The Bernanke Fed

As the maestro, Greenspan, was ultimately shown to be greatly mistaken, perhaps even a fraud, so eventually Ben Bernanke also will be shown to be cut from the same cloth, with less verbal acuity. His approach to the US banking system is naive, as one might expect from an eager student with little or no practical experience.

"Mr. Bernanke, an academic who has never worked a single day in his life. He will take anything off a cliff: a business, a McDonald's stand, the Federal Reserve. And I have to say I have a certain sympathy for him as a character. He's ok, but completely useless. I would not even hire him as my butler...Mr Bernanke is a madman, a destroyer of the value of money. And he is a wealth destroyer and an economic criminal. It is the duty of a central bank to keep the value of money. I believe today for ninety percent of Americans life is harder than it was in 1999. Basically I think they are a bunch of crooks."
Marc Faber on King World News

"There is no room for ambiguity in this story. Bernanke was at the Fed since the fall of 2002. (He had a brief stint in 2005 as chair of President Bush’s Council of Economic Advisors.) At a point when at least some economists recognized the housing bubble and began to warn of the damage that would result from its collapse, Bernanke insisted that everything was fine and that nothing should be done to rein in the bubble."
Bernanke and the Corruption of Washington Culture - Dean Baker

SP 500 Futures Daily Chart

The VIX (volatility index) fell to 20.39 today which is near the lows for the year, signaling a complacency in the US equity markets, although the bulls would call it 'the new norm' which is a euphemism for 'all is well again.'

Today the market drifted upwards in light volumes as the risk trade was sold (treasuries, precious metals) although stocks struggled to hold their early gains, and remained in the big rangebound trade from early November.

This is a holiday shortened week, subject to portfolio adjustments and some profit taking, which causes cross currents, but often with an upward bias as the tape gets painted into the year end and the Other People's Money crowd take their bonuses.

We are playing these markets now by holding lightly hedged longs (about 1/6 position) in the metals and miners which we picked up around 1120 gold on average, after the 'sell signal' which we issued here at 1215.

Now we stand pat on all investments and wait for something to break out one way or the other. The dollar is reaching the technical levels we are looking for on a bounce, and now we will see what it is made of.

Markets are being shoved around by the big traders. Do not overtrade in response.

Christmas 2009

They were a boy and girl. Yellow, meagre, ragged, scowling, wolfish; but prostrate, too, in their humility. Where graceful youth should have filled their features out, and touched them with its freshest tints, a stale and shrivelled hand, like that of age, had pinched, and twisted them, and pulled them into shreds. Where angels might have sat enthroned, devils lurked, and glared out menacing. No change, no degradation, no perversion of humanity, in any grade, through all the mysteries of wonderful creation, has monsters half so horrible and dread.

Scrooge started back, appalled. Having them shown to him in this way, he tried to say they were fine children, but the words choked themselves, rather than be parties to a lie of such enormous magnitude.

``Spirit! are they yours?'' Scrooge could say no more.

``They are Man's,'' said the Spirit, looking down upon them. ``And they cling to me, appealing from their fathers."

"This boy is Ignorance. This girl is Want. Beware them both, and all of their degree, but most of all beware this boy, for on his brow I see that written which is Doom, unless the writing be erased. Deny it!'' cried the Spirit, stretching out its hand towards the City. ``Slander those who tell it ye! Admit it for your false purposes, and make it worse! And await the end!''

``Have they no refuge or resource?'' cried Scrooge.

``Are there no prisons?'' said the Spirit, turning on him for the last time with his own words. ``Are there no workhouses?''

The bell struck twelve.

Scrooge looked about him for the Ghost, and saw it not. As the last stroke ceased to vibrate, he remembered the prediction of old Jacob Marley, and lifting up his eyes, beheld a solemn Phantom, draped and hooded, coming, like a mist along the ground, towards him.

Charles Dickens, A Christmas Carol

“Earth provides enough to satisfy every man's need, but not every man's greed." Mohandas K. Ghandi