In The Bubble of Stupidity

The brilliant and colourful English Lit professor and occasional philosopher Marshall McLuhan presciently wrote, “Politics will eventually be replaced by imagery. The Politician will be only too happy to abdicate in favour of his image, because the image will be much more powerful than he could ever be.”

 McLuhan passed away in December of 1980, yet he seems to have had the capacity to perceive so many vacuous celebrity politicians which today fill our electoral landscape – empty vessels which float to re-election on electoral carpets of wishful thinking and ignorance. With an uninquisitive media abstaining from accurate reporting, the misinformed public remains in the dark.

No-where is that ignorance of “imagery” politicians in more glorious display than on all matters economic. Politicians may not hold forth on brain surgery or Mars landings, but they certainly expound profusely on the economy and its forces.  This week we were treated to a rather typical display of incomprehensible idiocy by none other than a Ranking Member of the House Financial Services Committee. Perhaps we should underline “Financial Services Committee.”

Congresswoman Maxine Waters made the following statement,“Yesterday we did have Mr. Bernanke in our committee and he came to tell us what he’s doing with quantitative easing and that is trying to stimulate the economy with the bond purchases that he’s been doing because he’s trying to keep the interest rates low and create jobs–and he said that if sequestration takes place, that’s going to be a great setback. We don’t need to be having something like sequestration that’s going to cause these jobs losses, over 170 million jobs that could be lost–and so he made it very clear he’s not opposed to cuts but cuts must be done over a long period of time and in a very planned way rather than this blunt cutting that will be done by sequestration. . . . . And so, we are here today, one more time, talking about women and children and families and how we can protect our women, children, and families and have a decent quality of life–sequestration will set us back. All of the gains that we have made will be lost with sequestration.”

So there you have it from very near the top of the Nation’s political hierarchy – a statement providing clear insight into the frightening lack of comprehension with which the country’s financial affairs are supervised.  Let’s ignore the absurd claim, “170 million jobs that could be lost,” since there are only 141,614,000 jobs as of January 2013 in total – and well, anyone can make a mistake when making a supposedly critical statement to the Nation. No?

Of greater import is Waters’ description and characterization of Bernanke’s presentation to her Committee?  Does she, or any other member of her Committee understand enough of what Bernanke is doing, or why?  She states,  “he came to tell us what he’s doing with quantitative easing and that is trying to stimulate the economy with the bond purchases that he’s been doing because he’s trying to keep the interest rates low and create jobs.”  Huh?  Does anyone ask her how her brain connects all those dots? That would be embarrassing, since the dots don’t connect.   They don’t and they can’t.  Did anyone on her committee ask Bernanke to connect those dots?

Her statement demonstrates that this “imagery” politician is lost and baffled by economic matters and realities, but she is evidently confident of achieving a successful outcome for herself through the spewing of unintelligible gibberish as long as it is followed by a comment about the sky falling on single women and children.  Pretend to somehow be protecting single women and children, which is even better than championing motherhood and apple pies, and Walters succeeds in propping her own statue another day.

Waters is simply another fear-mongering politician ignorant of the fact that the Fiscal Cliff is only reducing some of the planned increases in discretionary spending.  Almost nothing will be cut from mandatory entitlement programs – Social Security, and Medicare, or from debt interest payments.  The Nation’s financial problems rests primarily on mandatory expenditures and their looming explosion.  Should someone point that out?

With the quality of economic acuity we are subject to, as demonstrated by politicians of the Waters caliber, it is hardly surprising that nothing is being done to bring spending and debt under control.  Nothing is being done to restrain the excessive growth of government.  The complexity is too difficult for uninformed and uncreative minds of the “imagery” politicians to confront. It is so much easier to ignore a complicated reality, particularly when doing so might throw shadows on their ideology.

Let's take another prod from Marshall McLuhan’s stimulative mind, in which he prophetically defined mindsets of the current leadership in Washington, “I wouldn’t have seen it if I hadn’t believed it.”

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A Critical Turning Point In American History

We progress, marching forward leaving behind us a trail of yesterdays, filled with events large and small, assembling memories, but some of the more momentous occurrences rise to a superior level which we include in our collective “history.” In that wake of our advance some of those momentous waves swell further, rising to become events that only hindsight can identify as pivotal moments in that shared recollection.

Such hindsight is not always 20/20. We may be aware of the events as they unfold, but their significance and impact on our march forward is not always self evident and years may pass before they become so. Self-serving motivations too often imbue the retrospective lenses with prisms which deliver infinite varieties of perspectives. 

For over four years we have been instructed by those supposedly most knowledgeable and most insightful, occupying positions of leadership advancing society forward beyond the now and into the great unknown, that a new and magically wondrous elixir named “QE” would be the salve to all anxieties. It matters little that QE stands for Quantitative Easing, and may as well conjure up notions of a long-reigning monarch, since its true long-term consequences appear beyond our collective comprehension. Nevertheless, its impact is not as benign as one queen’s influence on ‘her people’. With minimal scrutiny or analysis by most of our media, but with the unrestrained approval of Congress and the Administration, The Federal Reserve proceeds with its unrestrained expansionary monetary policy. It pretends that this is good medicine for a Nation yearning for a return to economic growth, unaware that a printing press, while capable of printing unlimited dollars, cannot print a single job. It also pretends that its expansionary fiscal policy is enabling the hoped-for purchase of homes and cars. It pretends that low interests rates render the escalating debt load inconsequential. The reality is very different.

QE, QE1, QE2, QE3, and QE4 ad infinitum, indulge the Federal government’s insatiable expectations of unrestrained spending. The Fed will continue to buy up billions in Treasuries and Mortgage Backed Securities from member banks well into the future (on your behalf – and remember that those major too-big-to-fail banks are still burdened with toxic debt). The Fed’s actions will also enable Tim Geithner to sustain his schemes for financing friends of the Administration such as he did the unions in the GM bailout, or the brilliantly invested hundreds of millions in Solyndra.

The QE program is to continue until unemployment falls below 6.5%, or inflation rises above 2.5%, and the interest rate of 0% will be held until at least 2015. Other than those who watch their savings shrink each month, does anyone care? Not Congress, certainly. We may have structurally experienced the boiling frog metaphor.

The mandate of The Fed is supposedly to support job creation and to keep inflation in check. It pretends to be concerned with inflation while creating truckloads of debt. How is this not going to produce run-away inflation in the long-term? It can be argued that real inflation has been running at well above the government published 2% – your own cost of all goods will provide some indication. Additionally, 0% interest has not and will not launch a rush to banks for loans. 0% interest is, however, rewarding The Fed’s friends with the cheapest money they’ve ever had access to, enabling them to make money without risk – enabling never before seen executive bonuses. This action by Ben Bernanke in fact works against new or riskier businesses looking for loans from their local B. of A. or Wells Fargo bank managers.

‘Liquidity’ is not the barrier preventing the creation of jobs by corporate America, large or small. What else do we know?

•  We know that larger corporations are refraining from investing in capital goods and are only tepidly bankrolling increased productivity.
•  We know that most of the bank reserve increases since 2008 are sitting idly on the sidelines, as is a vast amount of corporate cash.
•  We know that current unemployment is ‘structural unemployment,’ which could mature into a long-term malignant disorder. 
•  We know that new dollars created without the ‘backing’ of relative increases in economic activity (gold was once used as backing), places excessive downward pressure on the value of all dollars. 
•  We know that one major constraint to job growth is the current lack of confidence, and that uncertainty can be diminished, even eradicated, with energized leadership. 
•  We know that unrestrained government spending stimulates very little confidence, and fear expands to fill that void, stifling ‘job creation’ by companies afraid to stray from the secure status quo. 
•  We know that The Fed’s activities have resulted in relative decreases in the dollar’s purchasing power manifested in our increased prices for staples such as gasoline and food, and for those who can afford to, the purchase of gold. As recently as late 2008 you could purchase an ounce of gold for under $1,000. Today that ounce costs between $1,650 and $1,700. 
•  We know that The Fed actions have aggressively replaced personal ‘interest income’ with ‘dividend income’ since 2008. 
•  We know that rates of inflation have been understated by the Federal Government, just as the rates of unemployment have been understated. 
•  We know that Congress will not cut back on expenditures and we know that the current Administration is steadfast in its advance of more spending. 
•  We know that the unfunded future liabilities of Social Security and Medicare present a financial challenge far greater than the current total National debt. 
•  We know that The Fed has independent control of the printing presses and provided the  Washington Treasury with seemingly unrestrained amounts of magic cash (read ‘ability to spend’) through debt loaded onto the backs of all taxpayers, while at the same time restraining and suppressing the economy. 
•  We know that most of the political establishment in Washington has been unable to resist the temptations driven by self-interest and is willingly, and knowingly acceding to overindulgent debt financing. 
We know, but are we in denial?

Are we pretending and rationalizing those nasty gremlins away by convincing ourselves that the all-knowing elected leaders, their appointees and their friendly neighborhood banking masterminds will solve our worse problems?  Are we convinced that the Washington centers of influence will somehow coalesce supernal erudition into a pathway around the inevitable economic implosion which our love affair with debt has created?  Surely there must be good reason for some experts to be promoting profligate spending.  No?  Are we accepting rationalizations from QE believers that unlike the personal debt borne by consumers, the Federal government can simply, though carefully, arrange to have printed evermore of the world’s favorite currency to nurse its debt affliction?  With other nations also devaluing their currencies such as the Yen or the Euro, almost in lockstep with the U.S., are we clasped together with them in an only-slightly-out-of-phase race to the bottom?

We must be convinced that experts know something we don’t and that they have grasped concepts which eluded Thomas Jefferson when he wrote in 1814, “We are to be ruined now by the deluge of bank paper.” In a world where opinion has transplanted knowledge, authenticity is infused into unworthy illusions.  Does a majority of Society really believe that it cannot accept reductions in deficit spending while it refuses to acknowledge the need for financial diligence over growing government and unaffordable entitlement programs?  Does Washington really reflect the Nation’s wishes?  What is clear, is that personal considerations, personal influence and personal wealth have vanquished the halls of power in the Capital.

The political leadership has succumbed to the irresistibly seductive ‘Easy Money’ of the incomparably powerful and historically unprecedented Federal Reserve. There is nothing subliminal about the seduction which has taken full and absolute control of Washington. There has been nothing subtle or concealed about the production of new debt, and there has been no subtlety of process in the devaluation of the dollar.  Washington’s addiction is unmistakable, and particularly disturbing is that this addiction has so far had few serious consequences for those holding positions of power.

How did we get here?

Let’s recall some of the more infamous proclamations of just over four years ago. Assertions such as, “this is truly a once-in-a-lifetime economic nightmare,” and “the world’s most cataclysmic financial crisis since the Great Depression,” or how about, “world’s impending financial Armageddon.”  These unnerving and sinister shrieks instilled fear into the consciousness of every resident on Capitol Hill.  The perplexed and readily pliant media ensured that the apprehension blossomed into an epidemic. Admonitions of terror were used by Hank Paulson, then Treasury Secretary and formerly CEO of Goldman Sachs, and Ben Bernanke, currently Chairman of The Fed, who only months earlier in mid 2008 had proclaimed that all was well in the economy and that there was no chance that the subprime market problems would impact the broader economic health of the Nation. And their views on the taxpayer backed Fannie Mae, Freddie Mac and AIG, . . . what, me worry?  And yet, here we were, listening to fear, terror, panic, foreboding and threats. And what were the titans of Wall Street demanding as shivers ran up and down the spines of Washington’s decision makers?  A blank check made out to cash with no conditions.  “Too big to fail” along with, “bailout,” became household terms.

The shivering spines turned into talking heads on every evening news outlet in the Nation, parroting that the once-in-a-lifetime impending armagedon had, “left us no choice.”  The money was borrowed, the checks were cashed by friends of The Treasury and The Fed, and then the declarations evolved.  We heard from politicians with newfound bravery, “whew that was close, but weren’t we great, we saved the Nation from doom,” and the ‘inside’ players changed chairs with Geithner replacing Paulson at Treasury.  Across the country almost everyone with a keyboard and a microphone could repeat the chant, “we were on the edge of a cataclysmic crisis, but The Fed and Treasury saved the day.”  The cry had a rhythm and a plurality accepted this new gospel.  A new Administration moved through 2009 and 2010 with an acceleration of long-term financial commitments and borrowing, along with unrestrained check cashing particularly in favor of friendly ‘contributors’.  The Nation had stepped over a threshold and into a new paradigm.

The Nation had become desensitized.   Its elected officials and the banks had surely known something the rest of us did not comprehend.  On the Hill, the affliction spread as a realization that astronomically huge amounts of money could be created seemingly out of thin air and thrown at, . . . well just thrown at whatever might help re-election, and there would be no consequences – at least none in the near-term, and the future would take care of itself.  Epoch-forming levels of debt were created in the comforting expectation that The Fed would take care of ‘managing’ just the appropriate maximum.  It might even administer the creation of an infinite amount of dollars since, apparently, there would be no cost, no downside.  We were in a new era.  We are in a new era.

A decision made in fear and in panic changed the consciousness of Washington.  The new paradigm of increased spending and debt by trillions of dollars, would have no consequence. At least not to the current Washington. This shift, however, will see the next President step into an Oval Office presiding over an America encumbered with an estimated debt North of $20 trillion.  Whatever the amount, there is no will on Capitol Hill to change the narrative, and to the long-term detriment of a misled Nation, there is a deeply entrenched addiction which refuses to be curbed.  As for the value of the dollar in four years?  You will know by the real cost of living to which you will have been subjected.

The constitutionally mandated separation of powers between the Administration and all of Congress with which the Framers so presciently endowed an eagerly awaiting Nation, has been trampled by effectively maneuvered, yet elected, debt junkies.  IMHO, America has been bowed by, and has capitulated to, egocentric forces which do not hold its best interests to heart.

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• Another Misstep On Obama’s New Battle Front

There is little argument that the concluding G-20 meeting has been an international beat-up slugfest on America. Effective and substantial Strategic Planning is critical in the success of any significant endeavor. It should be ever-present when addressing the country’s economic long-term health.

Obama and his advisors fumbled once again on the international scene. Unfortunately, this time the fumble was on an economically critical battlefront.

The Fed continued its artificial manipulation of the economy by announcing that at the stroke of a pen filled with dollar printing ink called the Quantitative Easement Quill, a tidy $600 billion will be added to the float. While there is urgency in taking decisive action to stimulate hiring across the country, The Fed’s bond purchase program could have waited announcement another few days, particularly since it will be implemented over a very extended period. The Fed may in fact decide to scale back on the total amount depending on how the economic activity trend reacts.

Currency fluctuations have not been the source of the current economic crisis, but have been the outcome of such things as the overwhelming export of never to return jobs to inexpensive-labor-gives-us-cheap-products countries, AND we can artificially inflate national wealth by enforcing the financing of a home-for-each-citizen program.

Announcing the easement (read: circumlocutive euphemism for Inflative) just prior to G-20 gave China a major pass at the meeting, and in fact, pushed it to stand shoulder-to-shoulder with America’s “friends” pounding on America. The G-20 meeting should have been more about China’s maintenance of a weak Renminbi, and protectionism, rather than about the U.S.’s wholesale weakening of King Dollar.

The Bernanke announcement resulted in a verbal assault on America by everyone from China to Germany. America’s defense was left to representation by a President not familiar with things economic. It isn’t even clear that China’s real relative exchange rate hasn’t appreciated recently given the rapidly rising prices within China. Just like The Fed, whose complete independence from Congressional control or real oversight enables it to go wherever it wishes to go, so too China will ignore all bended-knee implorations from Obama and Geithner.

Now to make matters doubly difficult, the Administration is shouting into the deaf ears of its trading partners and geopolitical friends. China will continue on its merry way, and it has firmly confirmed that it would completely ignore the Administration when it admonished Obama as he went out the door with a, “Don't make others take the medicine for your disease,” (Yu Jianhua, a director general of China's Ministry of Commerce). The opportunity presented by the G-20 meeting to coagulate forces to pressure China is now passed, and the situation has been made worse for America.

This Administration really must take some classes on Effective Negotiating.

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• Pent-up Pressures Will Explode Into A New Age Of America

The Obama Administration nudges Treasury Secretary Timothy Geithner to the front of the class to present Pollyanna statements on subjects apparently not fully understood by the President or many of his advisors. Millions react with little more than frowns of confusion.

The skeptical population is exposed to too many scripts on the economy written in rose-colored ink, read through rose-colored lenses. Listening to Geithner, leads one to wonder if he’s read the news lately. Actually seeing him, leads one to doubt that he cares. Down the road, Bernanke does as he’s told by the bankers who have little concern for 17%+ unemployment. Their multi-billion dollar bonuses are thick insulation from the plight of Middle America. Ben Bernanke pontificates from The Fed, pretending that inflation is a curse, when in fact its advance would erode the assets of his bosses on The Street. Inflation’s impact would also be a reduction of the real debt currently burdening homeowners whose perceptions rendered home ownership a panacea.

Hypocrisy is one those more despicable black arts practiced by too many sitting in positions of influence. Self preservation and self interest too easily twists truth from the podiums of power, and confuses a population unfamiliar with the complexities pretended by economists. Today a whole middle class shudders at the long term prospects of its underwater mortgages further sliding into an abyss, as job continue to evaporate.

The public sustains abuse, particularly when the likes of Geithner, and Bernanke continue the reign of power and influence enjoyed by Greenspan, even after having proven complete and absolute incompetence during the creation of the mess. Of course in fairness to Bernanke and Greenspan, we should note that Geithner additionally demonstrated contaminated morals and meager principles in his tax filings. These three mousequeteers of finance and their friends, along with the misguided Congress of the past 20 years fuelled the indebtedness now burdening an anguished middle America. The crisis is the result of burst housing and debt bubbles, which many perceived correctly and some capitalized on. Bernanke, Geithner and Greenspan were not among them. Bernanke, however, was very capable when he effectively misled Congress on behalf of his boss in the White House and his bosses on The Street, to get the Troubled Asset Relief Program (TARP) passed.

Both businesses and consumers are ignoring Bernanke’s continuation of “cheap debt”. If you’re concerned with job security, you’re not running out borrowing for a bigger home. These days, no one wants more debt, it seems. No one, that is, except Washington.

The lamentable uncertainty afflicting every corner of the United States has permeated its business engines. In Board Rooms across the Nation, Accountants are telling their bosses, “hold tight.” CEOs aren’t economists, or fortunetellers. They gleam information from those they have hired, and those which they have confidence in and trust. From behind closed doors, senior executives sense the choking “uncertainty” and they fear it. The result? Corporate America sits on almost $9 trillion in cash and counting.

Another result? Investors purchase Johnson & Johnson 2.95% ten-year notes, preferred over company shares or even over Treasuries with downward sliding yields. Suddenly junk bonds are more delectable than Treasuries? This is a major shift in perceptions. It is also telling of concern for the economy’s future, mid to long term. It speaks volumes of investor confusion about the economic future. Corporate America and Main Street are uncertain, and Washington daily adds to the confusion.

Corporate America would normally look for any excuse to invest. American business is seeking signs from the country’s leadership that it can “get behind.” That is the biggest failure of the current leadership in Washington. No one in the Capital seems capable of leading the charge to the restoration of confidence, least of all the inexperienced President. Ineptitude, indecision, reckless spending and loading up the future with unfathomable debt, pulls the train of hope into reverse.

A panoply of hapless maladroits appear like balls bouncing down a pinball machine, reacting to daily events with little grasp of the most critical expectations of a tired public. Perceptions are powerful forces moving through the country’s social, economic and political fabrics. While stagnating over economic stimulus package decisions, Washington should give energy to psychological stimulus.

Assertive leadership should take forceful steps to reduce administrative bureaucracies, and streamline all levels of the structures providing services, including simplification of the taxation and the health-care systems. Other actions should include biting into the biggest lie of them all - the Social Security and health-care costs which almost 80 million Baby Boomers have been led to expect as they head into retirement. The expectations represent entitlements of $4 trillion which the U.S. economy will be incapable of supporting. There is even more important action for a leader to take. Inspiration.

It is not the nature of the average American to want coddling by big government. America has long demonstrated a propensity for innovation, hard work, creativity, and entrepreneurship. America has progressed through numerous transformations since its founding. The vast majority of jobs lost in the past five years have been in manufacturing, while the most stable corporate environments have been those in the high technology industries.

We may not know what new chemicals or revolutionary algorithms will trigger new industry sectors, but as the future unfolds, America’s destiny will rest on the stimulation of interaction between people and the stimulation of thinking which will galvanize toward new discoveries. Avenues of communication, through the Internet, as well as physical corridors such as high-speed trains between major urban centers will further stimulate connections and energize creativity. Each of these discoveries, large or small, will then need encouragement on risk taking, and entrepreneurship.

Companies, nascent and mature, will require the opposite of the noise which is today effusing from Washington. Leadership means pointing to clear defined goals and energizing Main Street. It means stating confidence in the bearing – clear heading and clear direction. Once such leadership leaps onto the stage, there is pent-up pressure from the cash stockpiles corporations are sitting on. Just as significant is the pent-up creativity and innovation waiting to commercialize the next technological revolution. The psychological stimulus America hungers for, is inspiration.

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• Bernanke And The Super Fed Say It's Over

The loud, national sigh we heard this week was America gratefully, but suspiciously, acknowledging Ben Bernanke’s claims that, well, it’s over. The Fed Chair is satisfied that the recession is in a turn around mode, or at least stabilizing. Covering his backdoor, he added that America can look forward to a sluggish recovery. Just in case anyone missed it, he added, with all the vigor and compassion of a snail, “Unemployment will stay high for some time. It’s not going to feel like a very strong economy.”

You cannot get more confident than that, can you? With that level of insight you can now go out and make major decisions for your own future, such as, whether or not to buy a house, upgrade your car, perhaps even fly to Europe on the wings of hope. No? This is the kind of foggy thinking and direction we have come to expect from the independent organization that controls America’s most important economic element – America’s money. Did he define an exit strategy for the money being fed into the system? Did he even describe where, or how, that money is doing anyone any good? Not so much.

Bernanke is the same expert who only last year told Congress wonderful fairytales about housing, the markets, and the economy just as the bubble was beginning its implosion. This is the also the Bernanke who, along with Geithner, in a desperate moment of panic made a deal with J.P. Morgan, taking on $30 billion of toxic derivatives from Bear Stearns. Even former Fed Chairman Paul Volcker thought the deal impelled the Fed to, “extend to the very edge of its lawful and implied powers.” What an incredible understatement. The agreement viewable here, was not a loan as claimed, but an outright purchase of an ephemeral mountain of garbage. It was in effect a gift. Did anyone in Congress jump on this breach of law? Of course not. No one would dare question The Fed. Did anyone explain why Lehman was sent over into the abyss, but not Bear? Don’t ask. You don’t want to know. You also won’t be told how it was possible that giant firms including A.I.G., were allowed to gamble with complex derivatives that their own executives didn’t understand. The crumbs leave a trail from Wall Street, all the way to Congress.

You will note that the first signature on the hastily created agreement (linked above) is Tim Geithner’s. You can judge for yourself with a little analysis of Tim’s “signature,” what help such a massive ego (IMHO), will bring to your neighborhood. While you’re at it, also check out Morgan CEO James Dimon’s scribble on the signature line. Let me know what you think he’s all about. Looking at that signature, I doubt anyone really knows, but in the meantime, understand that he has more influence on your life than most of your friends do. These are some of the egos that were so overwhelmed with arrogance, and so confident in self intelligence, that there was nothing that the economic super-bubble would throw at them which couldn’t be handled. As the world economy melted about their ankles, all they could do was panic, and in turn panic everyone around them.

Bernanke, Geithner and their buddies are effectively in charge of taking good care of the largest members of the banking industry. This does not include your pocket book, or your wellbeing. Although Greenspan was vilified, and slapped into anonymity for having completely missed the housing bubble, Bernanke was right there with him promoting almost non-existent interest rates, downplaying obvious dangers of the bloated borrowing, and belittling concerns of inflation. The fact that no one in America was saving a dime since there was no Interest incentive to do so, didn’t seem to matter. In fact, it still does not seem to matter to Bernanke. How much are You getting on your savings account? How’s your borrowing capacity coming along? Getting any good business loans at cheap interest rates lately? Wall Street will make money if you spend, if you churn, but not so much if you build equity in those resources that matter most to You or if you invest in yourself.

When you listen to The Fed Chairman's claim that he can tighten monetary policy, and actuate programs such as selling securities from its portfolio to take cash out of the market, as needed to head off inflationary pressures, .... based on past record, you can now bet against him. Beyond applying common sense to his present prognostications, his track record suggests that he will not be able to reign-in inflationary pressures. You can assume that with the fast expanding money supply, inflation is returning for a visit that may be reminiscent of the late ‘70s. The amounts flying into the system are enormous, and making the assumption that The Fed will be able to “repurchase,” or appreciably retract the process, is to assume the improbable will occur. When Bernanke says things like, “I don’t regret anything we’ve done,” heed the arrogance in the context of the domain which is his sovereignty. Most importantly take everything else he says with a grain of salt, and let's remember that he’s referring to such things as taking taxpayer money/debt for the bailout of institutions that should have been left to flail in the currents of the options available to them in law.

Are we to believe anything Bernanke, or his pal Tim, tell us? Nothing he did or said in the past was either rational, intelligent, or truthful. Alright, so it’s easy to beat up on him. Oh, but wait, he’s still in charge of The Fed. Along with Geithner, he remains in complete control of all things monetary in America. Why? Because neither the President nor Congress have either the knowledge or the backbone to question The Fed and its friends on Wall Street. They certainly don’t have the intellectual or emotional capacity to implement any serious change at the top of the money food chain where it is most needed.

It is unclear what has misfired in the President’s acumen when we hear yesterday from Bernanke that Obama wants to give The Fed new supervisory powers to oversee the financial system. Isn’t that just what you wanted to hear? The same Fed and Bernanke who have been so intuitive, diligent and ingenious over the past decade will be given more power? They don’t report to anyone now, if they’re not in the mood, so how will more influence be of advantage to the overburdened taxpayers, exactly? How about calling for the observance and application of existing laws, or implementing current oversight capabilities before expanding and swelling expensive government bureaucracies? How about appealing to Washington politicians for some demonstration that they understand why taxpayers have elected them? How about demanding a little transparency? Apply the controls available, without inventing new ones, and refrain from creating a Nation dependent on its government (through politicized cronyism) for financial success. Prosperity has no address on that road.

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• Bernanke And The Perpetuating Credit Card Swindle

Banks, and whomever else we blissfully accepted a credit card from, have been charging us, all of us, grossly usurious fees. Even those diligent observers faithfully sending off payments before they were due, have long been abused by capricious credit card issuers.

When the Head of The Fed, Ben Bernanke, gets involved because Congress has been asleep, you know the pressure of discontent from tens of millions of Americans is building beyond a sustainable level of annoyance. Ben Bernanke's comment that the rules, “will establish a new baseline for fairness,” is so fraught with meaning one doesn’t know where to begin its appreciation, … well almost.

This is what he might be saying, “We have been exhorting so much out of your pockets for so long through slight of hand, guilt, ... no, make that fear, that we are led to enact a few rules that will do nothing for you. If we present these new rules with enough jaw-dropping appearance of boldness and empathy for your well-being, you will remain oblivious to the vulgarity with which you have been and will continue to be fouled.

“Don’t get yourselves in a knot over this one-half-of-one-percent-rate thing on the sub-slime, I mean sub-prime interest rate the Fed charges its friends, and quit wondering why you can’t get in on that good stuff. It doesn’t concern you, and has nothing to do with you. Never has, never will. That rate has no correlation to the 14% to 36% interest you pay on your credit cards. Such rates are because you are all really terrible at keeping your books in order, and making all your debt payments on time. If you knew what you were doing, you’d never agree to pay such insane rates. You are so oblivious, you could be getting better rates on your street corner. Idiots. Oh, sorry. I didn’t mean that, although, why are there almost three quarters of a trillion credits cards holding a trillion dollars in debt when there are only 300 million men, women and children in this wonderful country of ours? And, NO, I will not go into an explanation of why our friends, the banks, get almost no interest charged on money we lend them, while their credit stinks, and you have to bail them out. It is much too Byzantine a system to be explained. Even my bosses have no clue.

“Ladies and gentlemen the rules regulating credit are complex, though a little feudal. You’ve understood all along that we, umm, I mean the banks and credit card issuers, could set interest rates and fees at whatever levels they wished. Why so much surprise? We are nevertheless pleased to announce that we will reduce re-pricing, a little, well, we won’t reduce it but we want you to be notified when it will happen. Will we check if lenders tell you ahead of time? No. Will you? Not much, no. We are absolutely certain most of you never pay attention to notices or fine print. How many of you can tell me, right now, how much interest you pay on those ubiquitous and so colorful pieces of plastic? … Clueless.

"Let me make something perfectly clear. We do not owe you debt. Debt is not your right. It is a privilege. You should be grateful we even allow you to borrow from us to lever your lavish lifestyles against your future incomes. Right now we’re not so comfortable with your prospects for continuing those incomes, so we are simply making some adjustments. Tweaking the system a little. We also don’t need to see any demonstration parades coming down Avenue of The Americas whining about how you’re hard-done-by, or chanting ‘ban the fed’ or shaking signs with ‘help we’re broke.’

"We are gleefully aware of your lack of familiarity with the term, Saving. It is a term in the English language that refers to economizing or conserving money for the future. Who do you think keeps count? I do. Why? Because tracking details of your habits with microscopic attention enables us to accurately time adjustments in the system. I don’t mean adjustment in prime rates, I mean the establishment of regulations that will instill in your minds an impression of our all-knowing prescriptions for everything financial that ails you.

"This is why we will allow companies to raise interest rates only on new cards and purchases, not on existing balances. I know that you think the interest on the old stuff’s already been jacked through the roof, so what difference can this possibly make? True, but when you add to this the restriction on allocation of payments to account balances with lower interest rates, and reducing cross-card-credit-contamination, now we’re talking vast implications on the credit system. Huge. This is big for you guys. Really. Well, maybe. Hey, we’re doing the best we can here at the Fed, and things are tough everywhere. No one wants to give an inch. That is why we won’t be putting caps on interest rate levels charged by card issuers. Sorry. Oh, and by the way, because we just cannot upset our friends, these new rules will not go into effect for at least a year and half. You know how things are. Congress is so laborious. Each one of those crapulous crackpots wants a piece of the pie before agreeing to anything. They think pork-barreling is their right, … things like that.

“In conclusion, I know deep down in my heart that all of you feel a very strong and emotional commitment to repaying your obligations. We are thrilled to know that you will be making your payments on time and that you will atone for your sins, … umm, that you will extinguish your debt, the principal and the interest. Every penny. Particularly the interest. Yes, make sure you repay the interest. Perhaps I shouldn’t harp on the principal so much.

“We will lend you more as you need it, and the presses, the paper, the ink are churning 24/7 to keep up. Now I must go have lunch with your new leader and explain what I’m doing, again. I wish these guys would just leave me alone, their eyes just glaze over when I talk to them. Merry Christmas, and happy spending. It’s good for the economy.”

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• OBAMA GIVES BERNANKE VOTE OF CONFIDENCE

In the reality of continuing negative economic news, American taxpayers are looking for signs of relief. With mortgages sliding under water, automobiles getting yanked out of garages and taken back to lenders, food costs becoming a sobering family burden, and with commuting to work becoming a deep breathing exercise as fuel gage movement becomes a source of anxiety, America is anxiously seeking leadership out of its mess. Obama’s thumbs-up on Bernanke is a depressing sign.

Bernanke has shown no capacity to forge a path different from the one Greenspan followed for a whole generation under four presidents. The restored economic health of the country is the principal concern of all voters. The Fed has implemented decisions, and has been supportive of economic policies that brought America its housing bubble, as well as unfathomable National and personal debt levels. Fed policy led a majority to view their homes as repositories of wealth. Homes became piggy banks, and to make things worse, the lack of regulations or restrictions on lenders turned trillions of dollars worth of real estate into a Wild West Show.

America not only yearns for, but badly needs new, knowledgeable and judicious leadership. The next President doesn’t have to be prescient, but should at least demonstrate some grasp of economics enough to pick the best of the brains around him or her. Obama directing a vote of confidence toward Bernanke disturbingly demonstrates a complete lack of familiarity with the complexities of the beast that America needs taming. His economic advisors should all be replaced, and he should close himself off in a room somewhere, and spend some serious time getting educated. It doesn’t matter that McCain isn’t any more economically literate since America isn’t looking to him for change or innovation. If Obama wants to inhabit the White House, he needs to brush up on the source of America’s most critical concern.

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• WHERE IS THE ECONOMIC LEADERSHIP?

Ben Bernanke delivered a bleak message to Congress today with the usual waffling and back door escapes on any firm statements related to the Nation’s economic future, even its near term prospects. Although, in fairness, we should note that with as much aplomb as he could magnetize from Greenspan’s past performances in front of Congress, he emphatically stated, “accurately assessing and appropriately balancing the risks to the outlook for growth and inflation is a significant challenge for monetary policy makers.” No kidding? How long did his staff stay up to come up with such vapid pronouncements?

How does someone with so little spine get to such position of power and influence? Even as a front man for back room boys he comes off badly. At least when Greenspan double-talked his way through the halls of Congress we could admire the extent of his obfuscating turn of phrase. He said nothing, but he said it with a nonchalance, even a sang-froid that made you smile in wonderment questioning if this guy was human.

America looks for leadership out of the mess it finds itself in, and the best the Fed Chief can do is warn Congress against doing anything about the futures markets, but he does tell lawmakers to tackle the uncertainty in the housing market. So now, Congress, as confused as ever, will head to the commissary for a free meal on the taxpayers, and mumble to itself over the perplexing state of affairs with no answers in sight, and no one to turn to for guidance.

Inflation continues to advance, although to what degree is unclear since it very much depends on what one measures, but the price index is expected to exceed 4%. The food staples are seeing much higher increases however, but since non-food finished goods and services are in the calculation mix, the numbers that have the most impact on the average family are distorted.

The millions of small businesses at the core of the economy are being affected by the credit crunch, but their plight is ignored while they watch major Wall Street firms getting bailed out. Have no fear though, the SEC is actively investigating the subprime meltdown, stock manipulations and short sales, as well as false rumors tainting brokerages and hedge funds. …And heads will roll. OK, well, maybe not. Effective scapegoating is an extremely difficult art to practice. Where is Eliot Spitzer when the Nation needs him?

The recent blame for the housing market deterioration placed on the hapless borrowers who indebted themselves beyond their capacities has not been very subtle. Policy makers’ only planned action is to set restrictions preventing borrowing by the great unwashed. Credit quality standards will be raised. Oh, joy. Is Congress asking the guys who ran those disasters called Fannie Mae and Freddie Mac into bailout territory to return their million dollar bonuses? Congress is mute. Is anyone on The Hill or the White House raising an eyebrow over the usurious interest rates being charged by banks and credit card companies to a majority of clients? Bernanke’s tarot cards predict a late fall interest rate increase to 2.25%, which is a number as foreign to most borrowing taxpayers as the number of stars in the sky.

We cannot expect superhuman talent to accurately read crystal balls, and obviously economics is not a science, but leadership imbued with some common sense is not too much to expect from Washington and its expensive hired help. Leadership, plus some effectively placed oversight.

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