Bernanke and Greenspan Live in the Bates Motel

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Bernanke can't deny Greenspan's murder of the U.S. dollar because Bernanke is Greenspan.

Put aside for a moment the Federal Reserve Banking system's impairment of free-market capitalism with its supply/demand override of the price discovery mechanism when it artificially, (and for the most part arbitrarily) sets interest rates at levels that only a command-and-control soviet era member of the politburo could love.

If you want to understand why the US dollar is doomed, what drives current Fed policy, Alan Greenspan's recent veiled mea culpa in the Financial Times on April 7 ("The Fed is Blameless on the Property Bubble"), and the current global market meltdown, keep in mind Alfred Hitchcock's Psycho, but with financial derivatives instead of carving knifes.

Greenspan is Mrs. Bates, the mummified corpse sitting in the attic of the Bates Motel; her transgressions (Greenspan's embrace of the so-called "New Economy" in the late '90s) have incensed protege Ben Bernanke (Norman Bates) who feels betrayed and erupts in homicidal interest rate slashing tirades. Caught in the middle is the living embodiment of the U.S. dollar, Marion Crane (Janet Leigh).

Greenspan is supposed to be effectively dead and hanging out at Davos with Bono and Geldof ogling Sharon Stone and supporting third world dictators embracing American style Caligula Capitalism, but he's undead. He's a walking Fed mummy whose ghostly voice can still be heard. In his April 7th, Financial Times letter he writes; "I do have an ideology. So does each member of the forum. I trust our views are subject to the same standards of evidence that apply to all rational discourse. My view of the the efficiency of global capitalism has evolved over the decades as new evidence has appeared contradicts some earlier judgments and confirms others. I have been surprised by the fierceness of investors in retrenching from risk since August."

Translation: Everyone is entitled to their own wrong opinions, but I'm still not taking responsibility for my screw ups when I drank dot-com "New Economy" Kool-Aid and forced interest rates "irrationally" low (compounding the error by also inflating the real estate bubble). But hey, I was eying Washington D.C. hottie Andrea Mitchell so I needed some NASDAQ street cred. When it turned out I was completely wrong, I got nervous about my own monetary situation so I started promoting Bush's smash-and-grab tax cuts and my banking buddies' predatory Adjustable Rate Mortgages. Maybe I did turn the entire global economy upside down and shifted economic power from America to the Mid and Far East. Maybe I did force global inflation higher, and global wages too, to the point of imploding the U.S. banking Ponzi scheme (and the U.S. dollar) faster than Building 7 on 9/11. But don't blame me for the credit seizure, blame those bankers at BearSteans who aren't peddling fake bonds anymore and blame the Americans on bread lines who aren't buying fake mortgages anymore. I'm blameless. Ask Queen Elizabeth II, she knighted me.

Contrast this with Bernanke's recent testimony before Congress: "A recession is possible."

Translation: A recession is here.

Enter Marion Crane. She works as a secretary in a bank. She dreams of flipping her mobile home for several million dollars. As far as she's concerned, there's nothing to worry about as she pulls into the driveway of the Bates motel.

She's carrying a $40,000 wad of cash (an inflation adjusted $300,000) that she extracted (stole) from her banker boss and his rich client, a clownish real estate developer (think Jimmy Cayne and Donald Trump). Her idea is to use the $40,000 as collateral to buy 40 billion dollars worth of Dow stocks and maybe the Bates Motel itself in a leveraged buyout.

In the famous shower scene, Marion is hacked to death by Norman "Bernanke" Bates, the cross dressing psychotic twin of Alan Greenspan who can't control long term interest rates from raging. Marion's liquid net worth (blood) is washed down the drain; mixed in with a massive credit expansion raining down from the open Fed spigot (the Fed's various multi-hundred billion economic stimulus packages -- also going down the drain).

How does this horror show end?

Marion sister's husband Sam Loomis (John Gavin) investigating Marion's disappearance saves Marion's sister Lila Crane (Vera Miles) from lethal, unregulated derivatives wielded by Bernanke as he tries to debase the currency with more credit expansion and bloodletting. In the remake Sam is played by Paul Volcker.

Forensic psychiatrist and accountant Dr. Fred Richmond (played in the remake by Peter Schiff), explains to the Chinese authorities, who now own most of America, that Greenspan, though effectively dead, lives on in Bernanke's psyche so he fights inflation by psychotically easing credit and printing more worthless U.S. dollars. The result is rising commodity prices and global starvation. Rising commodity prices are not the cause of inflation, but merely a symptom of the true cause of inflation; loose Fed policy, the very thing Greenspan-Bernanke were supposed to avoid, Schiff explains. By trying to save the U.S. economy, they killed it.

In the meantime; this just in...

NEW YORK (MarketWatch) -- The Federal Reserve is exploring backup options to extend its lending power in case the recent plans it has implemented to loosen the credit markets are unsuccessful, The Wall Street Journal reported on Wednesday.

These backup plans include having the Treasury borrow more money than necessary to fund the government and keep the excess proceeds on deposit at the Fed; issuing debt under the Fed's name instead of the Treasury's; and asking Congress for authority for the Fed to pay interest on commercial-bank reserves instead of waiting until a previously enacted law permits it in 2011, the report said.

cue Bernard Herrmann's screeching violins and violas; Eee, eee, eee.

Comments

[flatus]

At some point real money just becomes a number in an account. As long as these numbers can be shifted about, all is ok.

[brownshirted]

the credit seizure means these numbers can't be shifted about. banks do not trust each other any more because each knows that the other engages in the same fraudulent accounting that they do. in other words, banks who practice accounting fraud know that all banks practice the same frauds and so none of them will do business with each other. this means that the numbers or 'money' is not moving and if is not moving than the cost of hedging, or insuring these capital positions goes up and this puts further strain on the system by making it even less likely that the 'numbers' move... What the Fed is doing is taking these 'numbers' onto its own balance sheet, and in so doing - carving out it's credit worthiness which has the effect of debasing the currency and the country.

[salimfadhley]

How about some alternative financial re-makes:

Night of the Living Dead: Where hordes of sub-prime victims stalk the streats of a post-financial apocalypse America, literally consuming the living flesh of the few who managed to survive the disaster.

Repo Man: The zany adventures of a pair of foreclosure operatives as they re-posess the houses of the 3rd-tier borrowers.

[Shalem]

The Commodity Conundrum Solved

The Shape of the Yield Curve as a First Order Parameter of the Minerals' Price Movements

Executive summary:

The commodities I am studying here are the one with potentially very low storage cost. Minerals when kept in the ground have a storage cost next to zero.

Investors need of a reliable, efficient, timely and precise index of the future evolution of the price of minerals.

They need a mean to evaluate the risk of a position in order to calibrate the size and the risk of their exposure.

I observed a strong link between the evolution of the market price of minerals and the shape of the yield curve.

The idea is that given an inverted yield curve the marginal cost of extraction of minerals becomes irrelevant to their market price as miners stop maximizing their output under constraint of the marginal cost of extraction.

Profit maximization would have them trying to retain a higher proportion of their minerals in the ground rather than extract them.

The quality of the index, the slope of the yield curve, is superior to any other known system.

¢ It is Timely.
¢ It is Accurate.
¢ It Gives a Measure of How Stable Is the Trend and How Safe is the Exposure.
¢ The Model of the Yield Curve It is Proprietary.

The Cost is Low: only 10% of the Profit Generated.

Shalom Hamou
Independent Yield Curve Special Adviser
[e-mail]

http://seekingalpha.com/author/shalom-hamou

[xtown]

"Well, if the woman up there is Mrs. Bates," he wonders, " who's that buried out in
Greenlawn cemetery."

That's what I want to know.

Bates Motel is in foreclosure.

[zizyphus]

I think what we need is a nationwide movement to abolish the Federal Reserve, and a prominent person to actively spearhead it.

[Stirner]

We have one. His name is Ron Paul.

[biwee]

What would it cost the US taxpayers to buy out the Fed??? In comparison to what we are wasting in an unnecessary war of choice, very little. Then, why does not the US Congress wipe out the FED??? Answer:
The group that owns the Fed (a private bank) has BOUGHT the US Congress!!
Just ask Moron Mitch McConnell, whose IQ is less than the Shrub's (meaning it is under
50).

[NelsonR]

You have to wonder, where will Greenspan and Bernanke go to conduct seminars on how to improve an economy. Who would pay them? That is just an observation and future outlook for both men. Enough of Greenspan's denying of the fact, he started this slide. It will be horrendous. When I shop now it is a must to not only look at price but quantity. Our manufacturers always seem to know a way to hood wink the consumer. Sad part, most are fooled. Example, Box of paper towels last year, $22.00 dollars with a count of 4,000 sheets. This year 25.00 dollars with a count of 2500 sheets. Happy trails the inflation ride has just begun. Lets print up some more money and lower the prime interest rate to .05 percent.

[LammertMacroeconomics]

10 April 08 The US Dollar: the Predominant and Currently Valuating World Currency

Encumbered US dollars - borrowed against future wages and denominated reciprocally in over valued and depreciating assets - are vanishing. US assets - distortedly over produced in relative greater quantity than in other countries via excessively low US interest rates and historically easy lending terms - are not vanishing. The remaining unencumbered dollars will soon have greater purchasing power for these domestic assets relative to other countries individual or collective currencies. When will this turn occur? By quantitative fractal analysis, it may have already began. From the US dollar's saturation valuation area relative to a basket valuation summation of other world currencies occurring in late 2001, a deteriorating ideal Lammert growth and decay fractal series of x/2.5x/2x/1.5-1.6x :: 12/30/23-24/18-19 months is apparent, with the conclusion of the last 18-19 months containing a x/2.5x/2x/1.5-1.6x :: 14/35/24/21-22 day declining growth and decay fractal series with day 21-22 resting at the summit of the second fractal a x/2.5x/2x/1.5-1.6x 3/8/6/4 of ? 4-5 day ? completed growth and decay fractal series. This series likely forms the basis for US dollar growth relative to other currencies, commodities, and equities.

[msjennifer]

Huh?

[mmckinl]

Time to Fire the privately owned and operated Federal Reserve. We need a public central bank.

period.

[willo]

Throw a monkey wrench into the machine and call it a day. Thanks Greenspan. While the Fed was working us over from one end Bush was doing it from the other. Now they will both walk away from their messes, high fiving each other, 'heck of a job" they will say to each other. I wonder if it will ever dawn on Red stater's the mess they have helped create by giving Bush carte blanche? Maybe when their standing in soup lines? Naw , they will just blame those dam liberal's.

[WIpatriot]

No doubt, willo.

[ptah]

great post, just about sums the whole mess up in one tight narrative. I fail to see what the US can do to correct itself without further massive damage to its huge soft white underbelly.

[tinyrooster]

But Max, who or what is the fly at the end?

[WMG]

This is an absolutely brilliant post. Every point made in it is real. Wow. Wow.

[tsicby]

Luv it! But really, the debt we owe on all these bonds out there collateralizing the Fed's Notes we use for currency is a far greater amount than the Fed's collection agent, the IRS, collects in income taxes. Remember, according the Reagan Grace Commission report, 100% of IRS collections go to pay the interest on this debt- NONE of it goes to pay for govt. services. This is why the dollar is crashing, because this PONZI scheme is spiralling out of control- because we can no longer cover the interest with what we collect in taxes so we have to keep selling more treasuries and printing more money to pay for it and every year the spread gets larger and larger. Just wait until the other PONZI scheme collapses- Social Security.

[marignymitch]

Greenspan is a tool and revealed it breathtakingly and memorably awhile back. If the face of skyrocketing deficits and national debt (due to war, corruption, tax cuts for the rich, privatization, corporate welfare, no-bid contracts and other Republican scams) he offered this solution: cut Social Security and Medicare benefits.

Whatta guy! Cheeky but brilliant.

[outnow]

Was the subprime mortgage mess created by the Fed for the benefit of investment houses so that they would have money to play the market or for the benefit of homeowners. And who is it that is bailed out but the investment houses. Wall Street wanted money to play with. Their house of cards is coming tumbling down. Taxpayers will pick up the tab. The government guarantees are just another way of passing off the liabilities to taxpayers.

[brownshirted]

Home owners had a 'sugar high' of 'good inflation' for awhile - but now the 'bad' inflation is destroying the equity in people's homes; and debasing the purchasing power of the US dollar, i.e., inflation, i.e., prices for food and energy are going higher (way faster than the gov'ts official CPI numbers would suggest). This will be something for tax payers to deal with, yes. But right now, you are getting hit with an 'inflation tax' to bail out bankers. Savers are bailing out speculators.