| Back OpEd News | |||||||
|
Original Content at https://www.opednews.com/articles/How-Ben-Systemic-Risk-Be-by-Shalom-P-Hamou-090826-800.html (Note: You can view every article as one long page if you sign up as an Advocate Member, or higher). |
|||||||
August 28, 2009
How Ben 'Systemic Risk' Bernanke Deliberatly Created The Great Recession.
By Shalom P. Hamou
How Ben 'Systemic Risk' Bernanke Deliberatly Created The Great Recession.
::::::::
Article3How Ben 'Systemic Risk' Bernanke Deliberatly Created The Great Recession.
"The slowdown in economic activity, together with high interest rates, was in all likelihood
the most important source of the stock market crash that followed in October.
In other words, the market crash, rather than being the cause of the Depression,
as popular legend has it, was in fact largely the result of an economic slowdown and
the inappropriate monetary policies that preceded it.
Of course, the stock market crash only worsened the economic situation,
hurting consumer and business confidence and contributing to a still deeper downturn in 1930."
Governor Ben 'Systemic Risk' Bernanke
Money, Gold, and the Great Depression.
At the H. Parker Willis Lecture in Economic Policy,
Washington and Lee University, Lexington, Virginia.
2nd March 2004
"Each of the policy options I have discussed so far involves the Fed's acting on its own.
In practice, the effectiveness of anti-deflation policy could be significantly enhanced by
cooperation between the monetary and fiscal authorities.
A broad-based tax cut, for example, accommodated by a program of open-market purchases
to alleviate any tendency for interest rates to increase, would almost certainly be
an effective stimulant to consumption and hence to prices.
Even if households decided not to increase consumption but instead re-balanced their portfolios
by using their extra cash to acquire real and financial assets,
the resulting increase in asset values would lower the cost of capital and
improve the balance sheet positions of potential borrowers.
A money-financed tax cut is essentially equivalent to
Milton Friedman's famous "helicopter drop" of money."
Governor Ben 'Systemic Risk' Bernanke
Deflation: Making Sure "It" Doesn't Happen Here.
Before the National Economists Club, Washington, D.C.
21st November 2002.
<
It is not equivalent to Milton Friedman's famous "helicopter drop" of money. In fat it is the exact opposite.
The necessary consequences of the monetary policy that was implemented after the crash is to decrease the marginal return on capital (long-term yields), create the Mother of the Bubbles and increase the price of minerals (Oil, Precious Metals, Base Metals...).
I have proved that Bernanke mismanaged the sub prime crisis:
Ben "Systemic Risk" Bernanke is no beginner in crashes and economic depressions he even wrote a book on th subject: Essays on the Great Depression 2000. He has expleined again and again that what he did was exactly what he knew was the contrary of what he did.
The problem of the sub-prime MBS were known already to the public at the end of 2006. It is not hard to suppose that it was known before to the Federal Reserve System.In fact several month before as that Market was not transparent to say the least.
Google Trends on "Sub Prime".
Wells Fargo buying more 'sub-prime' mortgagesLos Angeles Times - Dec 5 2006
Goldman trims sub-prime riskIndependent - Mar 14 2007
Uncertainty shrouds sub prime situationMoneycontrol.com - Aug 10 2007
Sub-prime crisis claims further scalpAboutProperty.co.uk - Nov 5 2007
Swan upbeat about sub-prime falloutFairfield Champion - Dec 6 2007
Bank of China hit by sub-prime woesThe Australian - Jan 22 2008
Knowing that such a risk existed, according to his speeches and his book,
Bernanke should have lowered the short-term rates before December 2006.
It is only on September 18th, 2007 that Ben 'Systemic Risk' Bernanke lowered the target
fed fund rate from 5.25% by a mere 0.50% to 4.75%!
On March 5th, 2009 the 30 Years US Treasury Bond yield went as low as 4.621%.
It went as low as 4.617% on September 10, 2007!
On December 11 He lowered the target for Fed Funds by ridiculous 0.25%
When on December 4th the yield on 30 Years US Treasury Bonds were 4.309%.
On January 31 he raised the target to 4.25%. When on January 23, 2008 t
he yield on the 30 Years US Treasury Bond was as low as 4.102%!!!
"Among the more important monetary-policy mistakes were
1) the failure to tighten policy during 1987-89, despite evidence of growing
inflationary pressures, a failure that contributed to the development
of the "bubble economy";
2) the apparent attempt to "prick" the stock
market bubble in 1989-91, which helped to induce an asset-price crash;
and 3) the failure to ease adequately during the 1991-94 period, as
asset prices, the banking system, and t
he economy declined precipitously.
Bernanke and Gertler (1999) argue that if the Japanese
monetary policy after 1985 had focused on stabilizing aggregate demand
and inflation, rather than being distracted by the exchange rate or
asset prices, the results would have been much better.
....
I will argue here that, to the contrary, there is much that the Bank of Japan,
in cooperation with other government agencies, could do to help promote economic recovery in Japan.
Most of my arguments will not be new to the policy board and staff of the BOJ,
which of course has discussed these questions extensively.
However, their responses, when not confused or inconsistent, have generally relied on various technical or
legal objections- objections which, I will argue, could be overcome if the will to do so existed."
Prof. Ben 'Systemic Risk' Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis?.
For presentation at the ASSA meetings,
Boston MA, .
9th January 2000
It was never relevant to Ben 'Systemic Risk' Bernanke that average American, notably those who were
reimbursing variable rate mortgages, or those who lost asstes and jobs did suffer from these strict monetary policy.
Should he have acted decisively and normalised the yield curve by lowering, according to our computation, the rates to around 1% when he knew what was happening, the sub prime mess wouldn't have occurred and the number of mortgage who defaulted would have been a fraction of what they were.
Beware I am not saying that these analysis are right, what I am saying is given his knowledge and his experience, if he wanted to avoid the Crash, which he saw coming he would have acted completly differently.
Was it the result of indecisiveness, mere stupidity or more worrisome, a carefully planed sabotage?
An Intended Mistake:
I have learned several things in my previous life as a trader:
- When you can turn to only one person or institution in order to solve a problem, they did cause it in the first place.
- When a professional make a mistake more often than not he did that on purpose.
He had means, motive, and opportunity and he did take the opportunity he is, according to US Criminal law it is sufficient to convict him beyond a reasonable doubt for a premeditated crime.
Given the precedent of Bernard Madoff he would get, given the volume of the losses caused, at least 150 years in jail.
The only purpose of the crash and The Great Recession was to put in place the necessary conditions of The Crash at the time The New Forces had decided to trigger it. According to my computation had he acted otherwise The Crash, which was unavoidable, would have happen at a much later date.
In fact we know with a great precision when Ben 'Systemic Risk' Bernanke learned about the sub prime mess:
He took office on 1st February 2006.
When he took office the target was 4.5%; he increased them up to 5.25% with the intetion of inverting the yield curve sufficiently in order to create the Crash (see below The Puzzle of the Dyamic of a Crash.) on 29th June 2006. On 17th August 2006 he stopped to increase the rates. It is very difficult or almost impossible to time the Crash so Ben 'Systemic Risk' Bernanke increased the rates till he was sure he had reached his goal. So he has learned that his objective was reached between 29th June 2006 and 17th August 2006.
This is only part of my case against Ben 'Systemic Risk' Bernanke.
The fact that Prof. Paul Robin Krugman, Nobel Prize of economy and Professor Nouriel Roubini alias 'Dr. Doom' support his nomination in January makes me wonder about their motives.
When the Bubble Bursts we will be in a Keynes' Liquidity Trap and in a Deep Depression.
"Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency.
By a continuing process of inflation, governments can confiscate,
secretly and unobserved, an important part of the wealth of their
citizens.
...
Lenin was certainly right. There is no subtler, no surer means of
overturning the existing basis of society than to debauch the currency.
The process engages all the hidden forces of economic law on the side of destruction,
and does it in a manner which not one man in a million is able to diagnose."
John Maynard Keynes, 1st Baron Keynes of Tilton
The Economic Consequences of the Peace.
pp. 235-248.
1919
No monetary or fiscal policy will pull the World out of The Deep Depression.
Di Zeit: "Can the right monetary and fiscal policy keep the US out of a recession?"
Alan Greenspan: "Probably not. Global forces can now override most
anything that monetary and fiscal policy can do. Long-term real
interest rates have significantly more impact on the core of economic
activity than the individual actions of nations. Central banks have
increasingly lost their capacity to influence the longer end of the
market.
Two to three decades, ago central banks were dominant throughout the maturity schedule.
Thus, the more important question is the direction of long-term real interest rates."
Chairman Alan Greenspan
The Great Irony of Success.
ZEIT online, 30tn January 2008
Authors Bio:
Shalom P. Hamou
Tel Aviv, Ramat Aviv, Israel
I am the youngest economist at My Yield Curve.
Since spring of 1994 I have been working on economic depressions.
I am writing The Tract The Religious Interpretation of Employment, Interest, and Money..
It explains the nature and causes of economic depressions.
After a period of Irrational Exhuberance, which has inflated the Mother of All Asset Price Bubbles, we will have a Keynes' Liquidity Trap, The Crash and The Deep Depression.
The Crash will take place on Wednesday, 2nd September, 2009 5:10 PM EDT.
There is plausible alternative to The Deep Depression, The Adjusted Credit Free, Free Market Economy.
I designed a system, F**k the F*d, by which our economy can gather momentum for a successful and quick implementation after The Crash.
I have an MBA from Boston University ,USA, an Engineering Diploma from Ecole Centrale de Lyon France, a degree in Computer Engineer from Sivan Marchevim, Israel.
I have worked as a bond trader in Paris, France and as a NIP (Local) on the Paris MATIF.