Bringing up the Rear: Ben Bernake

by 11 Jun 2009
Bringing Up The REAR: Ben Bernanke Is the Federal Reserve Chairman lacking in intellect or integrity? I’m starting to get dizzy. One day we’re heading into a tailspin, next we’ve bounced off the bottom and are headed back to prosperity. One day, the banks are in need of trillions, lest we soon experience the end of the world as we know it. The next day the banks have beaten all earnings expectations and normal lending is right around the corner. In March, Fed Chairman Ben Bernanke told 60 Minutes that he had detected "green shoots" of economic recovery. Maybe he was thinking that if you spread enough manure around, something would be destined to grow? (sorry, just thinking out loud over here) In March, we lost 663,000 jobs, and 290,000 people received foreclosure notices. Ben, however was seeing shoots of green. Then in April we only lost 593,000 jobs, but then foreclosures jumped to 342,000.  Now it’s the end of May, and Gentle Ben’s looking a little green around the gills himself. Back in January the Central Bank forecasted unemployment reaching 8.5% - 8.8% by year-end. But then in April, unemployment hit 8.9%, so that made guessing less fun right there. Now, Green Shoots and his Board of Merry Governors have thought better of their earlier forecasts. Now, they’re guessing that unemployment will hit 9.2% - 9.6% this calendar year.  If history is any help, they might be safe with that guess until July, which is a big relief as far as I’m concerned. We’re planning on taking a vacation this summer and I’d appreciate just leaving the guessing alone for a bit. I don’t mind them worsening things again in September, but I don’t think it’s unreasonable to want the summer off from guessing. What good could possibly come of it? All downside, as far as I’m concerned. And when I use the word “guessing,” I mean “guessing.” It may be “forecasting” for a while, but if you’re wildly wrong every single time, I think it becomes obvious that you’re “guessing.”  The Labor Department has worn me out this past year by guessing wrong a record number of times, so here’s that department’s recent guessing record: Month/Year            Initial Guess                    Later Revised August ‘08                84,000                              175,000 September ‘08       159,000                             321,000 October ‘08             240,000                             380,000 November ‘08        533,000                             597,000 December ‘08        524,000                             681,000 January ‘09             598,000                             655,000 February ‘09           651,000                             681,000 March ‘09                663,000                             699,000 Bureau of Labor Statistics Personally, I would’ve stopped by November. No way I’m making a holiday guess with a fall record like that. I would have called Treasury and said: “Hey, it’s your turn to throw down a guess. I already done my turn on the guessin’-go-round. The only thing I’m guessing at this month is what Santa’s leaving me under my tree. Happy Chalidays! I’m taking my sick days, betches!” Of course, 8.9% unemployment is just a nonsensical number anyway, revised or not. If you add in the people who want a job but gave up, all the folks working part-time that wish for full-time, and all those that dropped off the unemployment rolls because their benefits ran out… oh, well then you’d peg unemployment at just a smidgeon over 15.6%! The Fed also lowered its expectations related to gross domestic product from a drop of 0.5% - 1.3%, which was its January guess, to a drop of 1.3% - 2%. Someone’s going to have to check my math, but I think the difference could be four times worse than previously expected… I mean guessed at.  Whatever happens by year’s end is anyone’s guess, but there’s going to be some serious averaging going on to hit any of those numbers because GDP shrunk by 6% in the first quarter of 2009 alone, and I can’t imagine that Q2 could look much better. The Fed also lowered its guesses for 2010 and 2011, but I can’t even write about stuff like that without laughing so hard I can’t hit the keys on my keyboard. Here’s how CNN/Money reported the Fed’s statements about GDP: “Fed members did indicate they expected GDP to increase slightly in the second half of this year. However, it would not be enough to overcome the anticipated declines in the first half. Policymakers added that they were not convinced the economy was out of the woods yet.” Oh come on… do we have to keep being nice to these guys? What up with that? I seriously don’t understand why we don’t all start laughing hysterically whenever Chief Green Shoots steps to the microphone. And then, I’m sure in an effort to send me running into the street to lie down in traffic, the minutes of the Fed’s April meeting also showed that the policy committee said they’d be okay with “increasing purchases of Treasury notes and mortgage backed securities in order to stimulate lending.” So, obviously a memo to the Fed is in order: ONE: You wouldn’t be stimulating lending, you’d be starting lending, morons. And TWO: If you have any moves you even think might start lending up, and you’re just sitting around talking about them… well… you should be forced to play circus music during all of your meetings until you prove yourselves to no longer be clowns. It makes me dream of living in Pakistan where they hit their government officials with sticks.  The Fed’s new unemployment guess, 9.2% - 9.6%, is horsepucky. It’s likely to have already topped 9.2% as you’re reading this. So, something is clearly deficient when it comes to Mr. Bernanke: Is it his intellect or his integrity? Either way, this month’s REAR is without question, Fed Chairman Ben ”Green Shoots” Bernanke. Martin Andelman is a staff writer for The Niche Report, and a feature writer for ML-Implode.com, where you’ll find his almostdaily column, Mandelman Matters. Questions or comments? Send them to: mandelman@ml-implode.com.

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