The Bishop and the Butterfly: Murder, Politics, and the End of the Jazz Age

    ARE BERNANKE'S PIPES LEAKING?

    By Oxy Mora on Sat, 02/05/2011 - 12:23pm |

    Several days ago I received a bad report on the cottages I built last summer on country property.  Seems that not enough care was taken to insulate the pipes from the deep freeze that has engulfed the Great Plains. The pipes froze and burst. Now as the frozen pipes thaw out water is leaking everywhere and is not reaching, for example, the commodes--which is probably a good thing because the commodes are cracked. If only I had put anti-freeze in the commodes, drained all the pipes, blown them out with an airhose (the pipes are like an underground grid, the map of which has been misplaced), things might be different. But when I turn the well pump back on I really don't know what to expect, where the leaks will be and how much water might reach the commodes--which will probably need replacing.

    I felt a certain kinship to Ben Bernanke as I watched the press conference in which he seemed almost as bewildered as I was when I got the bad report about my plumbing system. He also got a bad report. Seems that no matter how much liquidity he has put into the banking system, it is all leaking out somewhere. Jobs aren't being created. Smaller banks are not lending to small businesses.

    But I part company with Ben when it comes to the idea of personal responsibility. In my case, I know that I screwed up not taking precautionary measures. And I have a piece of paper with the 10 things I must do in order to redesign the system before the next mega freeze sets in. But In Bernanke's case, nothing ever seems to be his fault. He keeps pumping money into an antiquated system. And damn it, there are leaks in the pipes. But Bernanke is devoid of a new design.

    Bernanke seems perplexed that the macro levers are not working the way they should. But aren't the reasons clear? The mega banks are incentivized to employ their capital anywhere but in the small high growth businesses which create jobs. In not advocating for the decentralization of the mega banks and the strengthening of small and regional banks instead, Bernanke has made an implicit choice that taking risks by chasing assets favored by mega banks is preferred over taking risks on smaller high growth domestic firms that create the jobs.

    Bernanke, almost sheepishly, referred to the increases in the equity markets as proof his policies were working. Well, Ben, no one is disagreeing that your policies are working to some small extent. It's just that the pipes in the overall system are leaking and the water isn't reaching the commodes--and when it does the commodes leak also. So the report is still not good. And you are taking no responsibility for improving the design before the next freeze comes. Oh, excuse me, probably not your job.

    Comments

    Wait, who exactly is the commode in this scenario?

    (And who uses the word "commode" in 2011?)


    by Michael Wolraich on Sat, 02/05/2011 - 1:04pm

    I don't know the answer to your question, but I do know who the turd that originally cracked the "commode" is --> Bernanke's clueless predecessor!

    by CVille Dem on Sat, 02/05/2011 - 1:29pm

    I'd say the commode represents the one in which the middle class now finds itself. They told us it would be commodious, but it smells like a crapper. (In specifications we call them water closets.)


    by Donal on Sat, 02/05/2011 - 3:53pm

    In Michigan we call them toilets.  Even the boxes they come in say "toilet".

    But I remember when Jack Paar walked off his set because he got in trouble for saying "water closet".  He should have said "toilet".


    by Ramona on Sat, 02/05/2011 - 6:38pm

    Picture Bernanke as the architect telling his client, "well the plans weren't right--see right here, the toilet is facing the wrong way in the water closet and there isn't enough room for someone to sit there without banging their knees against the tub. This definitely isn't working."


    by Oxy Mora on Sun, 02/06/2011 - 7:19am

    Right, the metaphor wasn't flushed out properly.

    The mega banks would be best characterized as cracked commodes. (And the word is still used in the country, believe it or not.)


    by Oxy Mora on Sun, 02/06/2011 - 7:02am

    I believe the last figures I saw on credit card debt was put at @$900 billion.

    For all the liquidity that has been poured into the banking industry, imagine if it had been targeted to paying down this debt, along with a directive to reduce the maximum interest rates allowed to fall somewhere at least this side of usury.

    Of all the funds poured into the banking industry, imagine what could have been accomplished if it would have actually been targeted at fixing their "toxic assets" ( remember those?), namely the consumer mortgages that are held on housing assets that have been devalued as a result of the collapse of the housing bubble.

    Virtually everything that has been accomplished seems to have been undertaken in the interest of holding the banks harmless from having to suffer any consequences in the collapse of the financial industry. There appears to be very little consideration for doing anything that might actually address the underlying problems out of an almost spiteful desire to make certain that the consumers aren't afforded anything that might resemble a "free ride."

    And we suffer a "jobless recovery" as a result of all this money being poured into the banking industry whilst we do nothing to actually address the fundamental problems in the economy.

    Go figger!


    by SleepinJeezus on Sat, 02/05/2011 - 3:16pm

    Right, holding the banks harmless--that frosts me. 

      


    by Oxy Mora on Sun, 02/06/2011 - 7:12am

    Any idea where I can get a transcript of this that does not cost $55?

    I listened to Bernanke this afternoon while cleaning my kitchen.  The way he phrased a sentence was important but I would prefer not to have to listen to the whole thing again if I don't have to.  Plus I might miss the sentence a few times before finding it again.   

     


    by EmmaZahn on Sat, 02/05/2011 - 7:11pm

    I assume the press conference will be repeated this weekend on C-span.

    Bernanke's demeanor bowls me over. It's as if he's saying to his boss, "Yeah, we spent the money and it's not working the way it's supposed to. We'll have to wait and see, maybe need more money."Who else in the universe can get away with such unaccountability?


    by Oxy Mora on Sun, 02/06/2011 - 6:50am

    Are you sure you've described the relationship in correct terms? It's not too far a stretch to believe that when Obama meets with Bernanke, Summers, et. al., it is Obama who is in charge of making the coffee and setting up the A/V equipment.


    by SleepinJeezus on Sun, 02/06/2011 - 10:18am

    Right, Obama is making the coffee. I think in truth Bernanke has as much of a boss as he would have as a tenured Professor at Princeton. And I think his intellectual legacy among economists is his reference point.  He mentions over and over his studies of the Great Depression. And I do think he helped stave off systemic collapse. He seems to have used the levers of the Fed in innovative ways. But I'm looking for more innovation and re-engineering, some way to hard pipe the stimulus to where it needs to go rather than to dump it into the reserve account of a member bank and hope for the best.

    In order to hard pipe the system the real questions in my mind are: Are there tools Bernanke already has to hard pipe the money to where it will create jobs? Are there tools which would shift the emphasis away from mega banks and onto smaller banks? Does he already have these tools and is simply not using them for whatever reasons--personal (for example, what's in it for him to take a risk?) or policy wise? When he talks about smaller banks, and his 40 meetings with them and small businesses across the country I just get the impression that he is going through the motions.

    I am really frosted at the current philosophical discussion on whether Bernanke's QE2 is actually creating the inflation which is driving up the costs of commodities. Isn't it as simple as saying Goldman Sachs is running up the prices because they have more funds than they know what to do with and that they have no interest, intention, mechanics or ability to pump money into Main Street?  

     


    by Oxy Mora on Sun, 02/06/2011 - 12:35pm

    I've heard it said the little banks are unwilling to lend?

    I would be reluctant too if I were a small bank, realizing the larger ones were out there as predators. ready to devour me up, with the assistance of the federal government picking the winners and the losers; favoring the TBTF banks over the smaller banks  

    We all know,mergers and aquisitons are the next big business trend. 

    Cash is king.

     


    by Resistance on Sun, 02/06/2011 - 12:57pm

    Emma, maybe you can search for it here.

    At top right of the page I searched under the term Bernanke

    Ben Bernanke Unwilling to Own Negative Effects of Money Printing

    http://www.minyanville.com/


    by Resistance on Sun, 02/06/2011 - 10:10am

    Thanks for the reference.


    by Oxy Mora on Sun, 02/06/2011 - 12:19pm