Great Hatchet Job on Benjamin Bernanke

From The Black Hats Strike Back (Bernanke) - The Market Ticker:

I made most of these points in April of 2008 - but of course you won't pay attention to anyone who gets it right, yes Ben? Nor will you answer those critics, except through Goebbels-style repetition of bald-faced lies.

Or should you read my August 2008 missive in which I cited specifics:

Just like you said 'subprime is contained'? (3/07)

Or 'we do not expect spillovers from the subprime markets to the rest of the economy or to the financial system'? (5/07)

Or 'monetary and fiscal policies are in train that should support a return to growth in the second half of this year'? (4/08)

Or 'our baseline forecast is for moderating inflation'? (7/06)

Or '.... expect energy and other commodity prices to flatten out'? (7/07, right before the insane run in these prices began!)

Or if you prefer, you can read about them right here:

Chairman Bernanke before the Congressional Joint Economic Committee on March 28th 2007, just a few days later: 'Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear. The ongoing tightening of lending standards, although an appropriate market response, will reduce somewhat the effective demand for housing, and foreclosed properties will add to the inventories of unsold homes. At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.'

Chairman Bernanke at the Federal Reserve Bank of Chicago’s 43rd Annual Conference on Bank Structure and Competition, May 17th, 2007: 'We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.'

Chairman Ben S. Bernanke speech to the 2007 International Monetary Conference, Cape Town, South Africa, June 5th: 'The troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system.'

Chairman Bernanke to Committee on Banking, Housing, and Urban Affairs, U.S. Senate, April 3rd, 2008: 'Clearly, the U.S. economy is going through a very difficult period. But among the great strengths of our economy is its ability to adapt and to respond to diverse challenges. Much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year.'

Is it possible to be more wrong Mr. Bernanke? I think not.

Of course, the ultimate goal of all our efforts is to restore and sustain economic prosperity. To support economic growth, the Fed has cut interest rates aggressively and provided further stimulus through lending and asset-purchase programs."

Please read the entire article. Our "crisis" is so simple - too many bad loans brought on by artificially low interest rates created either by the Federal Reserve or implicit and explicit government guarantees (which mask risk and drive rates lower).

I highly recommend Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. The book does a terrific job of explaining how artificially low interest rates lead to what Austrian Economists call "The Business Cycle" (but which should more accurately be called "The Banking Cycle"). It's a pretty easy read and you'll understand why it's nothing short of disastrous to have a central authority set interest rates.

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