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The Pentagong Show
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Wednesday, July 22, 2009

Someone Needs to Clean Big Ben's Clock.

Per today's Washington Post article, BernBanke argued before the House Financial Services Committee that the Fed's actions helped prevent a global economic calamity, and he promised an exit strategy to head off fears of inflation. Somehow he forgot to mention that it was the Fed's (specifically Bernanke's) "fears of inflation" that ratcheted up interest rates to a level that brought on the biggest depression in the world in the first place. Quarter after quarter, in baby steps, to give the market time to unwind their over-leveraged positions and enhance the profitability of the crash, the Bernanke Fed, in order to fight off the specter of inflation, made inevitable by the Greenspan put, and put a little bit of teeth into the Bush Treasury's "strong dollar" stance, while US exports continued to dwindle and banks continued to swindle, brought the financial system to its knees.

The BernBanke pincer play was to trap the ARMageddon buyers of low-cost ninja loans into extortionate, hi-interest home payments, using the same strategy so successfully used on the current generation of college loan recipients, car buyers, and credit card users: trap 'em and sap 'em. One problem with this strategy was, of course, that the States have their own laws, one of which is the non-recourse nature of home loans in most states (something many home buyers themselves were unaware of).

So as the market for new loans got saturated and the profit-outlook of the ilks of Goldman Sacks America started to dwindle, the interest payments from all those it had suckered into loans that they would never, ever, be able to pay off would increase, offsetting the decline in those hefty securitisation fees from a declining new loan volume.

The fly in the ointment of this plan, was (is) of course, inflation. And since the Fed has long since stopped putting even a pretense of functioning for the overall economy, and operates under the sole mandate of providing profitability without risk to the entire banking sector while shifting the risk onto the backs of the rest of us, inflation was the only thing the BernBanke Fed concerned itself with, the rest of the economy could follow the "Free Market" mantra and fall right into the toilet: that's for the politicos to hash out. BernBanke's only job was to provide a smooth road for easy profits for all his friends and supporters who got him the job in the first place. In that respect, nothing has changed, and nothing will.

So, far from "the Fed's actions helped prevent a global economic calamity", the Fed's actions are precisely what caused the global economic meltdown. But, like the journalist who sat close-lipped while Cheney's daughter defended her father's legacy of "Keeping this country free from attack for 8 years", rewriting history in a single phrase, that just happened to be a blatant, ridiculous lie, we sit transfixed while this leftover from the most criminal administration in US history does the same. Big Ben's time is up. Like Condoleeza Rice, stating that "We never discussed planes flying into buildings", even though terrorists had already attacked the WTC with car bombs and there was a movie out in which the very scenario of a plane being commandeered to fly into the White House had played in movie theaters across America, Benron can whine that he never saw the largest financial collapse EVER coming, despite his $200,000.00 paycheck to do precisely that, and still expect to keep his job. Meanwhile, because of his complicity millions of people who were doing their jobs perfectly well will never have another one.

But Big Ben's got one of them thar big gub'ment jobs. He'll never have to worry about accountability; that's just for us private economy stooges. We who don't understand the complex world of high finance. Not that he does either, by his own admission, but it's only in the private sector that competence is monitored, measured, reviewed and employees are constantly threatened, cajoled, and peremptorily dismissed for the slightest misstep. Nope. He's got one of those public sector jobs that's paid for by the very private sector all those public sector employees disdain, because we have to actually (ooowww, gross) produce something. So Benron BernBanke can relax: he's safe. But as long as he is safe, the rest of us are in ever-growing peril: Someone Needs to Clean Big Ben's Clock.
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