someone has to make it rain...
I can't believe another year has gone by and have to say this one was just as exciting as the last except minus a few ugly scandals and some hot FOMC action but hey, they can't all be 2008 right?
Here's last year's wrap up if you missed it and don't worry, 2011 promises to be just as exciting if not more. We're still waiting patiently for CRE to tank and eventually silver is going to have to come out in the wash, which we guess will happen some time after March. I was a little sparse in my normal being-up-the-Fed's-ass activities this year as I lost both a mother and a grandmother within 7 months, retired from my job and moved across the country from San Francisco to DC so if I missed something, forgive me.
Anyway, I know you've all been waiting anxiously for this so here it goes.
In January, we kicked things off waiting for Bernanke to get confirmed for a second term and boy did that get ugly. St Louis Fed President James Bullard blasted out of the gate and took the Quote of the Year award not even a month into it with "the Fed is a firefighter, not an arsonist" while he whined about the Fed being the scapegoat. TIME's Michael Grunwald, who wrote Ben Bernanke's Man of the Year piece in 2009, insinuated that I was a right-leaning hawk but forever credited me in the mainstream media for the term Zimbabwe Ben, which I am eternally grateful for. Bailout watchdog Neil Barofsky started two inquiries into the AIG mess but everyone is still employed at the NY Fed so, as suspected, nothing came of them. The Fed's advanced money laundering scheme netted the Treasury a whole $45 billion in "profit" for the year, something we didn't hear the end of when we were busy lighting our pitchforks. The Fed actually talked about selling some of the crap on its balance sheet but, uh, we all know how that turned out.
In February, Richmond Fed got cussed out by Zero Hedge but turns out he screwed up a few details so it was merely a mild ass-whooping as opposed to a full-on bitchslap. The Fed came out with its latest financial accounting manual or, as JDA likes to call it, a "A Guide to Cooking the Books for Central Banks" - gee, it must be nice to write your own accounting standards! Bernanke came out and tried to say there was really no net impact on the taxpayer when it comes to his Fed's shenanigans but then employers got hit with an average 27.5% increase in unemployment taxes and that whole lie was blown to bits. Whoops. In one of my favorite posts of all time - Federal Reserve System Presidents: "This is Your Ass!" - we watched Fed presidents scramble to cash in all the favors they could ahead of financial reform and I have to say it was better than chocolate but not as good as sex. Of course it ended up working out in their favor even if they did do a lot of fighting amongst themselves during the whole thing.
By March, Fed vice chair Donald Kohn was out and the search for a replacement was on. Save the Fed's Ass 2010 was in full swing and they were both trying to get along and trying to convince Congress not to pull the plug. The Fed got to keep TBTF and Chris Dodd left them alone. Then DISASTER and my worst nightmare: Obama tapped Janet Yellen as the next Fed vice chair. Then Chris Dodd realized he could tap the Fed's secret backdoor and boy did he. The FOIA war raged on, with a Manhattan appeals court ruling the Fed had to reveal recipients of its $2 trillion in emergency loans during the 2008 crisis but in the end the Fed won that. Until Dodd-Frank said otherwise but that comes later in the year.
In April, we got the Maiden Lane details we've been waiting for. Hey buddy, what are those? They're zeros. They tried to come out with a new $100 bill but we know that by the end of the year, its release had been delayed due to printing press problems. It's a beautiful thing.
Then May came and audit the Fed was trendy again but that died pretty quickly and as we've always said, it's hard to audit an entity that gets to come up with its own rules. We found out Janet Yellen is filthy rich and Ben Bernanke is broke but that's nothing new, he lost 29% on his investments in 2009 and hasn't done so great with ours so we were not surprised. Oh and it wasn't hard to blame the Fed for JP Morgan's silver manipulation (hint: it involves Bear Stearns). The Fed's two Chucks later went on record saying they blamed Europe for all our trouble.
In June, Taco Bell petitioned the Fed to print more $2 bills so folks could buy their $2 meal deals but gee, the Fed doesn't actually print money, that's the Bureau of Engraving and Printing. Besides, what about tax? And please don't encourage them. The Fed opened up the spigot so the failing Eurozone could get all the dollars they needed but NY Fed's Brian Sack assured us this wouldn't be a permanent sort of thing (as of today, they're still wide open). And Fed audits came up again but by then I was bored with the entire idea and had given up completely. Oh and someone at the Fed must have lost the financial accounting manual but thankfully I had an extra copy and they found me (you're welcome).
July started with Richmond Fed economist Kartik Athreya pissing everyone off by implying only those with PhDs should be allowed to talk about economic matters. We also found out (shock) that Tim Geithner and Ben Bernanke lied when they told us the crap Bear Stearns assets they made us pick up were investment-grade. They weren't. Dallas Fed President Richard Fisher was hard at work trying to overthrow Richmond Fed's Jeffrey Lacker as JDA's #1 Fedhead and said that he was pretty much done with all this bullshit. Things got really interesting when a bunch of former Fed officials started railing on the current Fed, which got JDA pretty excited (doesn't take much). The Senate Banking Committee confirmed Janet Yellen as Fed vice chair and it's pretty much been downhill since.
By August, Lacker officially got dethroned by Fisher as my #1 Fed President and Fisher remains a safe #1 to this day. To Lacker's credit, I still think he has the best hair (that should be some small consolation I hope). I digress. The big bad Fed started foreclosing on folks and of course the media screwed it up and called it "the government" but we all know that's BS so we'll let it go. The FOMC decided to invest proceeds from previous bad investments er bailouts in new bailouts as a precursor to their big $600 billion buy announcement, which would come in November. They kicked off that little stunt with a piss poor $2.55 billion purchase. Oh and let's not forget former Fed governor and current Columbia professor Frederic Mishkin exposing himself as a big fat fraud.
September came and Bernanke was feeling a little Lehman regret (aren't we all). And the NY Fed passed off its AIG liability to - who else! - the taxpayer.
By October, NY Fed President William Dudley was wishing inflation would run a little hotter and his head of market ops was right there calling for more, more, more. The new (UGLY) $100 bill was delayed because they broke the press or something and that made for some good laughs and a sigh of relief because the damn thing was hideous anyway. No new bills for Timmy, sorry! But wait, is the Fed insolvent?
Well crap, they better not be because in November, they blew everyone's minds (yeah right) by announcing a new round of fresh money in the form of $600 billion in Treasury purchases. Monetization? Sure! Oh and the Fed surpassed China as our greatest creditor but hey, that should work out OK right? We wondered out loud if the Fed would bail out the muni market, maybe they're already working on it.
And that brings us to December, when the Dirty Fed tried to steal Christmas (you can guess how that turned out) and WC Varones wrote a very polite letter to Kansas City Fed President Thomas Hoenig explaining his feelings on the First Amendment. Bernanke and I had a birthday on the same day once again (happens every year) except mine was exponentially better. He went on 60 Minutes (AGAIN!) and said the Fed isn't printing money but sort of somewhat technically they are and it just so happens that contradicts his last 60 Minutes statement which said they are printing money. I made Stop Bernanke bumper stickers because frankly I'm sick of it and the man needs to be stopped. Oh and let's not forget this new transparent Fed, who were brave enough to try their first live streaming webcast of a meeting. 3000 people logged on to watch Fed Governor Daniel Tarullo spend a lot of time trying to look like a) he was reading the book and b) not picking his nose. Awesome.
It's been awful and fantastic (sometimes at once) and all of it so much fun to watch.
Thanks all of you for riding along and see you next year.