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The Bernanke Scandal: Full-Frontal Cluelessness

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Posted on Jun 7, 2011
AP / Alex Brandon

Fed Chairman Ben Bernanke testifies before the Senate Budget Committee in January.

By Robert Scheer

How I wish that Ben Bernanke would get caught emailing photos of his underwear-clad groin. Otherwise we don’t stand a chance of reversing this administration’s economic policy, which is shaping up to be every bit as disastrous as that of its predecessor. 

Indeed, the Fed chairman’s much anticipated remarks on Tuesday take one back to the contemptuous indifference of a Herbert Hoover to the public’s suffering: Bernanke dismissed the wobbly economy with its anemic 1.8 percent first-quarter growth as merely “somewhat slower than expected.” The rise in unemployment to 9.1 percent was “some loss of momentum.”

The problem with Bernanke is that he is utterly clueless as to the stark pain and fear endured by the 50 million Americans who have experienced, or face the prospect of, losing their homes. His remarks reflected the insularity of a ruling-power elite that is magnificently impervious to the damage that Bernanke’s policies in the current and past administration helped inflict on what used to be called the American way of life. This is a man who assured us there was no housing crisis, while his policies at the Fed encouraged the mortgage securitization swindles that caused the meltdown of the economy.

His full statement stands as a classic example of the limits of economic language as morally descriptive: “Overall, the economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers.” Frustratingly slow—how about going bat nuts with fear over not being able to make your mortgage payment and losing your home? Tell it to workers who must contend with stagnant wage rates and sharply rising gas and food costs as better jobs and therefore consumer demand move offshore. Bernanke takes low wages to be reassuring news on what he sees as the all-important inflation front: “ ... Subdued unit labor costs should remain a restraining influence on inflation.”

At home we are experiencing a social tsunami with the disappearance of a middle-class workforce of stakeholders who were assumed by observers as varied as Thomas Jefferson and Alexis de Tocqueville to be the very bedrock of America’s experiment in freedom. Many with jobs are struggling desperately to get by as the average workweek and pay scales fall, and countless workers find themselves settling for rewards well below their skill sets. Even those slim pickings are denied to the unemployed. Bernanke concedes: “Particularly concerning is the very high level of long-term unemployment—nearly half of the unemployed have been jobless for more than six months.”

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The jobs that have been created by our large multinational corporations, like the bailed-out GE, are primarily outside of the country, as Bernanke admitted: “Many U.S. firms, notably in manufacturing but also in services, have benefited from the strong growth of demand in foreign markets.” Those foreign gains, fueled by far more successful anti-recession policies in China, Brazil and Germany, have driven up demand and prices abroad in the areas of petroleum, food and key construction commodities. 

Bernanke, speaking at a monetary conference in Atlanta, conceded that “the depressed state of housing in the United States is a big reason that the current recovery is less vigorous than we would like,” and that the “U.S. economy is recovering from both the worst financial crisis and the most severe housing bust since the Great Depression.” 

But he offered not a word as to how the severe effects of that housing bust might be mitigated. Not a word about assisting people to stay in their homes. Yet he claimed that the relief that the Fed provided to the bankers by buying up more than $1.2 trillion of the toxic mortgages those bankers had created “has been accomplished, I should note, at no net cost to the federal budget or to the U.S. taxpayer.” 

This is the Big Lie technique at work, employed by a huge banking lobby that stresses the direct cost of the TARP program while ignoring other programs that will not be paid back, as well as the additional cost of $5 trillion to the national debt that a proper Fed policy could have avoided.

The record is by now indelibly clear that the economic approaches pursued by George W. Bush and Barack Obama, with Bernanke playing a key role in both administrations, can be most accurately summarized as a policy of government of the bankers, by the bankers, and for the bankers. 

Assurances of stability to the financial markets, meaning the ability for companies to borrow government funds at a near-zero interest rate without giving anything back to the public in the form of mortgage relief or job creation, have been the overwhelming goal. But even by that standard, as the latest statistics on job creation and construction starts attest, the government’s effort is not working. Putting the bankers first has represented pushing on a string, what Paul Volcker condemns as a “liquidity trap,” a situation in which taxpayer money has been made available to major corporations that invest in job creation that benefits foreigners instead of U.S. workers. Now that’s an obscenity we should be concerned about.

Click here to check out Robert Scheer’s new book,
“The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.”


Keep up with Robert Scheer’s latest columns, interviews, tour dates and more at www.truthdig.com/robert_scheer.

 

Click here to check out Robert Scheer’s book,
“The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street.”


Keep up with Robert Scheer’s latest columns, interviews, tour dates and more at www.truthdig.com/robert_scheer.



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basho's avatar

By basho, June 16, 2011 at 12:06 am Link to this comment

“How I wish that Ben Bernanke would get caught emailing photos of his underwear-clad groin.”

wow, would you now.

it seems that most americanos see the world from this level.

fast forward

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By Cliff Carson, June 15, 2011 at 7:18 pm Link to this comment

Definitely agree with you carson and not just because of the moniker.

The Fed, privately owned, and not by Americans, sets American Money policy - totally.  And it is beyond the control of the United States.

The International Banking System (BIS, World Bank, IMF) a privately owned Cartel, owns majority interest in the “Central” Banks of the World, including the U S Fed.

Now lets just step back and think.  Who would the Money policy set by the Federal Reserve of the United States be organized to benefit the most - the interests of the taxpayers of America or the interests of the stockholders of the Fed?

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drbhelthi's avatar

By drbhelthi, June 13, 2011 at 1:59 am Link to this comment

Things my eventually get better, but not for you, or your children, or
your grandchildren. = prisnersdilemma

Gosh, pd.
Behind your black robe you are quite optimistic.

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By soapboxofrocks, June 11, 2011 at 10:11 pm Link to this comment
(Unregistered commenter)

Yea, so i ran up my mortgage and bought an suv.  largely because my job
income was sucking ass since the dot com bust (lost both jobs and investment
$) and last “recession” in 2001.  im getting bitchslapped now in various ways:
credit ruined, suv is dead, no job, declining income for the last 12 years.  the
banks, fed, and neoliberal policy made what was supposed to be a down real
estate market into the next great depression. 

But, if the blame is enough to get passed around (as I am reading here from
some of the “expert” shills and trolls that it should be), you would think that
there would be some bitchslapping for the likes of Greenspan (who made me
sick when he became a card carrying republican) and all the banksters which
have made it impossible for me to earn an honest living, sell my home, start a
business, etc.  they crashed the whole economy and have been exposed as
hucksters who gamed the system, gave out 0 down loans and seconds (at 130% of home value) to people who were not credit worthy, devalued our homes and currency, bet the downside, and threw everyone under
the bus. 

So to you: AIG, Goldman Sachs, Citicorp, Rubin, Geithner, and all of those credit
and insurance rating agencies who should have been giving AIG a D+ rating but
instead chose to keep them at A++, I’ll bend over and take mine. 

When do you get the “Too Big to Fail” insertion into your posterior?

As Frankenstein said: Ahhhhhhhhhhhhhhhgggggggg!

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Carson's avatar

By Carson, June 11, 2011 at 4:46 pm Link to this comment

No matter how much real money people can put together to build their countries the way they want there are those that can print up what ever it takes to get their way.

Maybe this will help make the danger of fiat money clear.
Imagine you and me are setting across from each other. We create enough money to represent all of the world’s wealth. Each one of us has one SUPER Dollar in front of him.
You own half of everything and so do I.
I’m the government though. I get bribed into creating a Central Bank.
You’re not doing what I want you to be doing so I print up myself eight more SUPER Dollars to manipulate you with.
All of a sudden your SUPER Dollar only represents one tenth of the wealth of the world!
That isn’t the only thing though. You need to get busy and get to work because YOU’VE BEEN STIFFED with the bill for the money I PRINTED UP to get YOU TO DO what I WANTED.
That to me represents what has been happening to the economy, and us, and why so many of our occupations just can’t keep up with the fake money presses.

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By Arouete, June 11, 2011 at 2:06 pm Link to this comment

This, of course, is a perfect example of why cartoonists always characterize the ruling class as pigs. The 1% get away with all this *only* because 99%  are, for the most part, sheep who line up to be fleeced - after which they are made into mutton. Horney cash-crazed shepherds have been known to screw their sheep before fleecing. The planet is their *igger and, for the most part, their Bill of Rights and entitlement is, F**k you.  We can screw whoever we want, however we want, whenever we want and as much as we want. We don’t care. We don’t have to. We are the 1%.” Given the fact that a few of that 1% are decent human beings the real number of people who run and rape the planet is much smaller. Indeed, Joseph Kennedy is famous for once telling a colleague, “You know as well as I do that no more than 5 people run America and that’s a generous estimate.” 

They do it and get away with it because they know they can - “What are YOU gonna do about it?” Mince Bernanke’s words all you want and they all translate into the same thing, ‘Bend over cause we are drivin’. F**k you ... I don’t give a hoot what any you think & we are still not done screwing you.’

But aside from superb forensic journalism such as we often find here at Truthdig (and a special salute to Matt Taibbi at Rolling Stone) it’s all *issing against the wind for the vast majority of Americans simply don’t read, they are so functionally illiterate that they can hardly fill out a job application (for what kind of job who knows), they can’t follow a newspaper article written at a 4th grade level, or are simply too scared *hitless and clueless to do anything even if they were so deluded as to believe they could make any difference.  Aside from these we have the crack-brained trolls whose ‘response’ to an article on Bernanke is to screed on in irrelevancy about a Nazi-type EU engaging in acts of terrorism by creating and releasing a new strain of E-Coli into the food chain- for what purpose we are left to imagine. They wallow in Weinergate rubbish and jump in gas-guzzling monsters to drive to 25 miles Kmart to buy flat screen TV’s made in China so they can watch reality TV and “Dancing with the Stars” as they feed on Mc*hit carry-out. We call these people ‘voters’ and it’s why we have the money-crazed and sex-obsessed leadership we have.

As always the 1% will do *exactly* as they please (they don’t care and they don’t have to) and they will push the other 99% as far as they can. Only when American streets break to riot as in the Middle East will they toss-over a little bit of chump-change compromise to quiet the sheep into thinking they can safely graze. NOTHING WILL CHANGE - AT LEAST NOT FOR THE BETTER.

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By Beaudigger, June 10, 2011 at 11:11 am Link to this comment

These are their plans, it is obvious:

Scenario I, The Ark Scenario

They know this is endgame because of irreversible global warming and population as well as death of the oceans due to warmth and acidification.

The elite in power loot the treasury.
Borrow as much as they possibly can.
Find somewhere to hide and try survive.
The rest of the world can rot for all they care.  They know we are due a major cull.  Will they speed it along?  They already know how to innoculate a species in order to neutralize the uninitiated- why do you think they call it round-uhp.  Is this too radical to imagine?  Call me Strangelove.
But why else would they stay calm and not care about the impending climate doom.

Knowledge of impending doom often frees the sufferer from worry.  Why worry about tomorrow when you know you won’t make it past today.  At least some of us will make it.  And the few left will have a world to once again rule over and populate as they see fit.

Scenario II, Live Today, Worry Tomorrow,  Just burn fossil fuel hell for leather and cross that steamy bridge when we get to it.

Scenario III, We are the World,  Enlightened and effective world leadership will reduce warming, population growth and feed the planet, meanwhile watering it using dry river beds flowing from a snowless himalayan mountain range as well as managing the complete destruction of habitable coastal regions home to the majority populatoin on earth.

Scenario IV Your guess is as good as mine.

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By Marc Schlee, June 10, 2011 at 6:09 am Link to this comment
(Unregistered commenter)

It’s so much easier to dismiss evil as mere incompetence.

freeamericarevolutinary(direct)democracy

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By FRTothus, June 9, 2011 at 6:36 pm Link to this comment

It is absurd to presume the taxpayer-funded major
corporations that invest the peoples’ money in foreign
“job creation” in any way benefits those foreign
workers.

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prisnersdilema's avatar

By prisnersdilema, June 9, 2011 at 1:38 pm Link to this comment

Actually it really doesn’t matter for the common person what Big B says. Nor, does it
matter what the Fed does.  Because no matter what happens, for the common person
the economy is going to continue to decline, along with their standard of living. Because
the plutocracy, is not going to change how they manage the economy. It means that
there will be more free trade agreements, jobs going overseas, downsizing of
corporations, and devaluing of U.S. Workers. Things my eventually get better, but not for
you, or your children, or your grandchildren.

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By Dave L., June 9, 2011 at 12:01 pm Link to this comment

Lafayette, you are very idealistic but out of touch with reality. Go out and buy something you say? You seem to forget that here in America people are losing their jobs. The stated unemployment rate is about half of the true rate. It does not take into account the underemployed. Jobs are being shipped out of this country at an alarming rate. The actors posing as our elected representatives who were voted into office by the sheeple(one thing I do aggree with) were the only choices on the ballot. The entire electorate process has been compromised and is controlled by TPTB.

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By C. R. Ambisagrus, June 9, 2011 at 11:39 am Link to this comment

The central banker should never be confused with an honest and respectable man. His primary job is to convince the world of the worthiness of the nation’s currency all the while he is controlling its destruction.”—Anonymous

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By Brent Greenwell, June 9, 2011 at 11:10 am Link to this comment
(Unregistered commenter)

Hey, why not offer something with your empirical wisdom?  Are we suppose to deduce something from all your wordiness?

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By Inherit The Wind, June 9, 2011 at 10:02 am Link to this comment

In Britain during the Enclosure Movement and in America
afterwards, and continuing from the Colonial Period to the
present, America has had a Linguistic System based upon
ideological definition and sophism, as opposed to a Linguistic System based upon logic.

If we are to have any real change in America, either economically or politically, it will have to come by way of reform to the Linguistic System that is used for communication of the problems and solutions economically, politically, and socially.

We will have to reform linguistic communication in the United States so that the present Linguistic System based upon linguistics defined by ideological definition of sophist propaganda gives way to linguistics based upon logic; this is where the beginning of any real change in America that provides for real democracy and benefit of the many, rather than benefit for the few lies——all else is smoke and mirrors.
*************

How are we going to improve communication with incoherent gibberish like this?

This puts the “nit” back in “nit-wit”.

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By Hermes, June 9, 2011 at 8:47 am Link to this comment
(Unregistered commenter)

“The central banker should never be confused with an honest and respectable man. His primary job is to convince the world of the worthiness of the nation’s currency all the while he is controlling its destruction.”—Anonymous

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By TAO Walker, June 9, 2011 at 8:32 am Link to this comment

Last week it was the li’l bastard Timmy Geitner and the big bad Goldman Sachs
gang, tied to Robert Scheer’s virtual whipping post.  This week it’s
“thebenbernanke” getting pretend pilloried.

In going-on five years of looking-in on this truthscratch-the-surface site, this
Old Indian has yet to see from its main man even a smidgen of well-deserved
“self” flagellation.  He did, however, once admit (in an interview with Gore Vidal)
to his very own too-precious “self” having an all-too-common (and commonly
overwhelming) addiction to cold comforts and crippling CONveniences. 

There’s a four-step treatment regimen for that.  The critical first step, of
course,  for Scheer and his fellah ‘n’ gal junkies, is to get-over their “self.” 
‘Cause if you don’t, Sisters and Brothers, it’s sure-as-hell going to put one over
on you all….in THE END.  So enjoin your “self.”  It’s later than you think.

Wonder who next Wednesday’s villain(s) du jour will be?

HokaHey!

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Lafayette's avatar

By Lafayette, June 9, 2011 at 7:55 am Link to this comment

sn: His QE 1 and Qe 2 policies have been total busts

Had we not had any QE whatsoever, the unemployment rate would have been easily at 11% if not more.

Ignorance is bliss?

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By Inherit The Wind, June 9, 2011 at 7:37 am Link to this comment

Surfnow:
Our disagreement is minor.  I’m no supply-sider, I simply know the theory. Bernanke, as head of the Fed, can’t control the other actors: Federal spending, taxing, borrowing and printing money.

And, yes, job creation by government spending is the best short-term solution. If we redirect the Trillion or so dollars from overseas wars into rebuilding infrastructure, the jobs creation there alone would blow us right out of this recession AND perform a desperately needed and long overdue upgrade to roads and bridges.

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By surfnow, June 9, 2011 at 6:53 am Link to this comment

Inherit the Wind:
You downplay Bernake’s role in the lack of growth the economy has acheived under Obama.His QE 1 and Qe 2 policies have been total busts, so he needs to shoulder far more of the responsibility. The reason quantitive easing has been useless is because it’s based on supply side economics . His idea is if the government buys enough bonds, their yield will decrease leading investors to buy more corporate equities instead- which will lead to corporate growth and more jobs. Bernake is of course dead wrong. The only thing that stimulates a consumer economy is demand- we need direct government intervention in the form of job creation -

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M Henri Day's avatar

By M Henri Day, June 9, 2011 at 6:42 am Link to this comment

«The housing fiasco was a bubble produced by socialist government attempts to get more people in houses ...» Your logic, dear phillipw, seems to be on a par with your ability to spell personal names. Why would a putatively «socialist» government (in the United States ?!! Whatever are you smoking ?) attempt «to get more people in houses» - by which you seem to mean promoting home ownership for poor people ? A socialist government, in contradistinction to the sort of capitalist government you seem to favour, would certainly attempt to provide shelter for those that lack it, but according to my experience with governments that describe themselves as «socialist», private home ownership is hardly one of their major priorities. Your priorities, however seem clear from your comment : «For example, someone serves in the military, works their life [sic !] to save and buy a house, and some unemployed new arrival buys a house without adequate income and keeps the responsible buyer out» ; i e, military or ex-military personnel should come before recent immigrants with regard to access to home purchases, as the latter, but not the former, enjoy the status of «responsible people». While I am less interested than you seem to believe in ensuring that all the poor purchase their own homes (myself, I rent my flat and am happy with that state of affairs), I am very much for policies that work to see that all, rich or poor, military or civil, have access to education of good quality and to a meaningful job under good working conditions. And I regard your insinuation that the poor people who find themselves losing the homes they were encouraged to purchase and saddled with permanent debt are not the «real victims» of this carefully engineered crash, but rather that that particular status is reserved for «responsible home buyer hopefuls» (presumably military personnel) both absurd and disgusting. The days in which an upper class (and their under-class sycophants) could be permitted to categorise the poor as «deserving» and «undeserving» should not be allowed to return….

Henri

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katsteevns's avatar

By katsteevns, June 9, 2011 at 6:28 am Link to this comment

“Those who make peaceful revolution impossible, make violent revolution inevitable” -JFK

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katsteevns's avatar

By katsteevns, June 9, 2011 at 5:59 am Link to this comment

So right, RedwoodGuy!

Revolutions need leaders, and for some reason, no fish are biting. I surmise the reason being is that it is a certain death sentence for any potential leader. That is a hard pill to swallow. Just ask one of the most recent candidates, JFK, Jr.

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drbhelthi's avatar

By drbhelthi, June 9, 2011 at 3:44 am Link to this comment

Right.
Sheeple.
Similarly,the subjugation of the German citizenry to the bioweapons
lab creation of e.Coli, released recently in the Hamburg area, and
other regions.

This version of e.Coli is impossible as a natural strain.
Which NAZI-type in the EU is responsible for the release of this
creation?  Or, was it an agent in the German government?
Who plans legislation at the EU level to remove farmer and citizenry
rights, turning them over to Dr. Mengele-WWII NAZI types?

http://www.truthdig.com/eartotheground/item/new_killer_strain_of_e_col
i_crops_up_in_europe_20110602/

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By christian96, June 9, 2011 at 3:39 am Link to this comment

Don’t forget the “working conditions” of those
employed in overseas jobs working for the multi-national corporations.  Conditions very similar to
those which existed in America in the past and present for some people.  Coal miners gave their
lives and suffered to form a union which was dealt
a strong left hook by Ronald Wilson Reagan.  Coal
miners now die in mines without a union because the
mines only had 30 minutes of oxygen stored for the
miners.  Oxygen, food, and water should be stored
for weeks throughout a coal mine to assist trap
miners.  Wonder what working conditions are like for miners in other parts of the globe?

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By Inherit The Wind, June 9, 2011 at 3:30 am Link to this comment

RWG:
The Fed does control monetary policy.  But you’ve bought into the “Supply Side” nonsense that monetary policy is what controls the economy.  Any first year Macro Econ class student can show you how that is wrong, that fiscal policy is an even BIGGER actor than monetary policy.

The teabag concept takes Friedman’s endorsement of monetary policy outside of economic analysis and into political pseudo-religious dogma.  Friedman argued that the use of fiscal policy to counteract cyclical behavior in the in economy didn’t work because it will always backfire, not that it won’t affect the economy.

Much of what has gone wrong since 2001 has BEEN the result of irresponsible, even criminal corrupt misuse of fiscal policy.  Why has the Fed worked so hard to keep interest rates low? What was pushing them up?  Insanely idiotic deficit spending by the US Government funding two wars, one of which was NEVER necessary and the other never should have gone beyond 2003.

Basic market analysis: The demand to borrow money goes up, the price of borrowing that money goes up, ie, interest rates.  Hence the Fed’s need to keep them low to try to stim the economy.

When Bush came into office, there was no deficit, there was a surplus. Now, every year more and more has to be borrowed.  Why do you think the Deficit Ceiling is now 14 TRILLION dollars?  10 years of war, unfunded by taxes, funded by borrowing!

And that’s just one part of (bad) fiscal policy!

What Ryan is pushing for in the House, and McConnell is pushing for in the Senate, is use of this financial disaster to take over the Titanic so the richest can grab all the life boats.

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Lafayette's avatar

By Lafayette, June 9, 2011 at 1:01 am Link to this comment

Concise Electoral Wisdom from we, the sheeple, here.

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Lafayette's avatar

By Lafayette, June 9, 2011 at 12:50 am Link to this comment

GO OUT AND BUY SOMETHING

Bernanke has been literally SHOVING a trillion dollars at his member banks in a program called “QE” and “QE2” - (Quantatative Easing) ... The banks are not using this for lending however, they are using it for speculation, acquisitions and mergers, and other investments.

From WikiP: { Quantitative easing shifts monetary policy instruments away from interest rates, towards targeting the quantity of money. However, the goals of monetary policy (including inflation targets) remain unchanged.

Quantitative easing may then be used by the monetary authorities to further stimulate the economy, by expanding the excess reserves in the banking system and lowering interest rates further out on the yield curve. Risks include the policy being more effective than intended or of not being effective enough, if banks opt simply to sit on the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio.}

One must ask, why should the banks loan money at this far less than propitious moment in our economic history? On what projects? On renegotiating foreclosed loans with people who cannot establish their creditworthiness – and thus start another round of Toxic Waste?

Your supposition that the banks are using the money to “speculate” is probably partly true. But it remains unsubstantiated by fact. (Unless you are privy to the information proving otherwise. Which the Fed would dearly like to see.)

The banks can indeed use the money as collateral for speculation on a number of different fronts (money markets, bond markets, derivatives). But corporations are flush with money, which they park with banks. So, do the banks really NEED the money to speculate? I doubt it.

MY POINT

Interest rates are historically low and they have proved insufficient to spark Demand or, therefore, Supply of goods/services (which creates jobs). If QE provides funds that cannot be employed by commercial banks to bootstrap a recovery of the economy it is because Demand is not there to justify expansion of industrial/commercial capacity to meet Demand. A bank cannot loan money if there is no one requesting a loan.

Golden rule of the game: The alpha and the omega of the Demand-Supply equation is that we, the consumer, stimulate Demand – corporations respond by enhancing production. Which means this: In the Economic Equation of Supply & Demand, the latter is the Independent Variable and the former is the Dependent Variable.

IOW, go out an buy something …

POST SCRIPTUM

The sad fact of the matter is this: If QE cannot spark Demand, then there are no other tools available to do so … except fiscal policy - which means Stimulus Spending.

Stimulus Spending is anathema to the dorks that “we, the sheeple” voted into power in the HofR, from which ALL MONEY BILLS must originate.

Got it … ?

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RedwoodGuy's avatar

By RedwoodGuy, June 8, 2011 at 9:52 pm Link to this comment

It has been suggested twice now in these comments that the FED only controls interest rates. That’s not accurate, and doesn’t begin to describe the roll of the FED at all.

The FED governs all the member banks with regards to their RESERVES. Which is to say, how much capital must be present to represent all the loans they have outstanding. We have a fractional reserve system. That means they only need to have a fraction of their lona portfolio represented by actual capital.

The way money gets created and put into the system is by manipulating this reserve requirement. Making it lower means the banks can loan more money without taking in more deposits. This is an enormous power that goes way the hell beyond regulating the discount rate.

Bernanke has been literally SHOVING a trillion dollars at his member banks in a program called “QE” and “QE2” - (Quantatative Easing). He is buying their Treasury securities with cash that he simply invents. The banks are not using this for lending however, they are using it for speculation, acquisitions and mergers, and other investments.

QUOTE
The Federal Reserve’s role as the lender of last resort to individual banks is quite separate from its traditional role in managing the level of interest rates. Banks are inherently illiquid institutions, taking deposits that the public can access on demand and lending those funds to businesses that have much longer times to repay. If a large enough number of depositors at any commercial bank wants their funds for any reason, the bank may find itself unable to provide the requested funds quickly enough. In this way, a bank that is solvent, i.e., in which the value of its assets exceeds the value of its liabilities, may find itself illiquid, i.e., having fewer liquid assets than it needs to meet withdrawal requests. To deal with such a situation, central banks act as the lender of last resort, lending to the commercial bank against illiquid collateral. Walter Bagehot, the 19th century editor of the Economist newspaper,  provided the classic advice on this subject when he wrote that the central bank should lend freely to a solvent commercial bank but only “at a high rate on good collateral.”
In the past year the Fed has extended credit in ways that Bagehot would not have approved. It has certainly loaned against collateral that was not of high quality and that entailed the risk of losses in excess of the haircuts or the Treasury risk sharing guarantees. It also loaned at lower than prevailing market interest rates in order to entice borrowing by the commercial banks. The Fed extended its lender of last resort facility to nonbanks and even to non-financial institutions.
END QUOTE

That’s a minor snippet on one aspect of what the FED is doing. Literally everything about monetary policy is controlled by the FED. Those policies and actions account for inflation, GDP growth, lending, interest rates, unemployment rates, margin requirements on stock purchases, solvency of banks and more. Our economy has been fully financialized. It is dependent on many obscure financial procedures to stay working. This isn’t trading wampum back and forth, this is mathematically based, and the FED has all the calculators. They RUN THE ECONOMY.

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By philipw, June 8, 2011 at 9:43 pm Link to this comment

M. Henry Day:
The housing fiasco was a bubble produced by socialist government attempts to get more people in houses and by the financial capitalist system who responded or led to get all the money they could out of this system.  These set up a system where poor and unemployed people could get a house they could not pay for.  Poor government, capitalist greed, and irresponsible buyers are all culpable.  All the lending and house buying caused the bubble and forced some responsible buyers out.  Since 2002 until 2008 and beyond responsible buyers suffered by not having a house and being taxed to keep irresponsible buyers in a house they should not be in and in which they live in for free for many months.  People buying the houses were also speculators, not to mention investors who compete with real buyers for a home to live in.  Who is suffering or a victim?  For example, someone serves in the military, works their life to save and buy a house, and some unemployed new arrival buys a house without adequate income and keeps the responsible buyer out.  In California where I live, houses are still almost double their 2002 level, are trashed foreclosures, and require large sums to restore.  Mid-level income people cannot afford such houses.  How is being out of a house for eight years due to the bubble, being despondent, discouraged, and disillusioned, being older, less healthy, and forced to move to some trashed foreclosure somewhere that is still overpriced sitting pretty?  How is seeing ones country nearly destroyed by this greedy inept system sitting pretty?  It’s ugly.  The people who caused this try to explain it away and blame others, instead of admitting their mistakes and trying to set it right.
If you want poor people to have a house, work for a society where they have education and decent secure employment so they can save and buy a house. Regulate for responsible financing or find another and better financial system with heart and soul.  I don’t castigate the poor.  I am of the poor.  I castigate the system the causes and supports this.  I castigate the elites who think they know it all, create horrible messes, and then won’t own up to their mistakes.  It is and was a mistake to put people in houses they could not afford and then try to keep them in them.  It was wrong and unjust for the real victims, responsible home buyer hopefuls and society as a whole.  The system could not deliver and the system wallows in blame, greed, and expansion of its evils throughout the world.  Someday maybe robots can build equitable houses for everybody without hurting the environment, but that day is far away.  Don’t support government failures and bad government and capitalist exploitation.  Admit the faults and errors, try to correct them for justice and work for something better.  Scheer is rightfully blaming the capitalists, but he omits blaming all involved or going beyond blame, and so contributes to more of the same.  There is equality, responsibility, and liberty, and play possible if we mature and develop to create it.

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By MarthaA, June 8, 2011 at 9:03 pm Link to this comment

The Economic Cycle of boom, bust, and bailout of private capital
and privatized capitalism has been going on since the time of the
Enclosure Movement in Britain that dispossessed the British
Populace to enable the British Textile Industry and jump start
Capitalism.

It was a time when the British Government took everything away
from the British Peasantry and gave it to interests of private
capital to raise sheep and use the dispossessed peasantry as a
workforce that was expected to work for starvation wages or die.

This British System of Privatized Capitalism is what American
Privatized Capitalism was based upon, and the American System
of Privatized Capitalism, to this day, works according to the British
Enclosure Movement Pattern of Privatized Capitalism.

The problem in Britain and in America is the Linguistic System that
enables the whole Privatized Capitalism Dumb-Show.

In Britain during the Enclosure Movement and in America
afterwards, and continuing from the Colonial Period to the
present, America has had a Linguistic System based upon
ideological definition and sophism, as opposed to a Linguistic
System based upon logic.

If we are to have any real change in America, either economically
or politically, it will have to come by way of reform to the Linguistic
System that is used for communication of the problems and
solutions economically, politically, and socially.

We will have to reform linguistic communication in the United
States so that the present Linguistic System based upon
linguistics defined by ideological definition of sophist propaganda
gives way to linguistics based upon logic; this is where the
beginning of any real change in America that provides for real
democracy and benefit of the many, rather than benefit for the few
lies——all else is smoke and mirrors.

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By Inherit The Wind, June 8, 2011 at 8:21 pm Link to this comment

Scheer has been brilliant and written many brilliant articles and analyses.

This is not one of them.  Scheer waves the Prog “Bloody Flag”, feeds the usual red meat buzzwords to the dogmatic faithful, and people praise him.  When Sarah Palin or Glenn Beck does it for the Teabaggers, we mock them, as they deserve.

Bernanke is at the point of the spear of only one of the four major economic instruments available to the Federal Government.  ALL the instruments together CAN steer the ship of the economy, but it’s like trying to steer a motorboat with a cooking spatula…and Bernanke leads 1/4 of that spatula.

Bernanke is the head of the Federal Reserve and, as such is the VOICE of the Federal Reserve board, as its chairman.  He puts forth the consensus of his choice of actions combined with the actions desired by his fellow board members.  They control the interest rates, but only indirectly, by setting the PRIME discount lending rate and the amount FEDERAL banks must keep in reserve.  Everything else trickles down from that and Bernanke cannot change that.  That’s the tools they have.

The other three actors are beyond his control.  And since Milton Friedman invented the fiction of “supply side” vs “Keynesian” economics, two of THOSE have been either abandoned or misused.

Of course, those two are the two halves of fiscal policy: Government spending and taxation.  Only once has the Fed commented on taxation, and it was disastrous.  Greenspan endorsed Bush’s irresponsible tax cuts in 2001, and lived to regret it.  At least Greenspan had the grace to admit he fucked up badly with that one!

In the face of the recession, we have seen (as Lafayette astutely pointed out) that the GOP has taken what EVERY economist knows is the worst possible road: Cutting government spending to close the deficit, and, have refused to use the most productive tool to do that: Taxing the people who have withdrawn THEIR money from the economy—the wealthiest 5%.  They don’t spend 90 or 100% of their income—they have food, clothing, shelter, BMWs, Rolexes, second homes and 15% tax rates so THEY can save their cash, and spend a fraction of it on poli-ticks.

The 4th actor in this is, of course, the Treasury and its ability to print and coin money.  This doesn’t control the entire money supply, but it does control a lot of it.  Tight money is anti-inflationary and has worked—on housing.  But it hasn’t worked on gas prices.

Furthermore, Bernanke was appointed by Bush, not Obama, and inherited a mess left by Alan Greenspan.  Greenspan started much of this in the late 90’s when Clinton was President when he decided the Fed needed to show Wall Street, especially the “New Economy” who really was boss. So he kicked off a mild recession which helped get Bush elected.

Bernanke inherited this crap.

Much criticism has been heaped here on Ben’s careful deliberate words, always understating everything. When the Fed Chairman even farts, the markets react so he is obligated (as were his predecessors before him) to pick the least colorful words possible, the words with the least that can be inferred. He also has to be conscious of the effect of what he does NOT say, as the markets react to THAT just as much.

I can’t say Bernanke is a bad Fed Head or a good one. It’s a flat-out shitty job, and there’s not much shittier these days in Washington.  I think the only two jobs I’d want LESS than Ben’s, is Boehner’s job as Speaker having to rely on bat-shit crazed Teaparty lunatics for his position, or, of course, Obama’s.

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By morongobill, June 8, 2011 at 5:30 pm Link to this comment

“liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.”-Andrew Mellon, Secretary of the Treasury to President Herbert Hoover-1931.

God, the good old days when a man said what he meant and meant what he said.

Does anybody on this forum really understand a damn thing that Bernanke and Greenspan ever said?

Note the above quote was for illustrative purposes only and does not indicate what I feel about the problem.

Hint on how I feel: I wanted Obama to channel his inner FDR, instead he seems to be channeling his inner HCH.

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By RedwoodGuy, June 8, 2011 at 4:41 pm Link to this comment

We’re demanding this! We’re demanding that! We insist on this and that! Meh. Reality check: waltz down to your local airport and watch the people raise their hands, remove their shoes and belts and get in line for a nude picture. You think the power structure is worried about Americans demanding anything? What a laugh!

Terror-fear has taken the last ounce of fight out of the saps. There’s nothing left. Oh sure, they’ll click on an online petition. Oh sure, they might even stand in the street with a cardboard sign. But “demand” something? You gotta be kidding me.

Simple question: When (specifically) was the last rebellion in the USA?

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By prisnersdilema, June 8, 2011 at 3:52 pm Link to this comment

another conservative disinformationist. No Mr. sludge, the majority of Americans did not
participate in any boom. They didn’t participate in the Bush boom or the Clinton boom.
Instead they saw the value of their labor devalued by the plutocracy, getting close to 50
percent of them are on food stamps, 50 million without healthcare, and on and on and
on….The the plutocracy always says its the people’s fault, for being poor. The poor are
always guilty of being poor, the rich are innocent by the fact of their wealth. If your
homeless you must have done anything wrong. But all of 99% of the people in this
country cannot match the greed of the plutocracy. It is un rivaled in all of human history.
Their greed is revealed in their obsession with secrecy. Let the eat cake.

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By John Andersen, June 8, 2011 at 3:17 pm Link to this comment
(Unregistered commenter)

I think it’s willful cluelessness with many of our “leaders.”  They once knew what ethical behavior was, but money, position and power, not to mention temporal security are all more compelling alternatives than being ethical, especially when being ethical means a tougher road.

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By bluesman, June 8, 2011 at 3:17 pm Link to this comment

Mehere, you could not have expressed it any more clearly. The truly “clueless” ones are the voters.
When will we DEMAND that our elections be funded with ZERO private dollars so that we may actually get candidates who truly care about America instead of themselves? I already know that answer- NEVER!!!!

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By sludgegulper, June 8, 2011 at 3:09 pm Link to this comment

@Lafayette “The banks were responsible for the predatory lending practices.” Yes and all those that took out hefty loans were forced, strong-armed, into signing the deals. Wake up man! greed took over the small guy who thought he could be like the big boys; turned out the badly for a lot of people but they’ve only got themselves to blame. Don’t vote, as the man said, It only encourages the bastards. Don’t buy the Chinese shit, insist on home produced products. but more than this… Live within your means, use less, consume less. We’ve all had a good life (party) over the last 15 years or so now it’s time to get a cure for the hangover. Don’t blame others for your own stupidity.(Rhetorical)

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By sludgegulper, June 8, 2011 at 2:54 pm Link to this comment

Scene one.
I enter my bank to be greeted by the manager with a firm handshake and a hail-fellow-well-met, slap on the back. He asks me how the wife and kids are doing as we walk to his office. Inside the plush, air conditioned room I’m invited to take a seat as we get down to the business of discussing my mortgage requirements. Without giving too many details away the mortgage deal is one I simply can’t afford NOT to take. A huge loan at next to no interest and that pile in the country, we’ve only ever dreamed about, is ours for the asking. Better get in there quick though, as the prices are going up by the day and others are out there snapping up the “bargains”
Scene two.
Fast forward three years. The expensive house I bought only a few short years ago is now worth under half what I paid and the mortgage repayments have more than doubled; so much so that on my meagre salary I just can’t afford them any longer. I suppose I should be thankful I still have my job, emptying trash cans, even though I’ve taken a wage cut. Guess we’ll be moving into that trailer we saw the other week…that’s if it’s still available.
The forgoing is an all too familiar story but I’ve got a question. Whose fault is it that I’m in this mess? My bank manager’s for selling me the mortgage? Or mine for listening to his fancy talk and dreaming I could actually improve myself and move above my station?
All the morons out there that hocked themselves up to the eyeballs and bought stuff they’d couldn’t afford and/or didn’t need, got just what they deserved. All those people that go out and buy the worthless shit coming over from China and Asia have only themselves to blame for lack of jobs here. If we don’t buy it they won’t make it. And if they don’t make it, those suckers over there will be out of work and on the scrap heap; then watch the social unrest take over and the Commie government struggle to keep the peace. STOP BUYING THEIR CRAP AND SEE HOW LONG THEY LAST. But that’s another story.

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By Josh_NC, June 8, 2011 at 2:28 pm Link to this comment
(Unregistered commenter)

I keep hearing that Bernanke and Obama are clueless, that the media is ignoring what is happening. I could not disagree more. Bernanke, the Bankers, the War Machine, Wall St do know exactly what is happening. They just don’t care. Obama knows it but does not have the guts to do anything because he is completely controlled by those around him who he placed around him because he was too disingenuous, a complete fool, or worse, part of the plan all along. His policies are not very different from his predecessors. Bottom line, we have been completely shut out. The insiders have full control and they will bring this country down because Americans have become too dumb to see what is going on or too scared to something about it or a combination of both and more stupidity. The United States is so broken up we may yet see some of the states attempt to break up from the union.

Ask yourselves why would anyone except the greedy elite vote Republican and yet they do! These middle class people have zero gains with Republicans and yet they voter for them. I can understand voting independent or not voting at all. The dems are also another disaster, hand-in-hand with the banks, wall st, so on. We are not at all represented and this is a well known fact not some conspiracy theory and yet nothing is done, no mass movement!

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By Lafayette, June 8, 2011 at 2:27 pm Link to this comment

FUTILE CATHARSIS

This article is almost totally devoid of any comprehension of what is happening economically in America today.

Almost all economists are unanimous in their prescription of a classic Keynesian Stimulus Spending (aka New Deal 2) in order to resuscitate the economy and create jobs more quickly. Of the 800 billion of stimulus money that Obama asked and obtained from Congress, only about 150 billion remains. This is not nearly enough to sustain the economy throughout the rest of this year.

Unfortunately, Americans shot Uncle Sam in the foot in the mid-term elections. They punished the False Miracle Worker for his lack of Economic Miracles, by electing Replicant Troglodytes to the HofR thus passing control to them. It takes no brilliant investigative reporting of who is the stumbling block to Stimulus Spending. A bunch of Replicant Nerds who think that reducing the National Budget Deficit by cutting the budget is more important than creating jobs by means of Stimulus Spending.

Bernanke is just a bystander. Sure his performance was lacking in punch. But what do you expect the guy to do? The Fed has control over only one financial policy mechanism – interest rates. And those rates are about as low as they can get – so low that they cannot get lower and do any real good.

American voter stupidity is responsible for the impasse in which LaLaLand on the Potomac now finds itself.  And pointing the finger of blame on Bernanke is just an exercise in futile catharsis.

As regards those threatened with foreclosure? Just what can we expect the Fed to do about them? Nada, niente, nichts, nothing.

MY POINT

What should have been done was not done. Pass a law that required banks to accept market rents instead of bloated interest payments until people either found an alternative solution or got back into a financial position that would allow them to renegotiate another mortgage.

The banks were responsible for the predatory lending practices. They should have been made to contribute to resolving the plight of those it harmed. Yes, shame on this administration for having done nothing. And shame on the banksters for having convinced Congress that the above suggested solution was a non-starter.

Until we, the sheeple, change the way businesses can influence politicians, there will be little hope for the American consumer in any battle with Corporate America. This can be done only by electing politicians who’s primary interests are those of its constituents and not its electoral campaign donors.

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By prisnersdilema, June 8, 2011 at 1:53 pm Link to this comment

Mr. Scheers article, is however, missing a dynamic view of the economy, and does not
Consider what will happen when the economy slides again in the near future. The
bankers Will protect their own, the people will be left to starve.

Housing prices have now slid further than they did in the great depression. When gas
prices hit $7.50, you will need a armed guard just to get to the store to buy your
groceries.

As long as Wall Street remains in charge, through Obama, and the Republican party,
America will be doomed. Do you think they will suffer? Or
Will they continue to tell you it’s your fault because you are greedy, because you had to
borrow money to feed your children?

At this point it is unlikely that there can be a political solution to the countries problems.
Consequently, there will be no stopping the coming financial collapse. Therefore, It is up
to each person to resist as much as they are able. Resistance can become a daily
activity. Any act of resistance no matter how small will be important In the end.

At some point it is likely civil unrest will be used as an excuse to justify an increase in
police actions against those identified as being enemies of the Plutocracy. Those that
frequent this web cite have more than likely already been added to the enemies list.

Better a lifetime in prison than an eternity in he’ll. Those who keep the secrets are as
responsible as those that pull the strings.

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By c.d.embrey, June 8, 2011 at 1:22 pm Link to this comment
(Unregistered commenter)

The Reality Distortion Field (RDF) may have been invented by Steve Jobs, but it has been perfected by Barack Obama.

Ben Bernanke is doing what both the President and Wall Street want. Stop being taken-in by the RDF.

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By ElkoJohn, June 8, 2011 at 12:58 pm Link to this comment

Robert, Uncle Ben knows exactly what he is doing.
The real job of the ‘‘Federal’’ Reserve
is to maximize the profits of the ‘‘too big to fail’’ global financial institutions.
MISSION ACCOMPLISHED !!

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By M Henri Day, June 8, 2011 at 12:57 pm Link to this comment

«Many of the bad home loans were taken by those
trying to get rich off their home in an obvious
bubble.  Others took the equity from their house for
toys etc.» Do you happen to possess any reliable
statistics which show the relative proportion of
speculators to people buying homes to live in,
phillipw ? You seem to be equating the culpability of
the latter group with that of our Wall Street
masters, who carefully packaged toxic mortgages in
such a manner that even so-called experts failed to
recognise these packages for what they were, and then
take Mr Scheer to task for not doing the same ! Just
how, pray tell, did these masses of poor people
trying to find a place to live on their minimal
incomes, whom you so charitably refer to as the
«irresponsible greedy players», «support[...] and
participate[...] in making the bubble and the
dysfunctional and pathological system of greed» ?
Those who (one wonders how many they are) « waited
for when the bubble broke, they would then be able to
responsibly buy a house when prices returned to their
real levels that could be afforded [sic !]» would
seem to be sitting pretty, now that house prices in
the US have declined significantly ; just how are
they being «ignored and their problems denied» ? In
what way does castigating poor people, often with
limited education, for their inability to see through
the wiles of smooth-talking real-estate agents help
to resolve the problems in which they, and the US
economy in general, find themselves ? Your moral
pathos seems to be that of Herbert Clark Hoover and
Andrew William Mellon, who were ever alert to the dire risk that too
lenient conditions (i e, getting decent wages and enough to eat and
having homes in which to live) might pose to the
moral fibre of the «lower classes». That both Hoover
and Mellon lived extremely well posed, of course, no
danter to their moral fibre, but then the rich
are made of sterner stuff than the poor, nicht
wahr
?...

Henri

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By Dave L., June 8, 2011 at 11:59 am Link to this comment

The latest from the Bernank ranks right up there with Bush’s “Mission Accomplished” pronouncement from the deck of that aircraft carrier and is on par with the Bernank’s earlier proclamation of “sub-prime will be contained”. Yeah, we all know how that one worked out.

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By frecklefever, June 8, 2011 at 11:59 am Link to this comment

FINDING ONESELF A PRISONER WITH THE ESCAPE HATCHES LOCKED…IS
THE SINKING FEELING THAT IS HELPLESSNESS…..BROUGHT ON BY THE
GREAT GOD CONFORMITY….TURNING ONES MIND OVER TO A POLITICAL
PARTY OR RELIGIOUS SECT AS A GUIDING LIGHT…IN RETURN FOR SOME
KIND SECURITY….SETS ONE UP FOR SLAVERY….THERE ARE SO MANY TRAPS
PREMISED ON SECURITY BECAUSE THAT’S WHAT WE ALL DESIRE…AND ALL
KINDS OF DREGS IN DIFFERENT HATS WILL PROMISE IT FOR A
PRICE….THROWING ONES FORTUNE TO THE WIND SOMETIMES IS THE
ONLY ALTERNATIVE….THAT’S WHY BRINGING DOWN VAMPIRISM WON’T BE
ACCOMPLISHED BY CONFORMING TO ITS DEMOCRATIC NICETIES…..STOP
THE MOMENTUM BY REFUSING TO VOTE IN FEDERAL ELECTIONS…

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By philipw, June 8, 2011 at 11:52 am Link to this comment

It takes two to tango.  Many of the bad home loans were taken by those trying to get rich off their home in an obvious bubble.  Others took the equity from their house for toys etc. Scheer calls these “the folks”.  Just like Wall Street they want the profits in good times and have others pay for the losses in bad times. Both are immoral and unconscionable.  This is American consumerism at its worst.  The masses who participated in the fiasco and Scheer support the greed system and the degeneracy it entails. There were and are groups of people who did not buy in a bubble feeding frenzy, who thought it might be a level playing field where laws and contracts meant something.  Priced out of a house for many years, they waited for when the bubble broke, they would then be able to responsibly buy a house when prices returned to their real levels that could be afforded.  They were trying to wait out the madness so they could finally buy a home, a home to live in, not get rich from.  These responsible people in not supporting the fiasco are ignored and their problems denied.  Only the irresponsible greedy players get helped because they are the masses and supported and participated in making the bubble and the dysfunctional and pathological system of greed.  How about responsibility and paying the consequences of your decisions so you learn more adult and less childish dependent behavior?  Bailing Wall Street and irresponsible home buyers out is just supporting and prolonging and immature evil society where responsible people can be crushed and demoralized.  Scheer is good at finding the faults of Wall Street, but needs to remember it takes two to tango and he is hurting the development of a decent society, by supporting irresponsible people over the responsible, counterfeit home invaders over responsible actual home buying hopefuls.  These hopeful homebuyers deserve more than buying a trashed foreclosure in a bad area and where they have to spend their life savings or more to make the place livable.  Every action is being taken to try to keep these home prices up instead of letting them reach their real level so justice is meet and people and business learn responsibility This is not left-right or up-down, it is moral decency, responsibility, personal and social growth that Scheer is hindering in his one sided view.  You can’t reign in pigism by supporting pigism and placing costs on others now and in the future.  Every remade loan is a kick in the teeth of the responsible that were excluded from a home or honest homeowners who did not feast on their equity.  And home hopefuls have to pay the taxes to keep those who are parasites and predators in their counterfeit houses and themselves out of a decent house.  People need to pay the consequences of their bad behavior, so society can improve and become more just.  That’s how babies learn not to retouch a hot stove.  Don’t support a failed and evil system that feeds of the lowest levels and pathological forms of human functioning.

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By litlpeep, June 8, 2011 at 10:53 am Link to this comment

Geez, Mr. Scheer, you are talking a truth that is WAY over the heads of the bipartisan hack parade (and this includes the clueless or purposefully crass President).

You are not alone.  But you are in a very small minority.  Even some, perhaps most of the self-styled “independent economists” talk like the bipartisan hack parade’s in-house shills (see the Huff Post for the hack parade’s economists).  I was stunned to see the HP include a link to your article; most of the time they find your writing too truthful to notice.

Thank you for this post.  I sure hope this blog
gains readership.  However, I have to admit telling
such truths so eloquently does attract some strange, not to say always interesting, comments.

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By RedwoodGuy, June 8, 2011 at 10:46 am Link to this comment

@faith

“It is just sickening that our government continues to support the likes of Bernanke and Geithner…”

Bernanke and Geithner ARE your government! Don’t let anyone confuse you on that.

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By RedwoodGuy, June 8, 2011 at 10:45 am Link to this comment

@mc.murphy

“Neoliberalism is the bastard child of both Parties. It would help this nation immensely if Mr. Sheer would start pounding that bit of truth and helping to
realign the battle lines from left/right to upstairs/downstairs in his readers
perceptions of a starkly dangerous reality.”

+1

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By M Henri Day, June 8, 2011 at 10:23 am Link to this comment

Isn’t it about time that the 50 millions in the US who suffer, to use Mr Scheer’s phrase, from «stark pain and fear» started investing in pitchforks ? After all, what is NORTHCOM for ?...

Henri

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By faith, June 8, 2011 at 9:56 am Link to this comment

Your best article to date, Professor Scheer !  My blood is just boiling.
And, actually, in California the true numbers of unemployed are more severe
than the 9.1% touted by the government.  Young people with post graduate
degrees, J.D.s and Bar pass cannot find jobs anywhere.  Only volunteer work
and pro bono work.  Yet our president continues to encourage every young
person to stay in college.  He’s not having to attempt to pay back student loans
post college and no with no job.  The police and firemen are in a far better situs
without all the college.

It is just sickening that our government continues to support the likes of
Bernanke and Geithner and that our AG is more interested in prosecuting small
players while refusing to investigate or pursue criminal proceedings against
those involved in the serious financial morass created by banking and wall
street.  Stunning.

Thank you sir, for such an excellent and important article.  I wish it was
published by every ho dunk little community in America as well as the more
prominent publications.

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By mc.murphy, June 8, 2011 at 9:43 am Link to this comment

Bernanke is, let us remember, Obama’s tool.

When the President and Congress, not only restrict fiscal remedies but are full
out choking them to death, the monetary path becomes the last one available.

Of course when no demands are imposed on how free money will be utilized to
help the nation recover, it winds up serving primary dealers and insider cronies,
but that too is a choice the President and Congress are making.

A little bit more balance and less deference to partisan politics is not too much
to ask, or is it?

Neoliberalism is the bastard child of both Parties. It would help this nation immensely if Mr. Sheer would start pounding that bit of truth and helping to
realign the battle lines from left/right to upstairs/downstairs in his readers
perceptions of a starkly dangerous reality.

http://mosquitocloud.net/

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By MeHere, June 8, 2011 at 9:42 am Link to this comment

Let’s be honest: it’s not about Scheer, Obama, or Bernanke. It’s about the
American public who continue to be under the spell of their own fears and beliefs,
and keep electing -give or take- the same kind of leadership to government. We
can’t ask anyone for miracles when the vast majority is accepting the status quo.

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By felicity, June 8, 2011 at 9:24 am Link to this comment

A couple of Bernanke remarks made a few years ago
indicate that ‘clueless’ he’s not, a hired thug
working for the financial sector he is.

“Transparency (referring to the financial sector)
would be counter-productive.  A return to Glass would
not necessarily lead to stability.”

In other words, a transparent window on the criminal
dealings happening on the Street leading up to the
economic meltdown, would have been “counter-
productive?” So Glass, the disappearance of which
gave a green-light to Street criminals, should not be
re-legislated because Glass led to instability in the
market?

Clueless, he’s not.  A thug, he is.

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By katsteevns, June 8, 2011 at 9:05 am Link to this comment

@ DavidByron

I tend to agree with Upton Sinclair’s assessment of those with bark but no bite:

“It is difficult to get a man to understand something when his job depends on not understanding it.”

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By Amon Drool, June 8, 2011 at 9:02 am Link to this comment

in a way, one can have a smidgen of sympathy for
bernanke.  he had to do something to get money into
the economy cuz the ideologically blinkered (and
power hungry) repubs weren’t going to allow a full-
blown keynesian fiscal stimulus package get through
congress.  but redwoodguy is right; even if a healthy
stimulus package had been passed, the effects would
have been at best short-term for americans..with our
productive jobs being off-shored through ‘free’ trade
agreements.

bernanke gave money to the banks at a .02% interest
rate.  with this money, the banks then either bought
gov’t debt which pays up to 3% or loaned it to
‘investors’ who began to bid up commodity prices
again…some of those commodities being fuel and
food.

our system of political economy is leaving a lot of
us with a hopeless feeling.  all i can suggest is
that we break our 300+ year experiment with money
creation being solely in the hands of a private
banking cartel.  governments should be able to create
interest free money to meet what they deem to be the
needs of the populace.  private money creation has
just fueled the growth of a parasitic rentier class
which (knowingly or unknowingly) has caused the earth
and its inhabitants needless suffering.

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By berniem, June 8, 2011 at 9:01 am Link to this comment

Debate, equivicate, deliberate, or whatever “ate” you choose the time has come for serious consideration of dismantling of our current corrupt and self-serving, elitist system! As mentioned above, the decline in the American public education system has left many of our fellows gullible and conplicit thru their ignorance, greed, and/or prejudices in sustaining this fascist “republic” and legitimatizing the criminal and duplicit individuals that rule us with no care as to the general welfare of the citizenry at large. It must be remembered that the American revolution was not only against the imperial English corporatocracy, but also a civil war as many of the colonists were against separation from England and actively worked against the uprising or fled to Canada and fought against the continental forces as British citizens. Let us hope that we can free ourselves from our internal colonization without resort to force; but in this gun crazed nation, I have my doubts!

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By ajintx, June 8, 2011 at 9:01 am Link to this comment

The problem with our economy is not merely policy, but how it is structured, and who has control (all in private hands).  A good look at how we got here requires a brief look at the history of economic structure and policy in the USA.  I highly recommend the book Web of Debt by Ellen Brown and the short dvd Secret of Oz.  The sytem we are now using was designed hundreds of years ago, and it is specifically structured to create winners and losers, and to extract value towards the top, and to keep the power to coin the nation’s money in private hands.  Tax policy created by our bought-off Congress only exacerbates the problem. The problem in the nation’s economy could literally be repaired overnight, if the powers that belong to the Congress were reclaimed by them.

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By rollzone, June 8, 2011 at 9:01 am Link to this comment

hello. obscene money printing, laundering on Wall
Street, rising unemployment, double dipping housing
bundles, carbon credits, Greece bail-out, Arab world
springing, insane gold bubble, industrial oil, three
ongoing wars… and the stock market has been on a nine
month bull market. they laugh while manipulating the
dollar.

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By RedwoodGuy, June 8, 2011 at 8:54 am Link to this comment

And the 5th possibility is that they are just doing their J-O-B. If you get hired by “The Nation” to write, you are going to be asked to write stuff that helps them sell magazines, right? If you get hire by MSNBC, you are hired to help them sell ads to the boner pill manufacturers, right?

Why does everyone look to “media workers” for an understanding of the world around them?

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By Textynn, June 8, 2011 at 8:46 am Link to this comment
(Unregistered commenter)

It wasn’t long ago that you could use Google maps to see
how many foreclosures were happening.  The maps would
show dots where there was a house in foreclosure.  But
TPTB stopped that. They didn’t want people to see to what
extent the Banking elite were gobbling up the property of
working class people. Not surprisingly as people should
be more than a little freaked out.

Evil Google covered for the banking elite by disabling
what must of taken a kazillion hours to data enter. This
shows just how affiliated Google is to the top of the pyramid.

Here is a link of many screen shots of this inhuman
banking elite’s handiwork.  Please go look at it and read
the quick article.  No one should not be aware of the
carnage Americans are experiencing. Take a look at what’s
being censored.

http://prof77.wordpress.com/2010/01/13/googles-
foreclosure-maps-portrays-the-end-of-the-world-as-we-
know-it/

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By DavidByron, June 8, 2011 at 8:34 am Link to this comment

“Obama is not perfect”

Another person who wasn’t perfect:  Hitler.

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By DavidByron, June 8, 2011 at 8:31 am Link to this comment

I agree with this but,

“I respect Robert Scheer as a lifelong progressive; he has contributed a great deal to movements for social justice and peace.  That said, I would be more impressed by this latest article—which I think is a good one—if it weren’t for the periodic agonizing Mr. Scheer displays to us about Obama.  Reading this article, you see Scheer acknowledge just how much of a corporado Obama is…yet, it is utterly predictable that sooner rather than later, he will be sighing about how he “must” vote for the lesser.”

I think we need to go further and ask WHY.  Why do all these so-called progressives writing for this and other boards always pull their punches and always end up sucking?  I suppose there’s basically only two or three possible answers.

One is that they are deliberately misinforming their audiences to keep them fat dumb and happy.  Working for the elites consciously.  That certainly seem possible for some—look at Obama for an example of that.

Another is that they have or had some real conscience but it is bludgeoned down by the need to pass some sort of veal pen test.  They want to be part of the in group and that means selling out.  They may persuade themselves that its worth it.  They probably despise those who haven’t sold out as “unrealistic”.

A third possibility is that they agonise over knowingly lying every time yet for some reason, perhaps access, feel they have to always bite back the truth.  That their audience is not ready for more than morsels of the truth at a time.  Or that they won’t get published if they stray off the reservation too much—an example here might be Chris Hedges.

4th possibility is that they really are just stupid, and too, never read the comments on their articles and so never learn anything.

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By http://MoneyedPoliticians.net, June 8, 2011 at 8:22 am Link to this comment

I don’t understand finances, but I sure wish my politicians were not taking campaign bribes from the industry so they’d sort this out.

Jack Lohman
http://MoneyedPoliticians.net

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By DavidByron, June 8, 2011 at 8:16 am Link to this comment

Ah cluelessness.

That is the problem.  If only the king knew.  If only the nobles understood the suffering of the people they would do something about it.

Yes indeed, cluelessness is the problem.

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By RedwoodGuy, June 8, 2011 at 8:15 am Link to this comment

The problem with Robert Scheer and TruthDig in general, is that they are myopic. They are stuck forever in the GOP v. Dem paradigm. The only glasses they can put are on have political lenses. They simply are incapable of rising high enough to see that it isn’t politics, it is economics. And, it isn’t local, it’s global.

Trying to force every observation you have into a political explanation leaves everyone fighting the wrong battles. You have the whole population facing off in a red v. blue social civil war, while the global capitalists have simply walked off the field.

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By JJW, June 8, 2011 at 8:15 am Link to this comment
(Unregistered commenter)

Anyone approved of by both Bush & Obama should be in jail.

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By RedwoodGuy, June 8, 2011 at 7:51 am Link to this comment

Can we accept the change? The “hot money” has all moved to China and other similar investment opportunities. The logic is simply in the imperatives of capitalism: maximize profits, minimize costs.

Workers in the USA are too high up the world food chain for capitalists to care about. We have evolved into a higher expectation of life - more comfort, more security, more quality. They don’t want to pay for that if they can go elsewhere and abuse people for a lot less money.

So, what has happened is simple: All investment in the USA has come to a stop. Private and government. The private capital is going offshore where it can rake in high returns. The Government money is drying up because the investment class has drawn a line in the sand on taxes. They only taxes they are WILLING to pay, are those used for militarism.

The canary in the coal mine is education. When a country stops investing in education, it has conceded defeat industrially. We stopped about 20 years ago. And now, we are even openly attacking and battling teachers to kill off the education faster, more dramatically. When you don’t need an educated population, you better be able to see what that means.

The USA hayday is over, because Americans are not as exploitable as Chinese. It’s literally that simple. Once you gave corporations the ability to move their capital globally, and move their profits offshore, the game was over already. And if you’d like to pin blame on any one president for making that possible - - - the winner is: Bill Clinton with Rubin’s hand up his arse of course. BC was the “banker’s president” long before Obama met Wall Street.

But blame is pointless. It is what it is. We’re being discarded like a used Johnny rag. Get used to it. When you see that now famous chart of how jobs always came back after recessions, but they aren’t coming back this time, you will understand it is because capital has “moved on” to a new game.

Better get out of debt. Walk away from upside down mortgages, develop some good skills for making your own way. If you are in college, DROP OUT and don’t go another dime in debt for a useless degree. Learn some skills instead.

It’s a new morning in America people.

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By JJW, June 8, 2011 at 7:45 am Link to this comment
(Unregistered commenter)

The whole freakin’ thing is going up in smoke from global warming.  Money won’t mean a thing when people are killing each other for food rations.

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By Michael Shaw, June 8, 2011 at 7:40 am Link to this comment

Why did we bail out US automakers only to give their competition billions in free money? Why are we giving billions to South Korea to create jobs there while doing nothing to create jobs here? Bernanke and Geithner should be tarred and feathered and send out of town on a rail as should all the economic traitor billionaires they work for. As for him being better than Greenspan? That is the most absurd thing I’ve heard in my life! They are all on the same team and that team is doing all it can to run the people of the United States of America into the ground!

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By RedwoodGuy, June 8, 2011 at 7:38 am Link to this comment

@WarrenMetzler

“The basic problem is that most Americans have become immoral, lacking in a smidgen of moral fiber, and are drifting in a sea of sickness and refusal to engage in enlightened accurate self-assessment.”

Nonsense. Please offer evidence of this suddenly immoral population.

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By sanctimonious purist, June 8, 2011 at 7:31 am Link to this comment
(Unregistered commenter)

“Until Wall Street is behind bars,  there will be no recovery, and we will continue to
become a slave state.  Wall Street believes in only one thing,  turning Americans into
wage slaves.”

Exactly!

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By BobZ, June 8, 2011 at 7:29 am Link to this comment

Bernanke is far from perfect but is hopefully not the Ayn Rand acolyte that
Greenspan was. Greenspan was even more imperious and in lockstep with Bush
tax cuts, which in hindsight were a disastrous policy, given we went to war two
years later use a credit card. Now the Republican’s have us over a barrel. We
were warned two years ago that the stimulus package wasn’t large enough, and
included too much in the way of tax relief instead of infrastructure projects that
would actually put people back to work. Bernanke realizes this at least, and has
strongly warned yesterday about premature short term deficit reduction policies
that would make our problem worse.  Obama is not perfect either as many have
articulated on Truthdig but he is far better than any of the Republican
alternatives. i shudder to think of a federal government totally in the hands of
the Republican’s. They aren’t even rational anymore. Bernanke has also pushed
back against the banksters like Dimon who think we should roll back all
regulation ignoring the facts of what got us into this mess in the first place.
Monetary policy has its limits and Bernanke has about run out of tools to use.

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By peterjkraus, June 8, 2011 at 7:26 am Link to this comment

Let´s face it: American style capitalism is
broken, and the longer we hold on to its feudal
vestiges, the poorer we´ll be.

Honestly, it is no fun to see one´s lifelong
fears come true.

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By katsteevns, June 8, 2011 at 7:05 am Link to this comment

By WarrenMetzler
“We are a very inventive people, but our economic future
lies in creating work situations were each employee has to be quite inventive
and creative. Such jobs will never occur in a union environment, nor where
employees just want to clock in for a 8 hour shift. “

Is this what we want,” to clock in and clock out”?

Apparently, you have never set foot on a factory floor where knowledge is deliberately compartmentalized so no one knows enough to make informed decisions outside their area. Where one must be content with a skimpy cost-of-living raise or pull their hair out trying to prove an on-the-job injury.(doing the same task promotes injury) Saturdays become mandatory and companies are now finding ways to skirt around the double-time-on-Sunday laws. Seniority has become a joke. Besides being held in the banks for as long as possible to accumulate interest, employee bonuses arrive late or mysteriously find their way into the pockets of the owners.
  What owners and managers are being taught in business school is not, how to compensate their workers for a job well done or to ensure they will have jobs tomorrow, but how to bullshit the workers into thinking they actually matter.
  On the factory floor these days you hear things like: “If you don’t like it, there’s the door” and “You can be replaced”, eminating from the mouths of retired muscle men trying to suppliment their Social Security.

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By Wikileaks for Nobel, June 8, 2011 at 6:54 am Link to this comment

I respect Robert Scheer as a lifelong progressive; he has contributed a great deal to movements for social justice and peace.  That said, I would be more impressed by this latest article—which I think is a good one—if it weren’t for the periodic agonizing Mr. Scheer displays to us about Obama.  Reading this article, you see Scheer acknowledge just how much of a corporado Obama is…yet, it is utterly predictable that sooner rather than later, he will be sighing about how he “must” vote for the lesser. 

How the hell do you think we got to this present, sorry pass?  It is entirely through the mental contortions of voting for evil, that we now face an entirely bankrupt political system, nearly bankrupt economic system, and a nation hell-bent on endlessly attacking other countries across the planet.  Figure it out, please!  Obama is the answer to *nothing*.  It’s long, long overdue that progressives developed some spine and independence.  Maybe it’s too late…but better to try than surrender.

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By TDoff, June 8, 2011 at 6:24 am Link to this comment

Were the whole of Congress, and The Dummy’s and Obama’s ‘Economic Teams’, to pose for, and email to the entire US population, a group photo of themselves with their naked genitalia hanging out…it would not be as obscene as the economic ‘policies’ we have been following since The Dummy authorized the first of his tax cuts for the rich in 2001.

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By WarrenMetzler, June 8, 2011 at 6:01 am Link to this comment

I used to admire Robert Scheer’s reporting, back when he was revealing the
fraud of people like Nixon. Now he has become a shill for ridiculous left wing
theories. The US is a country that was founded on the idea of giving individuals
the opportunity to pursue their individual potentials. Which is literally
impossible to do if you have a government that attempts to take care of
everyone’s problems; as as been increasingly so in the US for the past close to
80 years.

I have no truck with people who are consumed with making huge amounts of
money. But to claim that the government must apply huge efforts to keep them
from screwing us is pure nonsense. A law is reasonable if it articulates that
manifesting a behavior is unacceptable, when that behavior unavoidably harms
someone each time it occurs. And all such laws should be on the books and
enforced.

But enough of this regulatory nonsense. Our latest crisis is not primarily
financial, but moral. In that most of the money problems that occurred recently
stem from people being greedy and immoral. Home owners seeking mortgages
just so they could use their homes as piggy bank. Bankers abandoning centuries
old good banking practices. Local government giving up their mortgage
registering responsibilities. Financiers abandoning centuries old good
investment practices. And Congress showing their decades old prostitution
tendencies by passing laws that are so obtuse they will never make a bit of
difference. The current administration showing its allegiance to being corrupt,
by ensuring that no criminals related to financial scams are prosecuted.

The basic problem is that most Americans have become immoral, lacking in a
smidgen of moral fiber, and are drifting in a sea of sickness and refusal to
engage in enlightened accurate self-assessment.

We need to preach revival, not complain about the government not adding a
few more regulators who will never solve a thing.

One example. It is now patently obvious that most of the countries of the world
have citizens who can handle most assembly line type of manufacturing. To act
is such jobs should remain in the US is insane. Yet people like Scheer keeping
going around complaining the government isn’t doing enough to keep good
factory jobs in the US. We are a very inventive people, but our economic future
lies in creating work situations were each employee has to be quite inventive
and creative. Such jobs will never occur in a union environment, nor where
employees just want to clock in for a 8 hour shift.

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By JJW, June 8, 2011 at 5:59 am Link to this comment
(Unregistered commenter)

1.2 trillion dollars, half of Gov spending goes to blowing things up and killing people.

But if your going to raise a billion dollars for a dog and pony pissing contest, you’ll need a bunch of criminals sending you money, for special interest legislation.

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By mindful, June 8, 2011 at 4:57 am Link to this comment

I am horrified, but this is like the pablem puckers in the military saying a battle was won, when in fact, thousands of innocents were puleed under the tanks.

However, until Americans can see without the spinmeisters of Wall Street and their shills, Bernacke, nothing will change. They will the people who looking at their homes mangled after a tornado, thank God and declare life good. They open their Bible again and pray.

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By GrannyBgood, June 8, 2011 at 4:56 am Link to this comment

Another highly-placed Zionist Evildoer!

...and now he’ll scurry off to join the Bilderbergers at their annual Greed-fest party in Switzerland!

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By madisolation, June 8, 2011 at 4:43 am Link to this comment

“...a situation in which taxpayer money has been made available to major corporations that invest in job creation that benefits foreigners instead of U.S. workers. Now that’s an obscenity we should be concerned about.”

Exactly. Why have we swallowed the notion that “once jobs are gone, they’re not coming back” or that the global economy takes precedence over the national economy. The politicians could severely penalize these corporations for offshoring jobs and they could tax imports to high heaven when they bring their overpriced junk back to our shores. The jobs would come back soon enough, or we could help new manufacturing with good jobs get off the ground.
Look what’s going on, though: the South Korean NAFTA deal will cause us to lose even more jobs. The cruelty of these politicians is truly breathtaking, and one day soon it’s all going to come tumbling down on them. Obama is going to be the first to feel the wrath of all those broken promises and backroom deals. I look forward to the day when the politicians’ backs are against the wall and all they have for ammunition are empty words that fall on deaf ears.

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THX 1133 is not in the movie...'s avatar

By THX 1133 is not in the movie..., June 8, 2011 at 4:40 am Link to this comment

We’ve been “Shock Doctrined”, aka Naomi Klein.
The hard part is it was published in 2007. Prescient to
say the least; but the solution escapes the ever
incompetent ruling class. Not incompetent; calculating
and savvy; don’t forget that…

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By Bill Wofe, June 8, 2011 at 4:35 am Link to this comment
(Unregistered commenter)

Notice how Bernake distances himself from the human reality with this phrase:

“frustratingly slow from the perspective of millions of unemployed and underemployed workers.”

He didn’t do that with respect to low wages and inflation, when he should have said:

“from the perspective of a handfull of oligarchs and greedy Wall Street billionaires.”

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By surfnow, June 8, 2011 at 4:23 am Link to this comment

prisnerdilema:
I agree with you especially about this totally fake War on Terror. The problem is the average Amerikan moron has swallowed it- hook,line and sinker.

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By surfnow, June 8, 2011 at 4:17 am Link to this comment

Now he’s all over the news blaming the depression on Japan’s earthquake. Things will improve he says in the 2nd quarter. There’s two possibilities: he’s really ****ing stupid; or he just doesn’t give a damn. I’m leaning towards- it’s both.

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By Druthers, June 8, 2011 at 4:06 am Link to this comment
(Unregistered commenter)

For the first time in a long time I had a huge laugh with the title of your piece.
Just as in the much publicized photos we are down to basics with Bernanke also.
The deed is done and if allowed to continue we’ll all be skinned alive.  Already the population is left hanging in the wind like some anorexic blood-let adolescent for the crows to pick.
The scavengers are at their job cleaning the bones - democracy has begot a monster state!

PS:  Your question,“Are you a human?”
Frankly I am not so sure anymore.

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By Mike O., June 8, 2011 at 2:21 am Link to this comment
(Unregistered commenter)

“How I wish that Ben Bernanke would get caught emailing photos of his underwear-clad groin.”

Stopped reading right about… there.

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By prisnersdilema, June 8, 2011 at 2:05 am Link to this comment

As long as Wall Street remains in charge of our economy then there will be no recovery.
The longer they remain in charge the steeper will be our decline, until there may not be
enough left of us to recover at all.

We are not in a recession, or a depression, we are experiencing a fall in the standard of
living, for 99% of us, while the bankers and the one per centers have crowned
themselves royalty, above the law.

They have created a phony war on terror, to justify eliminating our freedoms, so they can
erect a police state for their protection against us.  Using Al Caeda, as a straw dog.

Until Wall Street is behind bars,  there will be no recovery, and we will continue to
become a slave state.  Wall Street believes in only one thing,  turning Americans into
wage slaves.

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