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Ear to the Ground

Bernanke Makes Mildly Encouraging Noises About Economy

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Posted on Aug 27, 2010
AP / Reed Saxon

There he is!: Federal Reserve Chairman Ben Bernanke waves from the veranda of the Jackson Lake Lodge at the start of the annual Federal Reserve conference in Jackson, Wyo., on Friday.

Is the recession over? Will there be another? Much like the famous groundhog from Punxsutawney, Federal Reserve chief Ben Bernanke showed up to offer an eagerly awaited sign—in this case to economists gathered Friday at Jackson Hole, Wyo., and to the world at large about whether we’re in for more hardship or a bit of relief in coming months. From the sound of it, the winter of our economic discontent isn’t over, but there might be some hope soon ... maybe, kind of.  —KA

From Bernanke’s remarks at the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming:

As I noted at the outset, when we last gathered here, the deep economic contraction had ended, and we were seeing broad stabilization in global economic activity and the beginnings of a recovery. Concerted government efforts to restore confidence in the financial system, including the aggressive provision of liquidity by central banks, were essential in achieving that outcome. Monetary policies in many countries had been eased aggressively. Fiscal policy—including stimulus packages, expansions of the social safety net, and the countercyclical spending and tax policies known collectively as automatic stabilizers—also helped to arrest the global decline. Once demand began to stabilize, firms gained sufficient confidence to increase production and slow the rapid liquidation of inventories that they had begun during the contraction. Expansionary fiscal policies and a powerful inventory cycle, helped by a recovery in international trade and improved financial conditions, fueled a significant pickup in growth.

At best, though, fiscal impetus and the inventory cycle can drive recovery only temporarily. For a sustained expansion to take hold, growth in private final demand—notably, consumer spending and business fixed investment—must ultimately take the lead. On the whole, in the United States, that critical handoff appears to be under way.

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Fat Freddy's avatar

By Fat Freddy, August 29, 2010 at 2:06 pm Link to this comment

What a dick! I just realized this. The speech was at the KC Fed. That’s where Thomas Hoenig is in charge, Bernanke’s biggest, and most vocal critic within the “system”. Ben is need of some serious bitch slappin’.

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Fat Freddy's avatar

By Fat Freddy, August 29, 2010 at 1:54 pm Link to this comment

Ouroborus,

Not quite.

Of course, this is verbatim what we have been warning about for months and months and months. And just as we have warned about the economy tanking, which is now confirmed by even the biggest permabulls on Wall Street (and we note with a deliberate dose of gloating the even Morgan Stanley’s “economists” have now stepped away from the Kool Aid punchbowl to their unquantifiable chagrin…and derision), the next leg down is stocks themselves, first as multiples collapse, and second, as all those corporate decisions to conserve cash (absent a few idiotic decisions by corp fin department ostensibly populated by crystal meth snorting monkeys such as those of HP and Dell), are finally seen for what they have been all along - prudent capital management in light of the next major downleg in the economy (and, yes, a major rise in corporation taxation) seen all too clearly by corporate Treasurers and CFOs, are all effectuated.

The dumb money also knows one other thing - that the Fed has now run out of all options to restimulate the economy (and prepare for the Fed’s escalating appeal of the Pittman decision to the Supreme Court* in the week before mid-term elections to take on a very contentious gravity from a political angle), absent for the nuclear option. That option, as Bernanke knows all too well, will do nothing to reflate leverage-heavy assets, and will merely shoot critical commodities like wheat, oil, cocoa (as recently demonstrated by deranged speculation**) into the stratosphere, finally ending the lie of the Core-CPI “disinflation.” Wall Street has yet to realize just how ahead of it the “dumb money” finally is - we have long said that Americans, especially those of financial decision-making relevance, are nowhere near as dumb as Wall Street would like to believe, and they just need the right pointers now and then.

From the “so-called” goldbugs, right?

http://www.zerohedge.com/article/confirming-dumb-moneys-resilience-wall-street-sirens


*
http://www.bloomberg.com/news/2010-08-27/federal-reserve-given-60-days-to-appeal-disclosure-order-to-supreme-court.html

**
http://www.zerohedge.com/article/cuckoo-cocoa-curves

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Ouroborus's avatar

By Ouroborus, August 29, 2010 at 7:27 am Link to this comment

Well, judging by the stock market; everybody’s still
buying what BERNANKE’s selling, pity.
I’m just glad I don’t live in the majorities reality.

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By ofersince72, August 28, 2010 at 11:50 pm Link to this comment

Vietnam Vet with a cardboard sign
Sitting there by the left turn line
Flag on the wheelchair flapping in the breeze
One leg missing, both hands free
No one’s paying much mind to him
The V.A. budget’s stretched so thin
And there’s more comin’ home from the Mideast war
We can’t make it here anymore

That big ol building was the textile mill
It fed our kids and it paid our bills
But they turned us out and they closed the doors
We can’t make it here anymore

See all those pallets piled up on the loading dock
They’re just gonna set there till they rot
‘Cause there’s nothing to ship, nothing to pack
Just busted concrete and rusted tracks
Empty storefronts around the square
There’s a needle in the gutter and glass everywhere
You don’t come down ‘less you"re looking to score
We can’t make it here anymore

The bar’s still open but man it’s slow
The tip jar’s light and the register’s low
The bartender don’t have much to say
The regular crowd gets thinner each day

Some have maxed out all their credit cards
Some are working two jobs and living in cars
Minimum wage won’t pay for a roof, won’t pay for a drink
If you gotta have proof just try it yourself Mr. CEO
See how far 5.15 an hour will go
Take a part time job at one of your stores
Bet you can’t make it here anymore

High school girl with a bourgeois dream
Just like the pictures in the magazine
She found on the floor of the laundromat
A woman with kids can forget all that
If she comes up pregnant what’ll she do
Forget the career, forget about school
Can she live on faith? live on hope?
High on Jesus or hooked on dope
When it’s way too late to just say no

You can’t make it here anymore

Now I’m stocking shirts in the Wal-Mart store
Just like the ones we made before
‘Cept this one came from Singapore
I guess we can’t make it here anymore

Should I hate a people for the shade of their skin
Or the shape of their eyes or the shape I’m in
Should I hate ‘em for having our jobs today
No, I hate the men sent the jobs away
I can see them all now, they haunt my dreams
All lily white and squeaky clean
They’ve never known want, they’ll never know need
Their shit don’t stink and their kids won’t bleed
Their kids won’t bleed in the damn little war
And we can’t make it here anymore

Will work for food
Will die for oil
Will dill for power and to us the spoils
The billionaires get to pay less tax
The working poor get to fall through the cracks
Let ‘em eat jellybeans let ‘em eat cake
Let ‘em eat shit, whatever it takes
They can join the Air Fore, or join the Corps
If they can’t make it here anymore

And that’s how it is
That’s what we got
If the president wants to admit it or not
You can read it in the paper
Read it on the wall
Hear it on the wind
If you’re listening at all
Get out of that limo
Look us in the eye
Call us on the cell phone
Tell us all why

In Dayton, Ohio
Or Portland, Maine
Or a cotton gin out on the great high plains
That’s done closed down along with the school
And the hospital and the swimming pool
Dust devils dance in the noonday heat
There’s rats in the alley
And trash in the street
Hang graffiti on a boxcar door
We can’t make it here anymore

JAMES MCMURTRY…..from CD , Childish Dreams…........

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Napolean DoneHisPart's avatar

By Napolean DoneHisPart, August 28, 2010 at 6:38 pm Link to this comment

Arraya… uh… no.

If you have a job and don’t mind being someone’s chattel treated and seen as a race horse or some fat cow, then fine, no point trying to hold water in your hands.  I’m just saying that maybe one can be happy making half of what they earn now working for themselves and be independent, that may be a God-send for them… and one may end up making twice, ten times or who knows!?!

If you are stifled, enslaved and anxious because your life is dictated by the empire and you haven’t the faintest clue how to turn the system to your favor…. then open your mind and take the helm!  ( those books I suggested ).

Above the argument, just stop being someone’s chattel… and if/when you do something else for YOURSELF which in turn benefits your immediate community, and the unbalanced inverted pyramid over the one that’s right-side-up you’re describing, will be more balanced to the ‘middle class’ which is really the populous / the people en mass which supports the entire system’s debt enslavement to begin with, to their detriment…. and they haven’t a clue ( mass deception folks ).

Amway?  Is that the best you can do Arraya?  grin 

rico, suave- I’m not sure how I can define the way I see the world politically, socially and economically and to label my ever changing views ( as I learn, experience and grow -hopefully- ).... to label an ebbing flow like that limits thinking and sets up immediate debate, opposition and prejudice in the minds of folks who naturally would treat each other like brothers.. yet their thinking has been conditioned and thwarted.

Somehow we’ve been set up automatically to believe and trust authority / government and keep an eye on each other… and of course, never have a conversation about politics, religion or money at the dinner table, right?

What do you call someone who grew up in a blue collar home, finding dissatisfaction with EVERY job they had to take up in order to SUSTAIN themselves ( parents had no clue or concept of a Trust, how to utilize a the corporate structure let alone start a business or work for oneself, how to identify investments and ‘run the numbers,’ nor how to recognize the debt enslavement they emigrated to )...

And I’ve found out that in order to ‘escape’ this debt load instilled by the empire, to ‘have’ to produce or work in order to exist, one may be tempted to enslave those less witty than themselves and hire the less witted for next to nothing while leveraging the less wit’s ignorance, need and automatic conditioning to further enrich oneself.

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Arraya's avatar

By Arraya, August 28, 2010 at 5:38 pm Link to this comment

It looks more like Napolean is trying to sell people on Amway or some such
nonsense. 

Our economy is collapsing and there really is no stopping it.  All wealth
structures pull wealth from the periphery towards the center. Which is way we
get a pyramid structure with wealth concentrated at the top and “wealth
conveyors” pulling wealth towards the center. Debt markets are a good example
of “wealth conveyors” . The US is the center of the global economic structure, so
it gets wealth conveyed to it in the form of resource extraction via globalization
and sophisticated forms financialization.  Though, the USs wealth distribution
mirrors the worlds exactly.

Now is about the time in history when these wealth conveyors start to break
down for physical resource limitations as well as debt structural issues. As time
goes on, we should see an increased number of failed states globally and
underclass internally. As the periphery gets stripped of all it’s wealth, the elite
will move further up the pyramid via public policy to maintain their privileged
positions and levels of wealth extraction as well as increased fighting over
resource deposits on a global scale.

Couple with the fact that technological advances, over time, have rendered
many jobs obsolete and this trend will continue which will ensure structurally
high unemployment to the point of social unrest.

Unless a dramatic changes in understanding and operation take place, it’s all
down hill from here.  Given that this would take a dramatic shift in belief
systems, I don’t hold much hope

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rico, suave's avatar

By rico, suave, August 28, 2010 at 3:59 pm Link to this comment

Napolean:

Are you a Republican? Your support for entrepreneurship, hard work and self-reliance is very refreshing to read.

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Napolean DoneHisPart's avatar

By Napolean DoneHisPart, August 28, 2010 at 12:41 pm Link to this comment

Why do we suppose the Federal government wants open borders that would allow inexpensive labor willing to do whatever and however to get dollars to buy bread,  own their own property and hopefully eventually buy that Mercedes and feel ‘rich’ or ‘successful’ or ‘free’ or believe the ‘American Dream’ or ‘_______’ ( your reason )?

Yet their are some who want to be serviced and practically have people feed them and wipe their dirty bottoms for them… and third-world impoverished and docile immigrants would do just that from their waking moment, being beneath and at the behest of their masters, willfully doing such for peanuts and living just a notch or two above the peasant status they were at in their country of origin… now accepting a rendition of the American Dream in what could have happily been considered the country of milk and honey and plenty of money…

Notice how educated immigrants come to the states and become millionaires or better, hire the domiciled breast-fed babies born stateside weened on MTV and everything ME…

What if in times like these ( what a way to end with a cliche wink, instead of only the few sharp and witted disenfranchised finally waking up to the reality of the world EMPIRE and decide to work for themselves and start their own path to sustain their momentary existence on this plain…. What if THE ENTIRE WORKFORCE were to work for themselves to attain income producing assets and be self-employed or own their own business small or large, be their own professional whatever and such?????

We’d see a boom like to the early emergence of this country, wouldn’t we?

We’d see allot of the few phony and self-indulged fat cats get their underwear in a bun and lose their financial stranglehold and monetary mind manipulation on the many overworked and burdened masses ( oh can you smell what Rome must have been like? )

What if all those workers were schooled in books like Rich Dad Poor Dad ( for paradigm shift ), Think & Grow Rich ( for tapping the energy & power of your mind ), The Wealth of Nations ( to realize the criminal enslavement civilization has been subjected to accepting )... and some others.

Yet many are very comfortable in their benefit filled government jobs, their corporate status addiction, their escape from the ugly using things you trade that fake idea of money to hep pass the time prior to final check-out.

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By jackofbeacon, August 28, 2010 at 12:14 pm Link to this comment
(Unregistered commenter)

Fire the mega crook now!!!

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fearnotruth's avatar

By fearnotruth, August 28, 2010 at 11:02 am Link to this comment

If one dares to risk taking hits like ‘tin-foil’ or ‘grassy knoll’ ascribing the
depression to a programmed sequence is tempting - how, other than making your
recruiting pool desperately impoverished, does an insane military, hijacked into
service to a global finance oligarchy manage the cannon fodder needed to advance
its hegemonic agenda

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Napolean DoneHisPart's avatar

By Napolean DoneHisPart, August 28, 2010 at 10:36 am Link to this comment

Plutocracy believes their very own market of buying and selling expensive junk and extravaganza will be immune to the greater economy of the ‘poor’ or working class / populous and can be self-sustained!

WHAT?

Only if those laborers who cook at the country clubs and restaurants and the bus boys ( you see what I mean ) CONTINUE to believe the lie that the only way to earn a living / sustain oneself is to work for those who have money or the ‘opportunity’ for an income… instead of THINKING about how to crack a nut on their own.

We have a population of Economic Slaves who’ve been conditioned to work for wages and be sifted by the capital system, instead of learning / knowing how to have that system work for them instead of against them.

And this is why I mention people’s image, paradigmatic perception and belief in money, the idea, concept, attitude of, etc….

What if the people realized that the carrot ( money ) can be got if they were to simply work for themselves… of course, this would take discipline and responsibility on the people’s part ( which is exactly the opposite lesson taught in the public school system ).

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Arraya's avatar

By Arraya, August 28, 2010 at 10:12 am Link to this comment

Bernake is losing control.  I agree with Oliver Stone…

http://wallstreetwarzone.com/oliver-stones-new-wall-street-film-market-
timing-signal-for-crash-of-2010-or-the-death-of-americas-soul-michael-
lewis-discovers-both-for-vanity-fair/
This film’s your biggest market timing signal of 2010!
Seriously, why now? Why after 23 years, did Stone decide to update the
message of his famous 1987 “Wall Street.” Great question: The interviewer was
Michael Lewis, former Salomon trader, author of Liar’s Poker, a guy who
understands Wall Street’s soul.
Stone’s answer is in “Greed Never Left,” Lewis’ Vanity Fair review of Stone’s new
movie, “Wall Street: Money Never Sleeps.” Stone had to think about it: “Why did I
go back?” Why? “Because it’s important. It’s the collapse of capitalism and the
collapse of our society. It is. Our way of life is going to change.”
The “collapse of capitalism?” Yes, Stone’s predicting the “collapse of
capitalism.” Not just a stock market crash, the “collapse of capitalism.” He’s
predicting the “collapse of our society.” Worse, Stone’s predicting: “Our way of
life is going to change.” Is this really a market timing signal? Hey, it was in
1987. Will history repeat? The odds say yes.

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By Will Richardson, August 28, 2010 at 9:33 am Link to this comment
(Unregistered commenter)

Until the state finances private sector saving/de-
leveraging give or take the trade deficit, the
stagnation of median family income of the last 40
years will become a fall.

Check out http://bilbo.economicoutlook.net/blog/

for a thorough explanation of this and why a

Job Guarantee at minimum wages to any un/deremployed
person would act as the ultimate aggregate demand
fiscal stabiliser and employment buffer, in the UK I
roughly calculate a ‘cost’ of 2-4% of income…better
still a sovereign state money producing monopolist
simply has to create the money, there’s no real need
to ‘borrow’ it. Inflation isn’t a serious worry when
the labour capital output gap is so large and
deflation seems a serious risk.

NB the real reason the Euro is a mad idea,
particularly for the peripheral economies to Germany,
is the self-imposed self-harm of denying a sovereign
state’s monopoly money creating ability.

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G.Anderson's avatar

By G.Anderson, August 28, 2010 at 7:30 am Link to this comment

“Is the recession over? Will there be another? “

No, No…and No again…

The recession is not over, so how can there be another one?

First of all we are in a depression, not a recession, one that is deepening significantly. Because, those in charge seem to believe that their remedy’s will restore the economy to what it once was.

It’s like story that starts out with, Once upon a time…

Once upon a time, American’s worked in jobs that paid decent money, bought products produced in this country, could afford to pay their taxes, send their children to college, pay for a mortgage, and had disposable income to buy things. Now they don’t.

Those in charge are never going to relinquish their power and allow the people of this country to become financially self sufficient again.

At this point their only selling dreams, dreams that will never come true, that are just so much pie in the sky.

Housing is going back to 1970 levels. And since the economy of California is somewhat dependent on real estate, it will be the first to go bankrupt.

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By expat in germany, August 28, 2010 at 5:24 am Link to this comment
(Unregistered commenter)

what a crock

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By ofersince72, August 28, 2010 at 3:01 am Link to this comment

Also what the Citigroup little winded memo points

out;  they expect the taxpayer to support them in many

ways.  They speak of conflicts for resources, that is

both taxpayer money and blood.  They speak of the

plutocracy paying very little taxes, and expect the

masses to pay for infastructure.  The make no bones about

their belief that they are special and privaliged and

expect to be treated that way.  They believe that their

salaries are not yet large enough.  They speak much about

Anglo-Saxonism,  but only how it should effect them and

how the U.K., U.S. and Canada will be experiencing

much flow to the top, and that this is good for them.

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By ofersince72, August 28, 2010 at 2:18 am Link to this comment

We are very insignificant to them. This isn’t the
first Citigroup memo I have seen like this.
The plutocracy looks good to them,  they don’t need
a bunch of middle class consumers for financial growth.

  But they are not near as smart as they believe they
are.  Yes, they have the upper hand and the military at
their disposal, but Mama Nature doesn’t like them any
more than she does us.

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By Daniel Pease, August 28, 2010 at 2:12 am Link to this comment
(Unregistered commenter)

Why in the hell would I want to start buying, and promote buying, more things
when I am not completely sure where those taxes will go?

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Napolean DoneHisPart's avatar

By Napolean DoneHisPart, August 28, 2010 at 1:24 am Link to this comment

I think stories like this receive little attention or response possibly due to the fact that folks continue to BELIEVE what central bankers and ‘expert’ economists suggest and pontificate…. and most folks have NO CLUE what money is, how it works and how to increase it.. NONE.. most folks only know how to WORK for it, trading hours for dollars.

The populous is mesmerized by money and all things bought with it…. and most folks here haven’t a clue of investing or increasing capital’s momentum.

So people like Benny look like a hero in a suit, another Bill Gates, except he’s a nerd about accounting ( or so the guise ).

What’s funny is the market rallied today ( but look at the value of gold, dollar, treasuries, bonds, etc. ) and one shouldn’t have to wonder how easy it is to make a losing market look like a winner when you simply write down estimates / earnings / outlooks… its a speculative market where traders are interested ( as always ) in increasing capital, not ‘investing’ in any company for dividends… that’s the slow money’s mentality / the chattel’s 401k’s and Mutual Funds, etc.

We see an ever divided economy… as that link in a previous post defines.

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By ofersince72, August 28, 2010 at 12:40 am Link to this comment

And throw away the key FearNoTruth.

What is astonishing, the little attention this thread
recieved.

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fearnotruth's avatar

By fearnotruth, August 28, 2010 at 12:26 am Link to this comment

Why would any intelligent person give an ounce of credence to Bernanke’s remarks on
anything pertaining to genuine economics? He and his cronies pulled off the biggest
heist of all time, after collapsing virtually all pension funds and endowments in the so-
called civilized world when their derivatives/hedge-funds ponzi bubble of fictitious
capital burst in the wake of the Lehman Brothers and Bear Stearns failures.

That any of these people can still walk the streets is nothing less than miraculous. That
they’re still cited as any sort of economic voices of authority is beyond absurd;
tantamount to citing Al Capone as an expert enologist, over his street persona: a
thuggish homicidal rum runner.

That this president has not been impeached for bringing into power such a gang of
blatant criminals, as bad if not worse than the last bunch, all of whom should be
impeached and jailed, further boggles the mind.

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Napolean DoneHisPart's avatar

By Napolean DoneHisPart, August 27, 2010 at 9:59 pm Link to this comment

From the ‘memo’ from Citibank to it’s plutocratic clients:

We have all heard the lament. A bearish guru, somber and serious, spelling out that the end is near if something is not done urgently about those really huge, nasty“Global Imbalances”. The U.S. savings rate is too low, the U.S. current account deficit is too high, foreigners are not going to keep financing this unless compensated with higher interest rates, and a sharply lower U.S. dollar. The world, being so imbalanced, is about to tip over it’s axis, all hell is going to break loose, so don’t any equities - the risk premium is high reflecting these imbalances and is going to go higher (i.e., lower stock prices) when the earth finally does keel over.

A more balanced view acknowledges these nasty imbalances, but predicts a gentle, gradual dollar decline, a yuan revaluation, and the hope that Asians and European (ex-UK) consumers will embark on a spending journey, righting the world. A tough workout, but she’ll be right.  Almost all the smart folks we know - our investors, our colleagues, our friends in academia, politicians believe in some variant of these two stories. There are very few exceptions who consider these“Global Imbalances” not scary but perfectly natural and rather harmless. (We can think of Gavekal as one of these exceptions, but their repose of comfort is different from ours - they have a new book out“The Brave New World”, elucidating the new business model of global“Platform” companies, etc).


http://www.scribd.com/doc/6674234/Citigroup-Oct-16-2005-Plutonomy-Report-Part-1

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By ofersince72, August 27, 2010 at 5:30 pm Link to this comment

Well, it is election time.

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