Fed Chairman, Ben Bernanke, appeared on 60 Minutes yesterday and assured the nation that the Recession should be over at the end of this year. Might his glasses be rose-colored? It appears that his confidence didn't quell the every-man and like Geithner before him, his intelligence and manner, landed like a thud. Of course I wouldn't be myself if I didn't mention the string of spit that stubbornly remained prominent in the closeups. Didn't the CBS cameraman notice this? Bernanke had dry lips and spittle, he needed to lick his lips and then follow-up with some lip balm. I probably should not have watched his mouth so intently but I literally was hanging onto every word he said. I wanted to fully understand the mechanisms of the Fed and its Bailout Programs. Alas, I wound up with more questions than answers.
For instance, the segment stated that the Fed loaned AIG that first $85,000,000,000. I thought that came out of the TARP funds authorized by Congress. So when we say that AIG has already received $160,000,000,000 in bailout funds, does this include the billions that came directly from the Fed? The Federal Reserve is not spending taxpayer $$ so how much is the taxpayer truly on the hook for with respect to AIG? Also, the segment did not make it clear that the Federal Reserve is a semi-private bank, it did not explain how the Federal Reserve raises the capital that it lends, and didn't explain how its authority to print money is regulated and lastly it did not fully eplain whether the Treasury has a say in all of this.
As far as I understood, the Treasury and the Federal Reserve had their own bailout programs separate and distinct from the TARP funds. Why would I expect 60 Minutes to clear that up for me? As it is not common practice for the sitting Fed Chairman to grant interviews, it was a noble act. Unfortunately, we are still going to continue to crash and burn as far as employment, housing unrest and financial stability are concerned. Some time in the next year, the death spiral is supposed to slow and then we will be on to the next task at hand, the hard road of recovery.
Showing posts with label Ben Bernanke. Show all posts
Showing posts with label Ben Bernanke. Show all posts
Monday, March 16, 2009
Thursday, December 11, 2008
"God Put a Smile upon my Face"
Well, my husband will live too see another day at his job. The layoffs went down today as scheduled but thankfully, it was not his turn, today. We are now on a month by month employment watch. We are way too cynical by now to believe that any job in the private sector has a shred of job security.
There aren't any guarantees since no one knows what direction any company should go. Should it retrench to its core business units and tread water or continue promising new innovations that expand its market presence, position it for future growth and produces new revenue even though it requires a greater investment in operating costs? Retrenching could sacrifice the future but new innovations could sacrifice today's bottom line that has to remain positive to survive. Whatever the case, employment reductions have to take place and unfortunately will continue to take place if the economy does not turn around soon.
Does anyone see a better future in 2009? Right now things do not look good which is why it is imperative, more than ever, to quit the bailout mentality and let Capitalism fix itself; let the companies that are swifter, better positioned, agile and innovative take over the space left by the struggling behemoths. Why are we so afraid of letting the market decide the fate of a company? New companies will rise and grow to meet the challenges of a global economy thereby increasing employment opportunities for all. The government can augment job creation with new infrastructure projects and alternative energy initiatives.
We cannot forget the fundamentals of business; a company is only as strong as its balance sheet and we shouldn't get hoodwinked into scare tactics because it is a venerable brand, other exalted brands have come and gone. Business will survive and revive if we allow it to follow the natural life cycle of capitalism for there is always another company waiting in the wings to take over.
There aren't any guarantees since no one knows what direction any company should go. Should it retrench to its core business units and tread water or continue promising new innovations that expand its market presence, position it for future growth and produces new revenue even though it requires a greater investment in operating costs? Retrenching could sacrifice the future but new innovations could sacrifice today's bottom line that has to remain positive to survive. Whatever the case, employment reductions have to take place and unfortunately will continue to take place if the economy does not turn around soon.
Does anyone see a better future in 2009? Right now things do not look good which is why it is imperative, more than ever, to quit the bailout mentality and let Capitalism fix itself; let the companies that are swifter, better positioned, agile and innovative take over the space left by the struggling behemoths. Why are we so afraid of letting the market decide the fate of a company? New companies will rise and grow to meet the challenges of a global economy thereby increasing employment opportunities for all. The government can augment job creation with new infrastructure projects and alternative energy initiatives.
We cannot forget the fundamentals of business; a company is only as strong as its balance sheet and we shouldn't get hoodwinked into scare tactics because it is a venerable brand, other exalted brands have come and gone. Business will survive and revive if we allow it to follow the natural life cycle of capitalism for there is always another company waiting in the wings to take over.
Tuesday, November 11, 2008
The Bernanke-Paulson Coincidenza
What do the Chairman of the Federal Reserve and the Treasury Secretary really have up their sleeves. The slow trickle of truth unfolds. The Federal Reserve waived the rules today to allow American Express to become a bank so that they can have easy access to Federal Reserve funds whenever they want to. Goldman Sachs became a bank. Morgan Stanley became a bankl We really didn't ask why because Bernanke and Paulson have convinced us that it had to be so; we had to save our financial institutions.
In addition, Treasury Secretary Paulson single-handedly changed tax law section 382 allowing companies to assume the debt of acquisitions thus off-setting their gains and significantly reducing their taxes. This loophole was closed in 1986 by Congress precisely to prevent companies from misusing this statute to circumvent their tax liability. Perhaps the treasury saw the benefit of giving good companies incentive to buy up losing companies but they don't have the authority to change tax law. Wells Fargo used this statute the very day it was unhinged to snap up Wachovia out of Citibank's grip successfully reducing its tax liability by $25,000,000,000.
Amidst off this, Paulson and Bernanke came begging congress for a $700,000,000,000 bailout package to rescue our financial institutions. Basically this gave them a multi-trillion dollar pot of funds to dole out to whomever they want to and now they don't want to give us all of the details for any of it. These Kings of the Universe have plundered the taxpayer, plundered the Federal Reserve and plundered the Treasury with virtually no oversight.
The two highest financial institutions in America have been hijacked by Bernanke and Paulson for in the process of saving our financial institutions, they have undone all of their own regulations. This can't be any accident. This doesn't look good.
In addition, Treasury Secretary Paulson single-handedly changed tax law section 382 allowing companies to assume the debt of acquisitions thus off-setting their gains and significantly reducing their taxes. This loophole was closed in 1986 by Congress precisely to prevent companies from misusing this statute to circumvent their tax liability. Perhaps the treasury saw the benefit of giving good companies incentive to buy up losing companies but they don't have the authority to change tax law. Wells Fargo used this statute the very day it was unhinged to snap up Wachovia out of Citibank's grip successfully reducing its tax liability by $25,000,000,000.
Amidst off this, Paulson and Bernanke came begging congress for a $700,000,000,000 bailout package to rescue our financial institutions. Basically this gave them a multi-trillion dollar pot of funds to dole out to whomever they want to and now they don't want to give us all of the details for any of it. These Kings of the Universe have plundered the taxpayer, plundered the Federal Reserve and plundered the Treasury with virtually no oversight.
The two highest financial institutions in America have been hijacked by Bernanke and Paulson for in the process of saving our financial institutions, they have undone all of their own regulations. This can't be any accident. This doesn't look good.
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