his repeated suggestion?

Bernanke broke no promises whatsoever. He never promised to begin reducing QE in September. From the July FOMC statement, the meeting that preceded the just concluded one:

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.

The underlined text is not a promise to begin tapering at the next meeting. There's a world of difference between a commitment to monitoring conditions and a commitment to begin reducing QE. If some market participants misread the statement and made bad decisions based on their misreading it, they alone are responsible for the financial consequences of their choice. Chairman Bernanke is not.

The overall macroeconomic context has not yet changed, even as there have been some indications of a pickup in growth. However, there were also some downside signals mixed in. The mixed bag suggested that it was premature to conclude that the economy had moved onto a sustained stronger growth trajectory just yet. Once the pickup in growth is sustained, then one can expect the Fed to begin paring back QE. For now, the Fed remains in a holding pattern, though the proverbial end game is nearing.

FWIW, my overall thinking remains that no taper is likely to begin until at least sometime during Q4 or next year (the December or January FOMC meetings might represent the most likely timing barring no meaningful economic shocks; unfortunately, the potential for a self-inflicted, politically-induced shock exists, both with respect to the government's expiring spending authority and the debt ceiling).

 

[Fisher]

Do you know why Bernanke broke his repeated suggestion?

Because the number of new jobs have dropped close to 25% per month since spring and this has caused them concern that things are sliding back would be my guess. That people lost money on their own gamble doesn't matter one way or the other. I wish they had lost more I am so sick of Wall Street gaming the market.

 

[katsung47]

The right answer is:

790. Bernanke’s Sept. Q.E. tapering off and Mueller’s stepping down (9/22/2013)


I quote some of my articles here because later development used to prove they were correct.

September should be the last month for Robert Mueller in his FBI office. (Sep. 2001 – Sep. 2011) His term has been extended for two more years. He has to finish Kat Sung before he leaves the office. (#694)

So this year we saw the last crazy before Robert Mueller’s leaving. The big plot – North Korea nuclear war crisis, the bird flu in China, Boston bombing. It ended with Snowden’s case in June.

There were still two months left before Mueller’s stepping down. So they hurried off a last hour effort – organized a Mid-East crisis which signaled by great prison escapes, US embassies close and Chemical weapon attack in Syria.

Embassies to close in Muslim world this Sunday

The Associated Press Aug 2, 2013

"Current information suggests that al-Qaeda and affiliated organizations continue to plan terrorist attacks both in the region and beyond, and that they may focus efforts to conduct attacks in the period between now and the end of August," the statement said.

U.S. issues global travel alert over al-Qaeda threat - World - CBC News

Why Al Qaida “focus to conduct attacks in the period between now (Aug 2) and the end of August, “? More likely, it fits the time of

Mueller stepped down on September 4, 2013, and was replaced by James Comey.[10]
Robert Mueller - Wikipedia, the free encyclopedia

The Feds used to buy in many houses in their case. It is for the convenience of surveillance. It also brings with them a lot of profit because they can manipulate the policy. In my case, Feds bought the houses of nearly whole area according to my observation. It now becomes a burden for them. The interest rate became a very important factor for them to maintain those real estate properties. They force the Federal Reserve to start a third Q.E. to keep the interest rate low . I describe the story from #733 to “739. The third housing bubble (10/1/2012)”).

The Q.E. certainly will create a big inflation bubble and a housing bubble as well. Bernanke likely has been assured he could taper off Q.E. after September. The Feds was sure they could eliminate Kat Sung before Robert Mueller’s leaving. However, it fails.

To maintain the interest of the Feds, Bernanke has to break up his promise and take the blame.

Bernanke blasted after surprise no-taper decision

Many blamed Bernanke and fellow members of the Federal Open Market Committee (FOMC) for having since May repeatedly suggested a September taper of the quantitative easing (QE) program.

Bernanke blasted after surprise no-taper decision

 

[Khayembii Communique]

The funny thing is that Bernanke has been completely and 100% crystal clear on when they would start looking at tapering. Everyone that wasn't paying attention misinterpreted what he was saying. How they did that is completely beyond me because he couldn't have been clearer.

 

[tech30528]

Interesting that the fed is purchasing mortgage backed securities. First, the toxic MBS market caused by no doc loans caused a huge part of this mess. But hten, not willing to let a good crisis go to waste, the federal government instituted the big bank "bail out", which was really handing the banks free money to use to buy out the MBSs and then foreclose on them without risk to the banks themselves. Then the federal government by way of Fannie Mae, ended up holding the paper on about 80% of the residential housing market.

So then Bernanke starts talking about tapering off QE which signals to the consumer market that interest rates will start to rise. Have you wondered why there have been so many home refi commercials on the radio lately? The possibility of interest rates going up pushed consumers who still owned a home (or still believed they should) to run out and lock that OMG IT WILL NEVER BE THIS AWESOME AGAIN rate. Except now there is a personal indemnification clause in these mortgages too. See, in the past, when people still thought the housing market was bulletproof, if you stopped paying on the house the bank took it back and resold it on the open market. If you had less than 80% equity then you had Private Mortgage Insurance, which was never there to protect YOU, it is there for the lender. Thing is when the market went belly up the insurance companies did not have enough liquidity to pay all the claims. The loss in effect ended up being absorbed by the banks with federal (fake, printed, borrowed, choose one) money. But now the government owns the market, people are jumping back in, interest rates have been creeping up in anticipation of the end of QE and now there are more fresh MBSs available with the added security that if the homeowner is caught out again, the difference between the sale price and the amount owed on the property remains the buyer's responsibility. So now the MBS is a more secure investment than it used to be. This basically means that PMI you are paying is now just another bank fee, because YOU, not the bank, are responsible for any market losses. Nice, huh? Still trust your government?

 

[katsung47]

This is what I wrote one year ago about Q.E. 3.

739. The third housing bubble (10/1/2012)

This was what happened in 1990s. The Feds started to buy in the real estate property from 1990 when they drove down the housing price. In 1997, when they found I trying to buy a house, the Feds passed the “Taxpayer Relief Act” to check other buyers from competition. Then they pushed up the housing market with the “dot com” babble. Why? Because the area where I live is the Silicone Valley where the high tech. companies gather in and where the Feds hold a lot of property they bought in my case. The tactic was to encourage the establishment of new company. The high salary employee would boost the property price.

The “dot com” bubble exploded in 2000. The Feds might have made good profit in property market in elsewhere but the San Francisco Bay Area where they invested heavily in my case. How to release their wealth? Then came the second bubble.

In April 2001, Pentagon created EP-3 spy plane collision incident in South China Sea. In secret deal with China to release the spy plane crew, the Feds bribed China to frame a drug case in US. As a payback to Pentagon, the Feds helped Pentagon prepared 911 terror case. Silverstein leased WTC at that month. 911 also gave the Feds the Patriot Act they have longed for. (See: “695. The collusion of D.O.D. and D.O.J. (11/28/2011)”)

With Patriot Act and a framed drug case in hand, the Feds now was sure Kat Sung would be eliminated. What needed was a booming housing market. How to get it? By manipulate the Federal Reserve.

http://graphics8.nytimes.com/images/2008/12/16/business/17fed.graph.190.gif

You can see how dramatically the interest rate dropped to the bottom in 2001 that created a housing babble US ever had which finally caused financial collapsing in 2008.

However, the property the Feds hold in Kat Sung’s case is still there, how to deliver the hot potato into other people’s hands? It’s still the mission of Federal Reserve.

Reuters – Wed, Sep 26, 2012.. .

(Reuters) - The U.S. Federal Reserve launched a new round of monetary stimulus this month, saying it will buy $40 billion in housing-backed bonds each month until the labor market improves substantially.

The Fed has kept interest rates near zero since December 2008 and now says it expects weak economic conditions will warrant keeping them there through at least mid 2015, half a year longer than it had earlier expected.
http://news.yahoo.com/factbox-fed-officials-comments-economy-policy-200444357--business.html

When Federal Reserve exhausted their interest rate tool, to help the Feds to break away from their straits, Federal Reserve will turn papers into money by printing 40 billion dollars each month – all of them will poured into the real estate market in order to create a third housing babble. This time, the bubble will come with severe inflation, I foresee.

 

[katsung47]

791. Summers withdrew candidate of Fed chair and oil price (9/26/2013)

Former FBI Chief Robert Mueller’s stepping down on 9/4/2013 obviously was a core time of recent big events. The sudden break out of Syria war crisis caused by Chemical weapon accusation in late August was a tradition way of Feds to distract. My relatives sudden trip to Turkey in early September was part of the elimination plan. When the plot went soured, the Feds has to change the original promise to the Chairman of Federal Reserve – we saw Bernanke having a “surprise no-taper decision”.

No-taper of Q.E. decision is only a temporary decision. For the huge amount of real estate property the Feds hold, they need a person to keep the interest rate low. There comes another big surprise that on September 15, the Fed Chair candidate Summers withdrew his name from the list. Summers was Obama’s top choice for the Fed. What made a man to abandon the fruit he almost certain to grasp? Or in another word, who has the power to manipulate celebrities? It’s the Feds. I’ve talked about it many times. They could force Chief Justice Roberts to change his mind on Obamacare. (see “726. The surprise turnaround of Chief Justice (7/4/2012)”) They could force Petraeos resigning from CIA Chief post. (see “747. Petraeus case is an extortion (11/27/2012)”) So what for a candidate for the Fed’s chair?

The point is Summers concerns more on inflation which will restrict the easy money of Q.E.. What the Feds need is a person who favors more Q.E. to boost the housing market.

The other news indicates how the Feds does to keep interest low (by lower the oil price).

Oil falls as US shows signs of patchy growth

PAMELA SAMPSON 9/26/2013


BANGKOK (AP) — Oil prices fell again Thursday amid worries about the U.S. economy and signs of a slowdown in demand.

Oil falls as US shows signs of patchy growth

In Autumn, a gas price fall

Per-gallon fuel costs expected to drop 40 to 45 cents by Halloween

By Gary Richards Mercury News 9/22/2013

A low oil price will draw dawn the inflation to offset the pressure to raise the interest rate. The Feds could manipulate politicians and manipulate oil price by financial group as well.

 

[donsutherland1]

The Federal Reserve announced the start of its tapering process. Beginning in January, the Fed will be purchasing $75 billion in mortgage-backed and long-term Treasury securities per month rather than the current figure of $85 billion.

From the FOMC's monetary policy statement:

Beginning in January, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month.

IMO, this timing is no big surprise.