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VIDEOBernanke Fingers the Culprit: An All-Encompassing Credit Boom
But fails to mention that the Fed created it.
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Kevin Depew's Five Things You Need to Know to stay ahead of the pack on Wall Street:
Bernanke Fingers the Culprit, An All-Encompassing Credit Boom
In a speech delivered before the London School of Economics today, Federal Reserve Chairman Ben Bernanke outlined a subtly more in-depth and critical view of the origins of the financial crisis than anything he has publicly stated previously. According to Bernanke, although the subprime debacle triggered the crisis, the developments in the U.S. mortgage market "were only one aspect of a much larger and more encompassing credit boom whose impact transcended the mortgage market to affect many other forms of credit." Indeed.
This view further explicates and builds on the one he first stated before the Economic Club of New York in October, 2007. At that time, Bernanke, like many public finance officials, had just spent months and months prior to October 2007 describing the financial crisis as "well contained" to subprime lending; an isolated outlier of what, at that time, were routinely accepted as perfectly normal credit market conditions. Of course, now Bernanke knows differently.
In today's speech he confidently asserted that the negative aspects of this "more encompassing credit boom" involved "widespread declines in underwriting standards, breakdowns in lending oversight by investors and rating agencies, increased reliance on complex and opaque credit instruments that proved fragile under stress, and unusually low compensation for risk-taking."
Well, shucks. No mention of who was responsible for that all-encompassing credit boom (The Fed), but let's not ruffle any feathers over mere semantics, especially while the apologist is still at the bar buying rounds.
I'm sorry. That was my embarrassing way of winking at Bernanke to let him know I'm onto the scam. It didn't work. For one thing, he doesn't even know me, so it just came across as some sort of weird eye twitch, or worse, a lame pickup attempt. Nevermind all that. Just start reading from here.
Fed In Massive Power Grab
"I'm in control here."
- Secretary of State Alexander Haig to reporters after President Ronald Reagan's attempted assassination
As is customary, Federal Reserve Chairman Ben Bernanke's speech before the London School of Economics today was long on words, short on meaning. But there was one crucial takeaway from it that bears mention; the massive power grab the Federal Reserve is asserting.
I understand that people who compose sentences like that are automatically viewed as 1) nuts, 2) conspiracy theorists and 3) nuts, but before you deliver the verdict take the chairman at his own words:
"The world today faces both short-term and long-term challenges. In the near term, the highest priority is to promote a global economic recovery. The Federal Reserve retains powerful policy tools and will use them aggressively to help achieve this objective."
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