Bernanke Claims Financial Markets Are (Just About) Normal Now
Which normal is this, the normal from before or the new one? Could I please get a clarification on that? Because from where I am standing this is most certainly not normal.
If this is normal, where the hell is everyone? Certainly not in the S&P nor anywhere else we've checked lately. Let's face it, most markets have turned into an adult arcade with the Fed jerking off HFT robots through a hole in the booth wall. Is that normal?
If you are Ben Bernanke it is.
Let's pretend Ben Bernanke is a doctor and his patient, Mrs Economy, came down with a terminal illness in March of 2008. Her symptoms were obvious for years before that but each time she came to visit Dr Bernanke to find out what was wrong, he ran a battery of tests and declared he just didn't know what was wrong. Finally Mrs Economy presents to the Emergency Room in septic shock and practically dies right there on the gurney. But not to worry, Dr Bernanke tried some experimental treatments not approved by the FDA, pumped her full of chemicals and - WOW! - saved her! Now the treatment actually put her into a coma and she's been on life support ever since but don't let that ventilator fool you, Mrs Economy is all better because she lived and that's what matters.
You with me?
“Although financial markets are for the most part functioning normally now, a concerted policy effort has so far not produced an economic recovery of sufficient vigor to significantly reduce the high level of unemployment,” Bernanke said in his speech.
New regulation should reduce the risk of future financial crises, he said, while calling for more research on asset price bubbles, market liquidity and decision-making during panics.
More research? Please, we don't need more Fed senior economists putting their big brains together to know that asset bubbles are A) inevitable and B) encouraged. Nor do we need any of the bastards to come up with a study that determines we are in the midst of attempting to blow the biggest one ever right now, that's sort of the game plan and surely Ben Bernanke knows as much.
The only regulation that could reduce (or eliminate) the risk of future financial crises would be one that declares the Federal Reserve unconstitutional, strips them of the ability to manipulate the money supply and leaves the Fed with only check processing and nothing more. That means dismantling NY Fed's open market operations (oooh sorry, U.S. government, you're going to have to find a new greater fool to pimp your debt out to), handing bank supervision off to an OCC/OTS hybrid agency completely independent from the Fed and of course FDIC (that's called segregation of duties, look it up) and canceling the FOMC. Screw it, they haven't been doing their jobs very well lately, if they were employees of a corporation they'd have already been fired.
Someone needs to teach Dr Bernanke a lesson in First Do No Harm. Then we can go back to arguing about whether or not any of this is "normal".