Today, at 2:15PM, Federal Reserve Chair Ben Bernanke will announce quantitative easing, round two (i.e.: "QE2"). It is, effectively, another Wall Street bailout. (See:
HERE, and
HERE, and
HERE.) Based upon advance stories in the MSM, that'll be another $500 billion for the fatcats, to be precise, with more, (some say another $500 billion) ready to roll in six months, depending upon which way the wind blows.
$500 billion here. Another $500 billion there (possibly, in another six months), and pretty soon you're talking about real money. Heh. No need for Wall Street to subject itself to the scrutiny of a lame-duck session on Capitol Hill; no need to tell the truth to an already-ignorant, deliberately misdirected public; just collect (print) 500 billion dollars. Do not go directly to jail. Do not pass "Go."
I've been writing about this issue extensively within this community, including posts such as this: "
Mtge. Fraud Bill Escalates As Stiglitz "Bashes" Bernanke's QE," from a couple of weeks ago.
Nobel Prize-winning economist Joseph Stiglitz has just told us, again, what's really needed: "Economist Stiglitz: We need stimulus, not quantitative easing." But, he's a progressive Democrat, and we have a Republican (reappointed to his post by a Democratic administration) controlling the Federal Reserve, spinning the latest stealthy welfare-for-the-rich bailout as something quite different than what it is: "Fed to Launch Bold, Risky Effort to Boost Economy." (Funny that. Weren't we told this about TARP? Even now, folks within this community continue to buy into the totally-conflated, brutally false meme, that in some distorted, contorted, status quo-centric version of a fairy tale, we're going to make a profit on the bailout, when in fact, nothing could be farther from the truth! TARP is just one of dozens of government-supported Wall Street-welfare-for-the-rich scams. People are in denial of what's actually occurred, and what is continuing to occur, even today!)
Here's what the Pragmatic Capitalist is saying about quantitative easing fail: "QE2 IS ANOTHER BANK BAILOUT & NOT A MAIN STREET RECOVERY PLAN."
QE2 IS ANOTHER BANK BAILOUT & NOT A MAIN STREET RECOVERY PLAN
1 November 2010 by TPC
...Ben Bernanke knows all of this. He has added $1T in reserves to the banks already and it hasn't resulted in a surge in borrowing or self sustaining economy recovery. It doesn't take a genius to understand that adding another trillion won't change anything either. If there is low demand for apples putting more apples on the shelves does not improve the apples salesman's ability to sell more apples.
But Mr. Bernanke is seeing the same thing that I am seeing. He sees a weak economy and a housing market that appears to be rolling over again. Knowing that the banks are extremely fragile here and understanding that there is absolutely no political will for another bailout Mr. Bernanke is creating his own bailout by bypassing Congress.
Some of my colleagues say I am giving Mr. Bernanke far too much credit here. After all, this would require a great deal of foresight and a level of proactivity that hasn't really been a trademark of his in recent years. I am not so certain. In fact, I don't doubt for one second that Mr. Bernanke is fully prepared to do whatever he must to avoid another bank meltdown. He continues to believe that this is a supply side problem and not a demand side problem. He may have failed in his mandate of full employment, but when it comes to the banking sector Mr. Bernanke is more than accommodative.
What's unfortunate in all of this is that the policy is being sold to the American public as if it's a Main Street stimulant. There is, arguably, some merit in doing what Mr. Bernanke is doing. After all, another bank meltdown would be truly traumatic (though probably necessary). So, there's an argument in favor of being prepared. But selling it as another Main Street stimulant is disingenuous at best. And unfortunately, 99.9% of the public is too oblivious to:
1. Understand QE
2. Raise a fuss.
The implications are obvious. The Fed will likely start with a rather small round of QE this week. After all, if I am correct Mr. Bernanke doesn't want to unload all of his shells too early. He wants to be fully prepared in case the banks relapse so he can step in with a sizable bank bailout. So, don't be one bit surprised this week when Mr. Bernanke announces a small round of Treasury purchases with the option to buy MBS in the future. In all likelihood, this program will remain open until it's clear that the U.S. economy is sustaining recovery and another bank meltdown is off the table. Don't be fooled into thinking that this is some economic panacea. Unless of course, you're a banker.
Meanwhile, these are the truths we now face in a (currently) Democratic-controlled legislative branch of our government...
-- More stealthy money for AIG to continue the totally false "TARP was profitable meme."
-- Roughly 1.2 million Americans are scheduled to lose their unemployment benefits, this month, alone.
-- More than likely, there will be ongoing tax cuts for the rich announced in coming days.
-- And, the Cat Food Commission's proposed (inevitable) cuts to Social Security and Medicare will take the stage, front and center in our public's contorted dialogue, once again.
Meanwhile, Ben Bernanke continues along with his errands for the oligarchy, right under our noses, in just a few hours.
(Queue, the "Ben Bernanke's ideas are brilliant" comments. Flame away.)
We continue to do what we've done. Therefore, we'll continue to get what we've got.