Ben Bernanke

The Fed's Economic Projections and Bernanke Conference

The Federal Reserve FOMC released their updated economic projections and frankly they are weird.  GDP estimates were lowered yet the official unemployment rate projections were also lowered.  The rule of economic law is lower economic growth means less jobs and hires so how one can have subdued GDP with better unemployment figures is none too clear.

We Don't Have Jobs, Fed Will Raise Rates Anyway

We can’t wait until unemployment is where we’d like it to be” or inflation gets “out of control” to tighten credit

The above is a quote from Federal Reserve Chair Ben Bernanke.

Gets worse, Bernanke believes the economy will not dip into another recession, yet of course, unemployment will remain at high levels.

While the Fed will raise interest rates from a record low before the economy returns to “full employment,” Bernanke said officials don’t know when that process will start. The banking system isn’t fully healthy and lenders are “cautious” in providing credit, he said.

“The unemployment rate is still going to be high for a while, and that means that a lot of people are going to be under financial stress,” Bernanke said at the event, part of a dinner hosted by the Woodrow Wilson International Center for Scholars.

Bernanke’s stance is consistent with that of several Fed colleagues. Atlanta Fed President Dennis Lockhart said June 3 that the central bank may need to raise rates even with “unacceptable levels of unemployment,” while Eric Rosengren of the Boston Fed said last month it wouldn’t be “appropriate” to have rates close to zero with the economy at full employment.

Senate Has One Standard for Wall Street and One Standard for Main Street

Ryan Grimm of Huffpost is reporting a double standard has formed in the Senate thanks to the Democratic leadership. Apparently when it comes to the confirmation of Wall Street favorite Ben Bernanke, Democratic leadership is fine with a 50 vote threshold to shut off debate (cloture) of the nomination but when it comes to something like REAL health care reform the vote threshold is 60 votes. What it comes down to is who is buttering your bread?

If it is good for Wall Street then its 50 votes. If it is bad for Wall Street (and private health insurance industry) then its 60 votes. So what is going on? Let's just say it isn't a Profile in Courage:

Implausible Deniability of Ben Bernanke

Federal Reserve Chair Ben Bernanke says the Housing Bubble is Regulator's Fault and the Fed had nothing to do with it:

“The best response to the housing bubble would have been regulatory, rather than monetary,” Bernanke said today in remarks to the American Economic Association’s annual meeting in Atlanta. The Fed’s efforts to constrain the bubble were “too late or were insufficient,” which means that regulatory actions “must be better and smarter,” he said.

Right o! Bernanke supported all of Alan Greenspan's cheap money policies:

Ben is In

Bloomberg is tallying up the Senate votes and reporting Helicopter Ben Bernanke is in by a good 66%.

Bloomberg yesterday interviewed 53 senators who aren’t on the Banking Committee, which voted 16-7 on Dec. 17 to recommend Bernanke’s nomination to the full Senate. Twenty-one lawmakers said they are inclined to vote for Bernanke, while four said they would oppose the central bank chief, giving him 37-12 support so far for a four-year term starting Feb. 1. Another 28 said they’re undecided or declined to comment.

California Democrat Dianne Feinstein and South Carolina Republican Lindsey Graham were among senators saying they’ll support Bernanke, citing his response to the financial crisis. Senators from both major parties said they expect him to be confirmed, even with at least four lawmakers trying to block or delay the nomination.

Senator Bernie Sanders Puts Hold on Bernanke Senate Confirmation

Senator Bernie Sanders has put a hold on the nomination of Ben Bernanke for Federal Reserve Chair:

WASHINGTON, December 2 – Sen. Bernie Sanders (I-Vt.) today placed a hold on the nomination of Ben Bernanke for a second term as chairman of the Federal Reserve.

“The American people overwhelmingly voted last year for a change in our national priorities to put the interests of ordinary people ahead of the greed of Wall Street and the wealthy few,” Sanders said. “What the American people did not bargain for was another four years for one of the key architects of the Bush economy.”

As head of the central bank since 2006, Bernanke could have demanded that Wall Street provide adequate credit to small and medium-sized businesses to create decent-paying jobs in a productive economy, but he did not.

Senate Banking Chair - Bernanke confirmation not a foregone conclusion

Considering yesterday's amazing victory to obtain an audit of the Federal Reserve as an amendment in a Financial Reform bill passed out of committee, today we have the most amazing report.

Senator Chris Dodd, Senate Banking Chair says:

Mike Stark: “Is it a foregone conclusion that he’ll be confirmed?”

Senator Dodd: “Not necessarily, not necessarily, we’ll see how members react.”

Mike Stark: “What do you think his chances are?”

Senator Dodd: “Well I don’t know, as Chairman of the committee I don’t want to speculate how other members feel about it, we’ll see what happens.”

So, the winds may be changing for Bernanke. The hearing is on December 3rd. What I would like to know before bashing Bernanke, is who would be his replacement? If it's Larry Summers, then yea rah Helicopter Ben.

Helicopter Ben Keeps His Job and Bloomberg Scores!

So much for the jockeying to get the big Fed job appears to be over.

From the New York Times, Obama to Nominate Bernanke to 2nd Term as Fed Chief:

President Obama plans to nominate Ben S. Bernanke to a second term as chairman of the Federal Reserve, administration officials said Monday night.

The nomination, while expected, comes after Mr. Bernanke has had perhaps the most tumultuous term of any Fed chairman, helping to steer the economy through its greatest downturn since the 1930's. Mr. Bernanke is a Republican who was appointed by President George W. Bush.

A top White House official said Mr. Obama had decided to keep Mr. Bernanke at the helm of the Fed because he had been bold and brilliant in his attempts to combat the financial crisis and the current deep economic recession.

Federal Reseve - Deficit Unsustainable (alternative title: zombies ate the money!)

The House Budget Committee held a hearing today with just one witness, Federal Reserve Chair Ben Bernanke.

As a consequence of this elevated level of borrowing, the ratio of federal debt held by the public to nominal GDP is likely to move up from about 40 percent before the onset of the financial crisis to about 70 percent in 2011.

A Bloomberg analysis

Bernanke’s comments signal that the central bank sees risks of a relapse into financial turmoil even as credit markets show signs of stability.

Worldwide bailout underway at the Fed.

In the continuing saga of "What are they up to now?", comes this story from Huffpo about the Fed pumping foreign currency into the US money supply. In this way, US banks can pay their foreign obligations in foreign currency.

This is a new wrinkle in the regular currency swaps the Fed performs with foreign banks. Until now the Fed has held the foreign currencies on its balance sheet while the foreign banks pass the swapped US dollars to their financial institutions. According to the minutes of the March FOMC meeting, this is just a precautionary move and not indicative of other countries having any trouble meeting their foreign currency obligations.

The minutes also show that the Fed will be increasing their currency swap limits with the Bank of England, European Central Bank, Bank of Japan and Swiss National Bank. Here's what Jamie Galbraith had to say: