Now that Bernanke will be reappointed, the stock market can fall back to earth.

Recommended.

Thank you, as always.

Thank you, Hugh. Recommended. IMO, “Get rid of the Fed” is the answer. The wise men of our past understood its dangers. I believe that was a goal of JFK in that he issued Treasury Notes, leaving the Fed out of it. This policy, among others, may have contributed heavily toward his death – IMO.

In this current meltdown Bernanke printed up and loaned out to banks some $2 Trillion. The taxpayers have no representation on the Fed’s board of governors. That is imposed taxation not legislated by congress.

If Obama has any true power left, he has chosen time and again not to use it. I voted for him; old as I am I fell for his rhetoric. Now I think of him as like the charlatans of the “Medicine Shows” who traveled about the country in my childhood, hawking their magic elixir that would cure any illness – mostly alcohol or laudanum which when continued did ease the pain but cured nothing and addicted the swallowers.

Obama promised to cure the ills of our country beginning with an open and transparent government; yeah…evidence of that is yesterday’s blackened mass of paper known as the OIG’s document dump concerning the conduct of the unrestrained CIA.

[O/T: Hugh, has Selise left the Lake?]

Thanks, Hugh, for another fine post.

Those who viewed Obama as sincere in his campaign rhetoric must’ve turned a blind eye and ear to the nature of the gathering in Denver last summer. The notion instilled that the grassroots were the major source of financing of Obama’s presidential campaign overlooks reality of the major funding by corporations and banks. His politics were clear during the campaign. Only an extremist nutbar of McCain’s ilk could serve to contrast. Given the predominance of appointments from among the Third Way Clintonites and the decisions taken so far, one has to be particularly obtuse not to realize this, by now.

Bernanke never should’ve been appointed to Fed chair in the first place, being totally unqualified for the position. The board wanted someone even more ineffectual than Greenspan was, and that’s what they got. It’s the people behind the scenes, wrapped in secrecy, who are actually in control. The chair is just a figurehead who has to address Congress from time to time.

To be sure, the Fed has powers that no single entity should be allowed to have. Its creation was a victory for the Federalist wing of the government and defeat for the ordinary people of this country.

On policy, at the very least, there should be a strong push led by the chair to re-establish the banking regulation that for so many years succeeded in preventing the most egregious crimes recently committed by the banksters. But that would be only a first step to banking reform.

Nouriel Roubini thinks Bernanke is just peachy:

Nouriel Roubini: The decisions made by Ben Bernanke prevented the Great Recession of 2008-2009 from turning into the Great Depression 2.0. For this reason alone Mr. Bernanke deserves to be reappointed so that he can manage the Fed’s exit from its most radical economic intervention since its creation in 1913.

Evidently, Krugman also supports the chairman’s re-appointment. Anna Schwartz opposes same:

Schwartz, 93, a research associate at the National Bureau of Economic Research and Friedman’s co-author on “A Monetary History of the United States, 1867-1960,” blamed the Fed under Bernanke for failing to warn investors of the dangers of investing in securities backed by pools of mortgages.

“Partly as a result of the Fed’s silence, investors who loaded up their balance sheets with these securities were ignorant of the great risks of trying to sell assets that are difficult to price,” she wrote.

She also said the Fed didn’t live up to its own rhetoric about the importance of transparency and “failed to articulate its own goals,” adding to volatility in financial markets.

Lehman Collapse

In particular, she said Bernanke failed to explain why the Fed supported the rescue of Bear Stearns and not Lehman Brothers Holdings Inc., whose bankruptcy in September 2008 added to the severity of the credit crisis.

When credit markets seized up last year, Schwartz said, the Fed “persisted in believing that the market needed more liquidity” when “the real problem was that because of the mysterious new instruments that investors had acquired, no one knew which firms were solvent of what assets were worth.”

Bernanke is an effective, willing tool for the criminally corrupt enterprises he represents.

I heard it said on NPR this morning that Obama’s reappointment of this slug was meant “to send a signal to the markets” that all would remain stable and that the Fed would always be poised to act to further that end.

One might add that Bernanke would be poised to act in favor of those who support him, corrupt slug that he is.

Great post, Hugh.

Thanks, Hugh. On the money as usual. My question is “why?” Why do this?

That Bernanke is a willing tool is hardly an explanation–willing tools are availble by the pallet-load. No matter how you look at it, Bernanke is damaged goods. Wouldn’t it be wiser politically to bury the past by retiring him and replacing him with another, less visibly corrupt Wall Street toady? Someone that would be no less pleasing to the banks and the WSJ but with no telltale stink about him to distress us members of the ignorant masses?

All I can think, is that the White House crowd doesn’t smell anything untoward, that it can’t imagine that the reappointment would even be controversial. But, if so, this just shifts the question to “how? How could they be so out of touch?”

The Fed has always had a dicey position Constitutionally. As long as it dealt or hid behind the rubric of monetary policy, it largely escaped scrutiny and examination. But since Alan Greenspan and Bill Clinton, the Fed has been operating as an adjunct of the Executive Branch, and its activities have become less monetary and more fiscal in nature. In essence, it gives the Executive extra-Constitutional access to its own purse. The Framers were serious about Congress’ power of the purse precisely in order to provide a check on Presidential powers. This has been effectively circumvented by the Fed and has been so blatant since the meltdown last year that for the first time questions about the role and make up of the Fed are seeping into the public’s attention.

I have had harsh words for both Krugman and Roubini for their endorsement of Bernanke. I even wrote a diary on Roubini’s support. I have pointed out repeatedly that Krugman has said that he owed his job at Princeton, and hence most of the rest of his career, to Bernanke. And while Krugman has criticized many over our financial and economic problems, I do not remember his ever discussing Bernanke’s role negatively. The NYT also endorsed Bernanke which I thought was typical. The Financial Times did too which was something of a surprise since it tends to be more reality based. I think a subtext to some of these endorsements is that people preferred re-appointment of Bernanke to avoid the possibility of Larry Summers getting the job. But that Bernanke who is right up there with Greenspan as the worst Fed chair in our history should get another term is both a tragedy and a travesty. No one so wrong about so many things that affect so many so much should be kept in any position of authority, especially one as important as the chair of the Fed.

Thank you, Hugh. Recommended. IMO, “Get rid of the Fed” is the answer. The wise men of our past understood its dangers. I believe that was a goal of JFK in that he issued Treasury Notes, leaving the Fed out of it. This policy, among others, may have contributed heavily toward his death – IMO.

Executive Order 11110

Thanks Hugh for continuing to watch this ongoing robbery of the public; like I have written before, Obama has been bought and sold; too bad I can’t get more support for the nationwide strikes that Larry Flynt suggested.

Nassim Taleb: Bernanake, Summers and Geithner Are Idiots, “Economists Have Been No Better in Their Predictions than Cab Drivers”

Taleb: Our Leadership Is “Literally Incompetent”. They Are Making Things Worse and “Rewarding The People Who Got Us Here”

Zero Hedge Claims that the Federal Reserve ITSELF Traded Over a Trillion Dollars Worth of Derivatives in March Alone

Kansas City Fed President Thomas Hoenig, the host for the annual Jackson Hole Fed confab, is utterly against bailouts, and thinks “Too Big To Fail” is a losing strategy

The White House, a Subsidiary of . . .

This diary and its comments all true, comprise a worthy Bernanke Spanky.

The Fed’s aggressive response with interest rates and balance-sheet expansion were in fact commendable actions, however I really don’t think that should forgive or explain how it is they became necessities in the first place, and certainly shouldn’t exonerate the opacity of the Fed on the latter of those two extraordinary actions. It remains to be seen just how advantageous that balance sheet expansion really was, since we have no idea what’s on it.

It’s a good question. I suppose the answer is that this is how the White House has been operating, at least when it’s doing things the Serious People favor. Just press on as if nothing’s wrong. Think of it as the audacity of chutzpah. ;)

Agreed. Timothy Geithner, when questioned about why he hadn’t enforced some fiscal discipline when he was in charge of the New York Fed, said that he didn’t see that as his role. Yet it’s quite clearly stated on the Fed’s website that it was his role. Expository links.

“The Federal Reserve must for the first time identify the companies in its emergency lending programs after losing a Freedom of Information Act lawsuit.

Manhattan Chief U.S. District Judge Loretta Preska ruled against the central bank yesterday, rejecting the argument that loan records aren’t covered by the law because their disclosure would harm borrowers’ competitive positions.

The Fed has refused to name the financial firms it lent to or disclose the amounts or the assets put up as collateral under 11 programs, most put in place during the deepest financial crisis since the Great Depression, saying that doing so might set off a run by depositors and unsettle shareholders. Bloomberg LP, the New York-based company majority-owned by Mayor Michael Bloomberg, sued on Nov. 7 on behalf of its Bloomberg News unit. “

http://www.bloomberg.com/apps/…..CC61ZsieV4

Bernake said NO to auditing the Fed…is that right

Larry Flynt is absolutely correct. Anyone saying Obama is a socialist doesnt know an arch capitalist when they see one. OUR government has been taken over by the wall street, corporate elites. Obama is one of them. Sorry, I supported him, but I am judging him by his actions. Re electing Bernake was a huge mistake. Maybe he should be forced to tell Congress what he did with all those trillions of dollars. What overseas banks got our money Ben, Israel mayhaps.

It is not just our financial system that is broken and bankrupt but, as Obama’s choosing of Bernanke shows, our political elites are as well.

Per Matt Taibbi in this month’s Rolling Stone:

The cost of all of this to society, in illness and death and loss of productivity and a soaring federal deficit and plain old anxiety and anger, is incalculable — and that’s the good news. The bad news is our failed health care system won’t get fixed, because it exists entirely within the confines of yet another failed system: the political entity known as the United States of America.

Emphasis added.

Great post, Hugh. It looks like Main Street is really screwed. Let’s keep watching it.

selise has been commenting on various posts. See here and here, for example.