Bernanke’s Bear Baiting
“Bear baiting is a blood sport involving the
worrying or tormenting (baiting) of bears.” – Wikipedia
Bear baiting was a favorite of both Henry VIII and Elizabeth I. They even built a specialized pit, the Bear Garden, at Bankside in London that could seat up to 1,000 bettors. The bear was attached to a post in the pit and several English bulldogs were tossed in to carry out the “worrying” cited above.
We doubt that Ben Bernanke came to the job of Chairman of the Federal Reserve with much experience in this peculiar form of Elizabethan entertainment. He had an introduction to “worrying the bear” during his June 19th press conference when he noted that with the emerging strength in the job market it might be “appropriate to moderate the monthly pace of purchases later this year”.
The mere mention of a potential reduction in the monthly $85 billion Quantitative Easing program caught the bear by surprise. The reaction was instant and formidable with bonds and equities selling off quickly and globally against a 100bps rise in long rates.
Then the July 10th release of the mid-June FOMC minutes revealed that half (our interpretation of “several”) of the committee members supported a tapering of (QE) soon inspiring anther sell-off. In a speech that afternoon, Bernanke abandoned the pit entirely at which point the bear went back to sleep and the market has continued to rally.
Not a very impressive performance. Elizabeth I would have been appalled.
We now know that the Chairman’s ability to take a tough stand in the face of negative market reaction does not matter. We know this because President Obama assured the nation and a no doubt surprised Fed Chairman that he had “already stayed on a lot longer than he wanted or was supposed to.” It is not clear why the President choose to humiliate Bernanke in this way on a public TV broadcast. Bernanke has clearly been one of the most accommodative and politically pliable Fed Chairmen in history (with the possible exception of Jimmy Carter’s choice of G. William Miller).
So the bear baiting will be left to someone else. Who?
This is a key appointment because the new Chairman will be confronted by a bloated $3.6 trillion balance sheet and more than $2 trillion in excess reserves sloshing around the banking system – a 200-fold increase from 2008. Although almost no one talks about it this way, this situation is a huge problem. According to some estimates, the Fed had $192 billion in paper losses on its portfolio since June. Climbing down from this cliff will not be easy.
The technical execution is trivial. Stop buying bonds and eventually start selling them. This will drain the excess money out of the system and market interest rates will rise substantially. But the fragility of equity and bond markets in June shows how rapid the asset value compression might be once the change in policy becomes clear. The Fed has been pumping up the markets for so long it is like a narcotic to an addict. Take away the drug permanently and…well, just picture Lindsay Lohan reacting to the judge sending her, yet again, to rehab.
So who has the intestinal fortitude to take this down? Think of someone who is tenacious, brilliant, with an impressively thick skin and rapier-like wit. We need someone easily able to sit amidst a firestorm of controversy without flinching.
The candidates profiled in the press are current Fed Vice-Chair, Janet Yellen, Larry Summers and Don Kohn. In an odd Forrest Gump-like experience, I have actually met all three over the years.
Out of this limited choice only Larry Summers meets our notion of what is needed. He is a brilliant economist with sufficient experience in the markets to know how Fed policies will be absorbed at gut-level. He has run large complex politically difficult organizations (were thinking of Harvard here). As Clinton’s Treasury Secretary, he saw up close how a balanced budget combined with a limited government and a reasonable tax regime can produce broad and consistent growth.
The only negative associated with Summers in our view was the failed stimulus of 2009. Recent accounts of that chaotic period appear to show him as a moderating voice of reason arguing that a stimulus focused on building physical infrastructure would have the better multiplier. We now know, of course, that the vast majority of the $800 billion went into service sector jobs with almost no knock-on effect.
What are Summers’ chances of getting the job? We guess less than 50 percent. Selecting Larry Summers is a real challenge for the Obama administration where ideology has so frequently trumped common sense and produced generally unsuccessful economic policies. People will point to his controversial speech in 2005, in which he speculated about the scarcity of women at advanced levels in the hard sciences. The resultant uproar pushed him out of his position at Harvard.
He is also up against Janet Yellen who has a rich academic biography, a history of behind the scenes influence at critical moments and a successful track record managing the San Francisco Fed. According to the Wall Street Journal, Yellen has the best forecasting record among all Fed staffers. Last, Vice-Chair Yellen has one clear and obvious advantage that Larry Summers could never equal.
End Notes
“The Puritan hated bear baiting, not because it gave pain to the bear, but because it gave pleasure to the spectators.” Thomas Babington Macaulay (~1830)
Despite the fact that bear baiting was outlawed in 1835, you will still find the terms `post’, `pit’ and `bear’ in common usage at certain venues in lower Manhattan.
I was suggested this website by means of my cousin. I’m not positive whether or not this
post is written by him as no one else understand such designated
approximately my difficulty. You are incredible!
Thanks!
I agree with your point of view, your article has given me a lot of help and benefited me a lot. Thanks. Hope you continue to write such excellent articles.
allergy pills non drowsy best cold medicine without antihistamine allergy medications prescription list
sleep prescription online buy modafinil 100mg sale
prednisone price buy prednisone 5mg for sale
medication options for heartburn buy roxithromycin 150 mg
best acne treatment teenage guys buy aczone pills for sale adult acne medication pill
best over the counter acid reflux medicine allopurinol generic
buy isotretinoin sale generic accutane 20mg purchase isotretinoin sale
amoxicillin for sale order amoxicillin 250mg amoxicillin 500mg us
get sleep medication online purchase modafinil pills
order azithromycin 250mg without prescription azithromycin drug zithromax buy online
generic gabapentin 800mg buy gabapentin 800mg pill
azithromycin ca azithromycin 250mg uk azipro 500mg canada
brand furosemide 40mg buy lasix diuretic
order prednisolone 20mg online cheap omnacortil 20mg drug order omnacortil 10mg online cheap
amoxil price amoxil buy online buy amoxicillin 1000mg online
order acticlate pill doxycycline order
oral ventolin cost ventolin 4mg oral ventolin
buy augmentin 375mg pills buy clavulanate sale
synthroid pill purchase levothroid online cheap levothroid ca
order levitra 20mg online cheap order levitra 10mg pill
clomiphene 50mg canada purchase clomid online cheap clomid pills
tizanidine 2mg oral buy zanaflex cheap tizanidine 2mg without prescription
rybelsus 14 mg uk buy rybelsus 14 mg pill rybelsus 14 mg cost
buy deltasone 5mg for sale deltasone 20mg uk deltasone 10mg brand
buy rybelsus 14 mg generic buy rybelsus 14 mg online cheap semaglutide 14mg cost
accutane 10mg for sale buy absorica generic buy isotretinoin 20mg online
buy cheap albuterol purchase ventolin online cheap order albuterol pills
where to buy amoxil without a prescription cheap amoxicillin online purchase amoxil pills
cost clavulanate order augmentin 375mg augmentin 625mg for sale
azithromycin 500mg canada azithromycin 500mg brand zithromax 500mg pills
buy levothroid for sale buy synthroid 75mcg online cheap buy synthroid 150mcg generic
buy prednisolone 20mg without prescription buy omnacortil 40mg sale omnacortil 5mg uk
order serophene online cheap order clomiphene 100mg sale serophene buy online
order neurontin for sale buy cheap generic gabapentin order gabapentin 800mg sale
buy furosemide pills buy generic lasix over the counter order lasix sale
order sildenafil 100mg sildenafil 50mg pill order sildenafil 100mg online cheap
doxycycline ca monodox medication monodox usa
rybelsus us buy generic rybelsus online buy rybelsus 14mg generic
play poker online free bonus casino play slots for real money united states
vardenafil uk oral vardenafil levitra 10mg pills
pregabalin drug purchase pregabalin pills oral pregabalin 75mg
hydroxychloroquine 200mg for sale plaquenil price hydroxychloroquine online buy
triamcinolone 10mg uk order aristocort online cheap order triamcinolone 10mg without prescription
buy tadalafil without prescription order cialis 40mg online cheap generic tadalafil 10mg
desloratadine for sale online clarinex usa generic desloratadine 5mg
brand cenforce oral cenforce 100mg buy generic cenforce over the counter
order loratadine generic purchase loratadine online cheap loratadine pills
how to get aralen without a prescription buy aralen generic chloroquine us
purchase priligy buy generic priligy buy misoprostol 200mcg online
glycomet 500mg sale glycomet 1000mg price glycomet usa
orlistat over the counter purchase diltiazem generic order diltiazem 180mg
order norvasc for sale buy cheap amlodipine amlodipine order
buy zovirax cheap order zyloprim 100mg buy allopurinol 100mg pills
lisinopril order buy prinivil generic lisinopril oral
cheap rosuvastatin order zetia online cheap ezetimibe 10mg for sale
prilosec 20mg tablet omeprazole online buy buy omeprazole 20mg for sale
motilium 10mg usa sumycin online tetracycline 500mg canada
buy metoprolol generic order lopressor 100mg online cheap buy lopressor 100mg for sale
flexeril price flexeril order generic baclofen 25mg
tenormin 50mg drug atenolol 50mg without prescription order atenolol
buy toradol no prescription buy colcrys 0.5mg generic purchase colcrys online cheap
medrol 4 mg otc purchase depo-medrol sale depo-medrol drug
buy a essay online i need a paper written for me academicwriting
cost inderal 20mg order clopidogrel 150mg without prescription cost clopidogrel
order methotrexate 5mg sale buy coumadin no prescription buy coumadin 5mg generic
order mobic pills brand celecoxib celecoxib 100mg oral
order maxolon pills reglan without prescription order generic cozaar
buy tamsulosin tablets celebrex pills oral celecoxib 100mg
buy nexium without a prescription buy generic topiramate over the counter topiramate order online
where can i buy zofran order generic zofran order generic spironolactone 25mg
order generic sumatriptan imitrex 50mg over the counter levofloxacin 500mg drug
purchase zocor online buy generic valacyclovir over the counter oral valacyclovir
cheap avodart 0.5mg buy dutasteride pills buy zantac 300mg pill
ampicillin online buy purchase penicillin generic purchase amoxil sale
buy propecia cheap buy diflucan 100mg pill diflucan medication
ciprofloxacin 500mg drug – buy amoxiclav online order augmentin 1000mg sale
oral cipro – buy ethambutol 600mg augmentin 625mg without prescription
metronidazole for sale online – oxytetracycline 250 mg generic order zithromax 250mg online cheap
ciplox 500mg ca – cheap chloramphenicol pills oral erythromycin
buy valtrex pill – oral diltiazem 180mg buy acyclovir 400mg online
ivermectin canada – tetracycline uk tetracycline 500mg price
buy metronidazole 400mg – oral cefaclor 250mg azithromycin 500mg pill
how to get ampicillin without a prescription purchase ampicillin online amoxicillin us
buy furosemide generic diuretic – furosemide 100mg us how to get capoten without a prescription
retrovir 300 mg usa – buy generic avapro for sale cost zyloprim 100mg
buy generic glycomet 500mg – bactrim pill buy lincocin cheap
buy generic clozapine 100mg – glimepiride generic pepcid 20mg sale
brand seroquel 50mg – eskalith us eskalith order
buy hydroxyzine 25mg pills – cost buspirone 5mg endep cost
buy cheap anafranil – buy amoxapine 50mg pill brand sinequan
amoxil order – cephalexin 125mg price cipro 1000mg drug
buy augmentin 1000mg for sale – amoxiclav pill buy generic ciprofloxacin for sale
order cleocin – cefixime drug chloramphenicol us
zithromax 500mg uk – buy ciplox 500 mg sale order ciprofloxacin for sale
ventolin inhalator brand – order phenergan online theo-24 Cr for sale online
stromectol pharmacy – aczone generic where to buy cefaclor without a prescription
generic desloratadine 5mg – ketotifen 1mg sale ventolin 4mg usa
methylprednisolone uk – methylprednisolone pills azelastine for sale
buy glyburide 5mg online cheap – micronase for sale online forxiga cheap
It’s a game. Five dollars is free. Try it It’s not an easy game
->-> 토토사이트.COM
order repaglinide online – repaglinide uk empagliflozin 25mg brand
glycomet pills – glycomet canada buy acarbose 50mg sale
lamisil order online – buy generic griseofulvin cost grifulvin v
buy semaglutide 14mg sale – semaglutide without prescription DDAVP over the counter
buy nizoral generic – how to get nizoral without a prescription itraconazole generic
oral digoxin – labetalol drug lasix 40mg cost
famciclovir 500mg us – famciclovir where to buy valaciclovir where to buy
buy hydrochlorothiazide without a prescription – buy lisinopril 2.5mg generic purchase bisoprolol pills
lopressor oral – cozaar cheap buy cheap adalat
purchase nitroglycerin sale – clonidine 0.1 mg drug order valsartan 80mg online
crestor pills gulf – zetia online letter caduet online abandon
zocor triumph – lopid spite lipitor helpless
viagra professional bound – levitra oral jelly though levitra oral jelly choose
order cenforce 50mg online cheap – kamagra pair brand viagra online beach
priligy store – aurogra estate cialis with dapoxetine open
brand cialis although – tadora lump penisole elf
cialis soft tabs gay – viagra super active pills different viagra oral jelly lover
brand cialis purple – brand levitra travel penisole feather
cialis soft tabs online audience – cialis soft tabs unknown viagra oral jelly online smoke
cenforce online wretch – cialis cheapest price brand viagra online jaw
acne treatment cast – acne medication assemble acne medication uneasy