Something strange is going on around
here, the type of thing that make you ask yourself, "what's up?"
The quitting virus is moving through Washington and Wall Street. When
these folks begin to voluntarily give up wealth, power and privilege
you can bet your bones that there is some bad juju just over the
horizon. I had this same feeling back in 2005 when Congress suddenly
got it into their heads that they needed to reform America's
bankruptcy laws as soon as possible.
Or in 2004 when George W. Bush had bragged of the "ownership society" yes, thanks to his programs more American's than ever before owned their own homes. He was proud of that and took credit for it, as something that he had done his own self. This was a duck the shoe moment, three years later the narrative had become greedy Americans who took out loans they knew they could never pay back. Sweet innocent, naïve, bankers and mortgage brokers who were taken in by these greedy American home scamming con artists.
The other day over on Wall Street, our nations capital. Wells Fargo & Co. Chief Financial Officer Howard I. Atkins resigned for personal reasons, taking an unpaid leave of absence. Wells Fargo had reported record income for last year of $12.4 billion. It was Atkins who had helped to engineer the takeover of the crippled Wachovia bank in 2008. Banks too big to fail buying up banks not to big to fail. Much like Steinbeck wrote about in "The Grapes of Wrath" of small farmers pushed off the land by the large farmers until all that was left were huge corporations.
Atkins said he resigned for personal reasons which is even further confounded by his up coming retirement. He's nearly sixty, isn't that the age when most working people retire? He'd planned to retire in August when his benefits kick in after ten years of service. After a long and successful career of a decade Atkins will retire with a severance package of $22 million dollars. This will help to tide him over until his Social Security benefits kick in. Insiders are puzzled as to why Atkins would leave so suddenly and under such mysterious reasons.
It must be a virus, Federal Reserve Governor Kevin Warsh also turned in his notice to America's banker in chief Ben Bernanke. Warsh was the youngest Fed Governor ever appointed and is just forty years old and now leaves that position. It is a position like Pope or a head football coach, you either get promoted or fired but you don't quit. Warsh is reported to disagree with Boss Bernanke on his quantitative easing program.
It is one of those strange ironies that if you took all the economists in the world and laid them end to end they wouldn't reach a conclusion. Quantitative easing was used by the Federal Reserve in 2008 when the Bush administration claimed that our economy was near collapse. It involves expanding the money supply, normally the central bank would lower interest rates to stimulate the economy but since the rates were all ready at zero that wouldn't work. In the years before the financial crisis the Federal Reserve had bought between $700-$800 billion dollars worth of treasury bonds.
Quantitative easing also gives the banks an opportunity to look good. With billions of extra dollars available at virtually a zero percent interest, the banks can sit on their own reserves because there is always plenty of money free for the asking. Remember now, that this was done to prevent an economic collapse and to prevent an end of the world scenario. By June of 2010 the Federal Reserve had purchased $2.1 trillion in mortgage backed securities and treasury notes. Now guess who will be asked to pay for this largesse? That's right, you will, they bought up bad debt and refinanced the banks with free money and left a debt to the American public of $22,000 per million dollars borrowed or your cost is roughly 462 billion dollars! That's not the debt itself, of course, that's just the difference between what the bank was charged to borrow versus the true market cost.
Kind makes all those economizing efforts by the President come into focus, doesn't it? But big Ben stopped when he saw the economic recovery was on the horizon. Ben and Barack skipped merrily arm in arm through old Washington town singing joyously of the economic recovery. Ben even bemoans the sad fact that there is no recovery in the job market for working people. Strangely, with the economy in full recovery mode Bernanke says that we need $600 billion more in quantitative easing.
It does seems strange that if we needed this economic chemotherapy to keep our economy from dying in 2008 that the doctor would prescribe it again after he now claims that the patient is almost well. Kevin Warsh is quitting over over it and folks are quitting all over town.
"Nor will I retire from politics. After my family and faith, my desire to advance conservative principles is the animating force in my life (even ahead of NASCAR). To those who say, "You can't stop now, there is so much to do and we're on the cusp of taking control of the Senate,' I simply note that there will always be unfinished business in advancing the cause of freedom." Republican Senator John Kyl
Democratic Senator Chris Dodd stepped down last month, Dodd was a member of the Senate Banking committee and Kyl was on the Senate finance committee. Democratic Senator Byron Dorgan also announced his retirement in January saying, "Although I still have a passion for public service and enjoy my work in the Senate, I have other interests and I have other things I would like to pursue outside of public life."
"For instance, the January Blue Chip forecast (an average of many forecasters) calls for new housing starts to jump to 680,000 in 2011 from 588,000 in 2010, a 15.7 percent leap (not too shabby). This same group expects a further 31 percent increase in 2012 (definitely not shabby)." Commerce Department