Federal Reserve Asshats Rub Themselves Raw For Their Work While the Economy Crumbles
taken by my BlackBerry at 6 in the morning
The New York Times has confirmed what most of us already knew. 6 years ago, top Fed officials were busy rubbing themselves for a job well done as the economy was on the brink of collapse. Who thought then that we would be where we are now?
Well a lot of people did. I didn't read Financial Armageddon until 2008 when the brink had long been crossed but Panzner wasn't the only one who saw this coming. Unfortunately, the people who saw this coming were not in a position to stop it. Those who were spent their time congratulating themselves when they should have been addressing the situation for what it was - a clusterfuck waiting to happen.
As the housing bubble entered its waning hours in 2006, top Federal Reserve officials marveled at the desperate antics of home builders seeking to lure buyers.
The officials laughed about the cars that builders were offering as signing bonuses, and about efforts to make empty homes look occupied. They joked about one builder who said that inventory was “rising through the roof.”
Our favorite son-of-an-elite-dickhead Timmy Geithner was busy stroking Greenspan's balls just before the shit hit the proverbial fan:
“We think the fundamentals of the expansion going forward still look good,” Timothy F. Geithner, then president of the Federal Reserve Bank of New York, told his colleagues when they gathered in Washington in December 2006.
Some officials, including Susan Bies, a Fed governor, suggested that a housing downturn actually could bolster the economy by redirecting money to other kinds of investments.
And there was general acclaim for Alan Greenspan, who stepped down as chairman at the beginning of the year, for presiding over one of the longest economic expansions in the nation’s history. Mr. Geithner suggested that Mr. Greenspan’s greatness still was not fully appreciated, an opinion now held by a much smaller number of people.
The NYT goes on to trash above son-of-an-elite-dickhead and the rest of the crew charged with fixing and/or manipulating our economy, a task that is apparently too hard for us, as a country, to understand so we essentially hire these morons to do it for us:
The transcripts of the 2006 meetings, released after a standard five-year delay, clearly show some of the nation’s pre-eminent economic minds did not fully understand the basic mechanics of the economy that they were charged with shepherding. The problem was not a lack of information; it was a lack of comprehension, born in part of their deep confidence in economic forecasting models that turned out to be broken.
NOW. If you aren't outraged yet, kindly fuck off.
Of course no one wants to read the entirety of these statements but here's a tidbit that reveals how lame, awkward and completely disconnected these fools are:
MR. FERGUSON. Thank you very much. I will do what is right. [Laughter] Let me open the floor now for nominations for a Chairman and a Vice Chairman of this Committee.
CHAIRMAN GREENSPAN. For the day.
MR. FERGUSON. Now, you’ll see what happens. [Laughter] Don’t presume anything. Governor Kohn.
MR. KOHN. I move that the Committee elect Alan Greenspan as its Chairman to serve for the remainder of today and Timothy Geithner as its Vice Chairman to serve until the election of a successor at the first regularly scheduled meeting of 2007.
MR. FERGUSON. Thank you very much. Is there a second?
MR. FERGUSON. Fine. Is there any discussion? Is there any objection? Hearing none, it
is unanimous. Congratulations. [Laughter] Before democracy moves too quickly, [laughter] we also have to move to plan for the election of a new Chairman. So let me, again, turn to Governor Kohn.
Jesus. Is it really some kind of joke? These assholes are about to get punched in the face with the worst crisis any of them have ever seen (including that Bernanke jackass with the fetish for the Great Depression) and they're giggling amongst themselves about what a chore the job is.
Or here is a statement from then Boston Fed President Cathy Minehan (the wife of former Fed vice chairman/NY Fed president and current Goldman Sachs partner and managing director E. Gerald Corrigan - shock!), from the June 28-29, 2006 meeting:
MS. MINEHAN. It’s impossible to see these things beforehand, but everyone is nervous about the idea of crowded trades—what havoc they could cause. Clearly, Iceland saw a bit of it.
It’s probably too much to ask to gain a sense of what could possibly be a problem here, other than that we need to be conscious that problems could be out there.
OH! Let's talk about Iceland while we're talking about Federal Reserve asshats who couldn't buy a clue if they had a printing press in their basement to print up a $1 bill to purchase one. Wasn't the year these transcripts come from - 2006 - the same year that former Fed governor and perpetual banking asshole consultant Frederic Mishkin wrote his "Financial Stability In Iceland" paper that he later rewrote on his resume to "Financial INStability In Iceland"? Just asking.
The comforting part? They look forward to determining how many of our dollars will buy how much stuff about as much as most people look forward to a root canal. Their words, not mine.
MR. KOHN. Thank you, Mr. Chairman. I distributed a memo earlier this week, a report from our communication with you about how you would like to proceed going forward. The main thing I’d like to do is hear whether there’s any reaction to that report. Very tentatively, our idea was to cover goals, broad strategies, and philosophy in August. A number of people thought it would be a good idea to start with that. It might provide a framework for further consideration. Then we would move on to the numerical definition of price stability in our two-day meeting in October, which Debbie will talk about in a few minutes. Most people wanted to start with the numerical definition of price stability, both because it would influence a lot of what else would happen and because it reflects on the discussion we’ve just been having. It’s relevant to the way we approach our monetary policy right now and in the immediate future. It will certainly influence some of the discussion we have about what the announcement should say. So a number of reasons were given for starting with that, and we proposed to do it at the October meeting. Does anybody have any reactions? Cathy.
MS. MINEHAN. I certainly think that at the August discussion we need to settle on the policy, the underlying goals, and all of that. I, for one, am looking forward to an October discussion of inflation targeting about as much as I would be looking forward to a root canal. [Laughter] I would be happy to put it off for a standard two-day meeting in January. I know I’m in a minority on this one, but I just wanted to register how much I’m looking forward to this. [Laughter]
FUCK, I know, it's really hard to decide how deep you're going to financially assrape us that quarter, Cathy, I'm so grateful you suffered through that for our sake. I don't even want to think about how much $1 got me in 2006 compared to now.
Check out the explanation then NY Fed Markets head Dino Kos - who bailed in 2006 just before the whole thing blew up - gives for the explosion of exotic credit instruments, which were big in 2006 if you don't recall:
CHAIRMAN BERNANKE. Governor Bies.
MS. BIES. Thank you, Mr. Chairman. Dino, regarding the last graph you showed, leveraged-loan growth, especially in the share held outside banks, has been happening even though, as you show, high-yield bond issuance really has been running in a fairly normal range. What is making these loan deals so much more attractive to investors?
MR. KOS. The cynic in me would say that a lot of money has been allocated into the credit space. A lot of money has gone into things like credit-default and credit-derivative products. Investors want exposure to credit to enhance yield. They are getting that exposure more and more through derivatives. You need supply to feed those structures, and so, as it were, demand to some degree is creating the supply. That’s one version of events. A second version is that the covenants are easier to negotiate and somewhat easier in general or less stringent than what you might get in the bond market. Third, it might just be cheaper to go out and structure these types of borrowings with a small group of lenders as opposed to going out and actually marketing a bond issue.
2006 is the tip of the iceberg, people, wait until next year when we get to see 2007.