Bernanke’s voice seems quavery in the confirmation hearings. I hope he feels under pressure.

Dodd brings up Roubini’s prediction of another asset bubble/burst.

Bernanke displays complete ignorance of how the FRB creates financial bubbles by narrowly focusing technically on “valuation” models.

Bernanke wants to be excused from his regulatory misdeeds because all regulators got it wrong.

I was writing yesterday that Dodd would cave on Bernanke because let’s face it he caves on everything. He truly seems intent on losing his re-election campaign. His “I’m a stooge for the banksters” platform just isn’t catching on.

As for Bernanke and transparency, the instances of those cited in the post are the same as those he had in his recent WaPo op-ed. He’s saying that the Fed will say in general how much it has lent out but not specifically how much to whom. And what this all refers to is the Fed’s intrusion into fiscal not monetary policy. But I should point out that the Fed’s monetary under him has failed. Interest rates are at zero and are fueling a carry trade which is sapping financing from our economy and putting it into more speculative ventures or propping up investment abroad. Finally, about those FOMC minutes. Those are only made public now as a result of a lawsuit which the Fed lost.

But I should point out that the Fed’s monetary under him has failed. Interest rates are at zero and are fueling a carry trade which is sapping financing from our economy and putting it into more speculative ventures or propping up investment abroad.

Bernanke is astoundingly ignorant in that sphere; see my 3.

Bernanke just addressed the auditing issue in his opening statement, saying that the Fed is highly transparent. He cites the detailed minutes from FOMC meetings, quarterly projections, public financial statements and balance sheets. He said that their financial activities are subject to review by an Inspector General, and that the Government Accountability Office can audit the Fed’s operations “except for monetary policy in related areas explicitly exempted by a 1978 provision passed by the Congress.” He said that this protects the Fed’s independence and resists short-term political pressures.

Yeah, right. Which is why we have no idea where the billions of dollars in bailout money went, and what they were actually used for.

That’s hard to believe given that Bernake was picked for his post by Decider Bush, the MBA Preznit. He also was the Decider’s top economic adviser. Although, how much advice is really necessary when the only allowed economic solution is tax cuts for the wealthy?

Bernanke explained something that I did not previously understand. The monetary policy part of FRB’s job is NOT audited. Everything else is. The exclusion of monetary policy from audit was a 1978 law iirc. The theory is that if the FRB does something unpopular in monetary policy, congress or the admin would quickly gin up an audit, which, both directly and more importantly, indirectly by creating a chilling effect, would exert a lot of political pressure on monetary policy. As the expansion of the FRB’s balance sheet falls in the sphere of monetary policy, details may not be revealed.

Not prepared to think about this in-depth while listening to the hearing.

No dilema, they use a hold as an exuse for when they do not want to do things – easy to blame one person who can take it (will lose/win anyway, or who it will actually help in their re-election).

If they want it done the rules magically work their way.

Think they call it Cloak Room & Dagger

Plus Bernanke’s early work was on the depression. I’ve never read it. I guess I should study up.

I wonder if he’s one of those “Roosevelt got it all wrong and made it worse” Republics?

Well, here’s the first sentence from one of the amazon reviews of his essay collection. I wouldn’t rely on such an unknown source very much, but it’s interesting that it addresses your Q so squarely.

Bernanke is ,unfortunately,ignorant of the preventive medicine approach to Bubbles and Depressions first postulated by Adam Smith in 1776 in the Wealth of Nations and then reapplied by J M Keynes with the additional analytic conclusion emphasizing the importance of clearly differentiating between tolerable security (risk)and uncertainty.

Classic that Dodd who had a decent following in the election is now more of the “Sen. Dodd (Bankster)” – which I noted along with others when he tossed his hat into the ring.

Goes to show that allowing and processing criticism of “the team” is a very needy thing – and something that should distinguish Dems from Repubs (who if they were pre-disposed would root for the iceberg from their deck chairs on the Titanic as it sank…because we must not question the iceberg).

Here’s part of the reviewer’s self-description, fwiw.

I received my doctorate in economics from UC Riverside in 1983.I have published 42 articles/notes in academic, peer reviewed journals.I published 2 books on Keynes in 2004.The publisher is Xlibris Press.

Prediction: Bernanke will get beat up a bit and then confirmed.

I don’t expect the senate to do the right thing, just the political things.

Bunning has his Bernanke knife out.

On transparency… do they still withhold how much money is printed? That would seem like a vital statistic.

As noted above who got the money would be a good next step – of course since people in that industry command 100M+ salaries the money is laundered through comapanies anyway.

Well, duh. *g*

Money supply statistics are published with at least a monthly, if not a weekly, frequency. (It’s been a long time since I looked at them.)

Please forgive my ignorance, but who are you talking about here?

Matthew Yglesias at ThinkProgress:

I expect what progressives excited about this are going to learn is that the Senate’s inane rules also have a structural bias and a hold on an establishment priority, like Bernanke’s confirmation, won’t be substantially held up by this move.

me:

I agree.

But what exactly constitutes this “structural bias”? And what exactly constitutes “the establishment”?

Again, here is what I construe to be the best take on that—a review of the film, The American Ruling Class from Bulldog Films:

The American Ruling Class is one of the most unusual films to be made in America in recent years–both in terms of form and content. The form is a “dramatic-documentary-musical” and the content is our country’s most taboo topic: class, power and privilege in our nominally democratic republic.

At bottom the film is a morality tale, the story of two Yale students (played by Harvard men) who seek their opportunities upon graduation. As the renowned essayist, author and longtime Harper’s magazine editor Lewis Lapham conducts them through the corridors of power: Pentagon press briefings, the World Economic Forum, philanthropic foundations, Washington law firms, corporations, banks, the Council on Foreign Relations, and New York society dinners–our two representative graduates “one rich and the other not so rich” must struggle with their responsibilities in “a world collaterally damaged by the magic of money and the miracles of science.” The real-life luminaries they meet on their journey become characters in a story about power, its responsibilities and abuses.

As we watch these two young men wend their way through what is only a slight fictionalization of their actual lives and choices, as we meet former Secretaries of State and Defense, directors of the Trilateral Commission and the Council on Foreign Relations, the publisher of The New York Times, Kurt Vonnegut, Howard Zinn, Barbara Ehrenreich, Robert Altman and a host of others, we have to ask along with Mr. Lapham: “To what end the genius of the Wall Street banks and the force of the Pentagon’s colossal weapons? Where does America discover the wisdom to play with its wonderful toys?” The possible answers move beyond the empty distinction of party affiliation and into the heart of American Oligarchy itself.

george:

Tell me Ben Bernanke and his ilk are not smack dab in the middle of that.

Indeed, will the mainstream media ever go down that path? Will it ever explore in depth the relationships between top government, corporate, media folks etc. and organizations like Bilderberg, the CFR, and TC? Will it exmine the systemic relationships between Wall Street and Washington, between the mainstream news media and its advertisers…in the context of “political economy”?

The only one who dares to go down this path substantively is Rachel Maddow.

Yglesias then discusses the critical need for an “independent” Fed.

Independence?!! What in the world can that possibly mean since the repeal of Glass-Steagall? The illusion that the debate over the Fed mostly involves “principle” and “integrity” and “democracy”and “rectitude” and “the rule of law” is ever kept flowing in the mainstream media.

Why is that? Where do they fit into all this pecuniary chincanry?

As for the “bi-partisan” hold, that is mostly an illusion. Both Sanders and Paul [and those like them] reject Bernanke precisely because they are fully informed of how Bernanake is the very embodiment of crony capitalism in America. Sanders from the progressive left and Paul from the libertarian right. But the overwhelming preponderance of the Democratic and Republican Party leadership are as deeply embedded in “the system” as Bernanke himself is.

Wow. Bunning sounds like a populist. It’s the most intelligent words I ever heard come out of his mouth. He voted against Bernanke in round 1, and it sure looks like he’ll vote against him this time too.

Transparent, Schmansparent.

I quoted part of an amazon review of Bernanke’s essay collection in #14, then noticed that the reviewer can provide a bio, so part of that is what I clipped & quoted in #16. It’s hard to know how to evaluate things you read online. Although I would agree with the reviewer, just because he sez he has a PhD & publishes is no guaranty of quality.

Damn, Who says Bunning is senile? Well said!

PhD

Piled higher and Deeper?

As the expansion of the FRB’s balance sheet falls in the sphere of monetary policy, details may not be revealed.

First, the Fed undertook a huge expansion of its balance sheet.

Second, rather than doing so by taking on very solid securities like Treasuries, it did so by taking on crap assets of banks that it knew were not worth their face value. In essence, it was party to a massive fraud at the expense of American taxpayers who will ultimately be on the hook for any losses.

Monetary policy is about the supply of money and at what cost. This never had anything to do with that. Banks didn’t start lending the money they got. (Indeed we know now that the Fed recently said it would have moved to curb new lending if it had occurred.) They used it to shore up their own positions, mask their liabilities, and to speculate with. That is not about monetary policy. That is about how money is spent and by whom, i.e. fiscal policy.

I owe you a beverage of your choice*g*

Is Bunning dyslexic? I watched him read his diatribe on Sat(?) and he had difficulty reading. Not the usual miscues one hears from reading out loud.

I think that the “lender-of-last-resort” function falls within the monetary policy sphere, and that the expansion of the FRB’s balance sheet falls into the LOLR category.

Sorry mods, I meant to reply to eCahns’s #23

If the Fed is so transparent, how come we don’t know anything about it? Who got the trillion or so bucks it printed? How do we know it’s competent to do its job as a regulator?

Bernanke does make me want to rip my hair out. “Problem wasn’t monetary policy. Problem was in mortgage market.” Geez, like the 2 are unrelated.

Shorter Benanke: Who could have anticipated.

He is a true example of the Overeductated-to-Stupidity Syndrome.

I got it, but it’s too early to start drinking, as much as Bernanke might drive me to it. *g*

Has it ever been contemplated that an expansion of monetary policy into trillions would almost invariably affect fiscal policy? Or that applying monetary cures to insolvent institution flies in the face of free market fundamentalism?

Well, we do know that it’s incompetent as a regulator. Bernanke’s excuse is that every other regulator was incompetent too. As for the expansion of its balance sheet, they can keep it secret because monetary policy is not subject to audit. See my 9.

Good hypothesis. I was wondeering myself why he was stumbling.

On all of the bubble-burst bubble-rescues of the past few decades, no one has bothered to ask the FRB for ANY accountability. They were happy not to know, leaving the Maestro to wave his magic wand. Predictably that led the FRB to the impression that they could do whatever they wanted without any consequences.

Oh joy. Crapo seems to be asking Bernanke what other powers the FRB should have bestowed on it by congress.

Bernanke thinks the soln to too-big-to-fail is to allow them to fail, rather than to prevent such sizable institutions to begin with. I’m eying that brandy bottle.

Schumer is such a suck-up.

Yep. Lips in perpetual pucker. I just don’t like him.

Schumer focuses in on ATM fees like a laser. Yep, I’d say that’s the heart of the problem. /s

Must Watch:

Interview with Matt Taibbi:
http://www.youtube.com/watch?v=G4it-Fs8RLw&feature=player_embedded

“Nassim Taleb points to the absurdity here: “People who were driving a school bus (blindfolded) and crashed it should never be given a new bus.” The problem is that because both our economy and to a larger extent our politicians aren’t really subject to democratic control, the bus drivers are always going to be graduates of the same driving school.” — Raj Patel

http://www.zmag.org/znet/viewArticle/23251

Waxman caressing the Maestro:

Waxman: The question I have for you is, you had an ideology, you had a belief that free, competitive — and this is your statement — “I do have an ideology. My judgment is that free, competitive markets are by far the unrivalled way to organize economies. We have tried regulation, none meaningfully worked.” That was your quote. You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others. And now our whole economy is paying the price. Do you feel that your ideology pushed you to make decisions that you wish you had not made?

Greenspan: Well, remember, though, what an ideology is. It’s a conceptual framework with [sic] the way people deal with reality. Everyone has one. You have to. To exist, you need an ideology. The question is, whether it is accurate or not. What I am saying to you is, yes, I found the flaw, I don’t know how significant or permanent it is, but I have been very distressed by that fact.

Waxman: You found a flaw?

Greenspan: I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

Waxman: In other words, you found that your view of the world, your ideology, was not right, it was not working.

Greenspan: Precisely. That is precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.

Edit: “Greenspan’s flaw was more fundamental still. It warped his view about how the world was organized, about the sociology of the market. And Greenspan is not alone. Larry Summers, the president’s senior economic advisor, has had to come to terms with a similar error — his view that the market was inherently self-stabilizing has been “dealt a fatal blow.” Hank Paulson, Bush’s Treasury Secretary, has shrugged his shoulders with similar resignation. Even Jim Cramer from CNBC’s “Mad Money” admitted defeat: “The only guy who really called this right was Karl Marx.” One after the other, the celebrants of the free market are finding themselves, to use the language of the market, corrected.”

http://www.zmag.org/znet/viewArticle/23251

Bernanke thinks they can deal with bubbles via regulation. Once again he exhibits stunning ignorance about bubbles. With zero interest rates, some asset, less regulated or unregulated, will bubble, regardless of how much regulators look at a subset of assets.

Was there a stain on Waxman’s suit?

Some of us may want to join Jane’s fresh cross-post already in progress: “Will Reid and Dodd Ignore Bipartisan Hold on Bernanke And Shield the Banks?”

I think Andrea Mitchell never forgave Waxman for this degree of hubby’s emasculation.

LOLR to what purpose though?

More substantively, imagine that, instead of an ideology, Greenspan self-described as having a framework (or theory if you want a fancier word), which produces hypotheses that can be tested for feedback on the accuracy of the frameword.

“Problem wasn’t monetary policy. Problem was in mortgage market.”

What is funny about this is that as eCahn says the two are related. The cheap money provided by the Fed wearig its monetary hat fueled the housing bubble but it also points to the failure of the Fed to rein in such activity wearing its regulatory hat.

LOLR is an old concept. Its general purpose is to prevent a debacle in the economy and financial markets.

There’s much to be discussed wrt whether monetary policy should be audited, the proper role of politics in monetary policy, how LOLR should be used. But I can’t get into that kind of deeper discussion while listening to testimony.

FWIW, cnbcers think hearing has been easier on Bernanke than they expected, and they recapped some of Bunning’s blunt remarks.

Former Managing Director of Goldman Sachs:

Accounting Fraud of the Too Big to Fails May Be Worse Than Enron

http://www.zerohedge.com/article/former-managing-director-goldman-sachs-accounting-fraud-too-big-fails-may-be-worse-enron

When that shoe drops, they’ll be drafting letters of Impeachment for Obama.

I’m just saying that under cover of LOLR the Fed engaged in what were plainly fiscal not monetary decisions. Bernanke is using a kind of tautology. What the Fed does is monetary, therefore anything the Fed does is monetary. But the Fed is under no obligation to accept repos for shit collateral.

I like a lot of what you’re saying. The common thread I emphasize is the shared beliefs of elites, and how those mythologies shape the world in which they only latterly act.

To understand human behavior, we have to first put people in their proper mythological contexts. For example, we can’t just treat people like rats and expect peace and prosperity. What happens instead is the induction of “laboratory psychosis,” ie, we get driven mad by our erstwhile masters.

We have to explain human behavior not in rat terms, or mechanical terms, but in human terms.

Myths, metaphors, and narratives, in which our psyches reside, despite their power to shape our worlds, are all too easily ignored because they’re the background to everything, not the foreground.

But Rachel Maddow most certainly is not as you describe: “The only one who dares to go down this path substantively. . . .” Haven’t you ever seen Democracy Now!? Next you’ll be telling us Keith Olberman is another Huey Long.

As only one example of stirring the pot without spilling a drop, Maddow leaves untouched the involvement of Zbigniew Brzezinski in setting the so-called Afghan trap, with covert ops he supervised under Carter, that now traps us.

:
Excerpted from Zbigniew Brzezinski:
How Jimmy Carter and I Started the Mujahideen

Interview of Zbigniew Brzezinski Le Nouvel Observateur (France), Jan 15-21, 1998, p. 76*

Q: The former director of the CIA, Robert Gates, stated in his memoirs ["From the Shadows"], that American intelligence services began to aid the Mujahadeen in Afghanistan 6 months before the Soviet intervention. In this period you were the national security adviser to President Carter. You therefore played a role in this affair. Is that correct?

Brzezinski: Yes. According to the official version of history, CIA aid to the Mujahadeen began during 1980, that is to say, after the Soviet army invaded Afghanistan, 24 Dec 1979. But the reality, secretly guarded until now, is completely otherwise: Indeed, it was July 3, 1979 that President Carter signed the first directive for secret aid to the opponents of the pro-Soviet regime in Kabul. And that very day, I wrote a note to the president in which I explained to him that in my opinion this aid was going to induce a Soviet military intervention.

Q: Despite this risk, you were an advocate of this covert action. But perhaps you yourself desired this Soviet entry into war and looked to provoke it?

Brzezinski: It isn’t quite that. We didn’t push the Russians to intervene, but we knowingly increased the probability that they would.

Q: When the Soviets justified their intervention by asserting that they intended to fight against a secret involvement of the United States in Afghanistan, people didn’t believe them. However, there was a basis of truth. You don’t regret anything today?

Brzezinski: Regret what? That secret operation was an excellent idea. It had the effect of drawing the Russians into the Afghan trap and you want me to regret it? The day that the Soviets officially crossed the border, I wrote to President Carter: We now have the opportunity of giving to the USSR its Vietnam war. Indeed, for almost 10 years, Moscow had to carry on a war unsupportable by the government, a conflict that brought about the demoralization and finally the breakup of the Soviet empire.

[Emphasis added.]

How many lives did that cost, how much human suffering, and how much more will it cost? Instead of being an international terrorist for his covert ops (state-sponsored terrorism is our regular trademark), he gets to advise Obama and go on TRMS to do it some more.

He’s still working the system for his long-held goal of full-spectrum dominance over Central Asia, without any embarrassing questions like, Aren’t you responsible for starting this conflict 30 years ago? Don’t you have interests in pipelines in the region? What did you mean by “full-spectrum dominance” in your book? Nope, nothing but softballs from RM for “Mika’s dad,” referring to her MSNBC colleague, ZB’s daughter.

I do watch TRMS, and I do respect what she’s doing, but only up to a point. Journalists embedded in the same multinational corporations that sell us war after war aren’t substantively challenging the powers that put them in their chairs in the first place.

Remember MSNBC’s the firing of Phil Donahue just before the invasion of Iraq? I think that’s the fear that keeps RM “on the reservation.”

If I may suggest, along with Amy Goodman and her unbelievable crew, Laura Flanders is challenging things Left and Right. Check out her interview with John Perkins and Russ Baker.

IF, he did utilize the framework as you described instead of the unbending, non-adaptable ideology that he DID use . . . then he would be eligible to apply for membership in the new Pragmatic Party.

Your postulation, “a framework , which produces hypotheses that can be tested for feedback on the accuracy of the framework,” is being incorporated into the Party’s Charter.

Rachel’s interview with Ambassador Rice, was another example of walking the line – just so. Hope Rachel will have the cahones to quit before allowing herself to be effectively muzzled.

I don’t think so. Despite a lot of hesitation, Roosevelt eventually got that you have to turn loose some money, maybe a LOT of money to climb out of a Depression. Bernanke is famous for saying that in order to deal with potential or actual Depression you must release an avalanche of money, “Toss it out from helicopters,” if need be. Hence, “Helicopter Ben.”

I think that, starting back around Sept. of ’08, the great financial elites decided that, no matter what, we were’nt going to have another Great Depression. Not because they are a bunch of caring sweethearts, but because Great Depressions CAN produce FDR-like characters who tend to deliver a lot of New Deal stuff that the elites hate and have never accepted.
After having made so much progress using Reagan, Clinton and others in clawing away so much of the New Deal, they were’nt going to perfectly re-create the conditions that produced it in the 1st place.

quite right, only problem; once the beast is out it sort of has a mind of it’s own: Bear mauls trainer.

“Myths, metaphors, and narratives” are embedded in lots of things: biologial predispositions, historical contexts, culture, childhood indoctrination, unique individual experiences, religion, political economy etc etc.

And they are embedded in turn in human pschology—in enormously complex ways.

As for….

But Rachel Maddow most certainly is not as you describe: “The only one who dares to go down this path substantively. . . .” Haven’t you ever seen Democracy Now!? Next you’ll be telling us Keith Olberman is another Huey Lon

….I was referring to the mainstream media. Coming from Air America, she probes the nature of crony capitalism as no one else does. She names names. And she stresses over and again the role that money plays in getting things in and out of Congress.

Olbermann can be a buffoon, sure, but his special comment on America’s health care crisis alone more than makes up for the hyperbolic narcissism. Plus he is by far the funniest talking head on cable. I go there because for an hour I know I will not encounter a single reactionary. And he scathiungly puts the Fox News/talk radio clowns in their place. Even if he comes off as a clown himself.