Anyone notice how Nouriel Roubini is now grandstanding behind Bernanke? The call is simple. Just back in March, Roubini forecasted a depression; now we already have the start of the recovery. Roubini can't admit that he was wrong; therefore he has to get behind Bernanke, as the "genius" who saved us from the second Great Depression.
So what policies did Bernanke enact after March that changed the course of history? Could Mr. Roubini enlighten us on that? He, of course, won't and can't; because it's just another smokescreen.
But Bernanke can use that support. After all, that's the line he's telling the American public in Kansas City last week:
"The problem we have is that in a financial crisis, if you let the big firms collapse in a disorderly way, it will bring down the whole system," Bernanke said. "I was not going to be the Federal Reserve chairman who presided over the second Great Depression."
Using that tortured logic, I can say I "saved" the stock market. I said it would turn at 666. How ridiculous is that statement? It bottomed, because it was ready to bottom. And its as ridiculous as Bernanke saying he saved us from the next Great Depression. What Bernanke did do, was save the jobs of a few banker friends!
It's the same with our economy. But stock market at bottoms, turn like speedboats, while economies turn like ocean liners.
And now that the ocean liner is half way through the turn, its even recognizable by those bearish who predicted the next Great Depression.
But since a trillion or so was handed out to the banks, Bernanke has to make up a bigger story, because the public knows they were screwed, while the bankers were bailed. The first $700 billion from the taxpayer given to the Government was on only two sheets of paper. Try and get a mortgage modification by the same banks, and you'll need 200 pieces of paper. So Bernanke tries to paper over this discrepancy, as though he saved the world, when in fact, he only saved the jobs of his friends.
These bankers are so bad with their BS, that they are in competition with Bruno as far as making people want to take a shower!
But compare what happened to the bankers in power here in the States, with what happened to the oligarchs in Russia. Weren't we told that they would all fall from grace with the decline in commodities? And all their empires would unwind? And no-one would rollover their debt? Debt that was is excess of $430 billion?
What happened? Why are the oligarchs still in power?
Let's go back to LTCM in 1998. Wasn't that supposed to come about because of the price collapse in emerging markets? And when LTCM needed to get bailed out, who balked? Didn't Bear Stearns not ante up the $250 million the other bankers did? And didn't Lehman only put up $100 million? Was it just ironic that these two firms bit the dust? Were they any worse than the rest of Wall Street, or were they just not as connected?
Maybe you think I'm being too dramatic in attempting to make a point. You think so? How about when Merrill was staring into the abyss, and was going to go out of business, just like Lehman and Bear Stearns did. Didn't John Mack of Morgan Stanley say, "Maybe we should let Merrill go down too." What did Jamie Dimon then say to Johnnie Mack? Didn't he say this: "John, if we do that, how many hours before Fidelity would call you up and tell you it was no longer going to roll your paper?" And later, didn't Dimon, like Bernanke, also have that same problem of recollection about this conversation?
So what caused things to change? Wasn't it something much simpler? Make it unpalatable to profit from falling prices. Restrict short selling, change credit default swaps, and make the White House the bully pulpit. That way, you need to get long to profit. In fact, you had that story here, on March 4, right before the bottom, when the White House put themselves on the cross, and did a shakedown of the vocal bears.
Bernanke, the arsonist, became the fireman after he was tried by fire. But his bet, was the same the oligarchs made. They just needed to buy themselves some time.
The difference was, the oligarchs didn't have a pussy like Paulson getting down on his knees and begging money from Pelosi to get it done. And then, have a Fed chief, broadcasting to the world that he saved it from the next Great Depression.
The oligarchs just decided to play Russian roulette with the banks.
And the banks blinked, before the chamber was even loaded!
And they bought themselves time, because that's all they needed.
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