Barack Obama , The Fed and The New Economy

Poor Information = Poor Policy Harpers' magazine article on Economic Bubbles , speculation and commodity price inflation

CallMeASeeker — Wed, 14 May 2008 17:51:49 EDT

Harpers Magazine The Next Bubble by Erik Janszen - Superb Read for All

CallMeASeeker : "They Know Nothing" (CNBC clip via Google/Youtube) was Jim Cramer's now immortal take on the Fed and I could not agree with him more. The Fed is clearly clueless and needs a major update in what I will call Tactical Economics and Technology to actually meet its charter. In this absolutely brilliant article by Erik Janszen of Harper's magazine the yawning gap between the Fed's Theories vs Market Realities and its effect on "asset price hyperinflation" are clearly explained. Bubbles have become the Norm rather than the exception and The Fed does not yet understand how to really handle this. This is what Buffett was alluding to as well in the 2002 BerkshireHathaway Annual Report where he termed mortgage backed derivatives as Financial WMDs(See Report Page 14 ). These financial instruments need to be regulated to an extent where they do not wreak the kind of havoc we see today. The days of using interest rates as leverage to control inflation and the money supply are over. The policy and regulatory controls of the Fed should be reviewed and overhauled. The Fed should look to state-of the art Hardware and Economic Model-based Business Intelligence to monitor and pre-empt dangerous fluctuations in the money supply, the credit/asset and securitization markets that can derail the global economy. The Technology is out there but this is not your boiler plate IT implementation and thats putting it mildly, this needs a Google like approach backed 100% by every branch of government concerned.
The Googles and Apples of the world have delivered gadgets, toys, search engines and Orkut but nothing that has come out of Silicon Valley has solved any of our real problems in the 2 most critical areas - energy and the economy. The IT industry needs to rise to the occasion and work with the economists of our time to deliver innovation that allows the Fed to monitor the economy.
For that to happen the IT industry's techno-whiz kids need to understand economics - period. As dry a subject as it is , it forms the very fabric on which American and global prosperity and peace depend. Mis-informed economic and monetary policy have caused much pain to the poorest amongst us. The food price bubbles in 2008 have already triggered a civil war in Haiti and rioting in Egypt. Economics and Monetary policy is the 10,000 pound gorilla in the room that we have chosen to ignore - and when we ignore something you can be sure our politicians and leaders will do the same. So start right here, Educate yourself ...Change comes from the ground up!! Vote Barack Obama 08 '

Harper's Magazine Feb 2008 Erik Janszen : The next bubble:Priming the markets for tomorrow's big crash - Absolutely Brilliant Article - A must Read!
"The dot-com crash of the early 2000s should have been followed by decades of soul-searching; instead, even before the old bubble had fully deflated, a new mania began to take hold on the foundation of our long-standing American faith that the wide expansion of home ownership can produce social harmony and national economic well-being. Spurred by the actions of the Federal Reserve, financed by exotic credit derivatives and debt securitization, an already massive real estate sales-and-marketing program expanded to include the desperate issuance of mortgages to the poor and feckless, compounding their troubles and ours. More.....in extended post

The Media VP Speculation Circus - Creating a Political Fog

CallMeASeeker — Wed, 14 May 2008 16:43:59 EDT

I am not here to post a news clip this time. Instead i am here to vent my frustration with the media, not at all of them mind you, only those who are inclined towards borderline tabloid journalism like CNN or those who dont even care about journalism like the FAUX news channel. Instead of concentrating on the policy tilt of potential VeePs for Obama, the talking heads have chosen to concentrate on the reality show like drama that is certain to result from talking about a Obama Clinton ticket. We know its not very likely to happen so why talk about this possibility on and on. ? Cos it is Drama, its ratings, it feeds the gossip mill, sells ad and changes the campaign into a voyeuristic reality show ...and the end result is policy debates and discourse are thrown right out of the window, public attention to policy diverted and public participation in policy debate starts tending towards the non-existent. They cannot tell the forest from the trees. I like to call it the Fog of Politics!! Thats my 2 cents for the day .! Stay tuned and keep the faith. Later folks

The Fed Road Show : Bernanke talks Theory and Philosophy while Main Street Sees Inflation and Mortgage Crisis

CallMeASeeker — Wed, 14 May 2008 15:48:51 EDT

From Forbes Magazine by Maurna Desmond May13, 2008 :Bernanke Talks Big Picture As Inflation Looms
Also go to extended post text to see selected slides and .PDF link for San Francisco Fed President and CEO, Dr. Janet Yellen's presentation on Credit, Housing, Commodities and The Economy (also on May 13, 08 at a Conference on Monetary Policy in Voncouver).

"Speaking at an Atlanta Fed conference at Sea Island, Ga., the Federal Reserve chairman voiced his theoretical concerns about the potential moral hazard that could be posed if the U.S. central bank bailed out financial companies that made mistakes. While Bernanke waxed about the Fed's rich philosophical history, other Fed officials chirped about more Main Street issues like rising inflation and the mortgage crisis.

Investors seemed to take the risk of inflation to heart. The yield on the 10-year Treasury note, a bellwether for the world's credit markets, shot up to 3.91% from 3.78% late on Monday. As inflation rises, investors demand higher returns on bonds since the purchasing power of the money invested will be eroded. The 10-year yield ended the first quarter of this year at 3.43%."

"The Federal Reserve is governed by ideas, and there is a need to look at the underlying principles guiding its actions," said Michael Feroli, an analyst at JPMorgan. "When it comes to monetary policy, you need to have a philosophy. It is important to say, 'what does it mean to be the lender of last resort?"
According to TradeTheNews.com, Janet Yellen, the San Francisco Fed president, said at a conference in Vancouver that financial stability is the core responsibility of the central bank. She added that the Fed "cannot be complacent about inflation."

CallMeASeeker May12, 2008: Also see a Presentation(PDF) by Dr Janet Yellen, CEO and President of the San Fransico Federal Reserve Bank - Credit, Housing, Commodities, and the Economy. Here are some Key slides.

Barack Obama and Fed Chairman in agreement on Credit Card Consumer Protection

CallMeASeeker — Thu, 08 May 2008 02:17:06 EDT

CallMeASeeker: May 06, 2008

Obama's proposed Credit Bill of Rights targeting predatory credit card practices and billing fraud is on the same page as proposals made by the Fed Chairman in 2008 . " Since the Fed Cut last week, Uncle Ben has been giving Congress and the Finance Industry something to think about, something positive - about credit cards. The target of his testimony to Congress was predatory business practices, lack of transparency on consumer policies and "stealth tactics" that credit card companies employ like "two-cycle billing" - where interest from amounts due in previous billing cycles are tagged on to the current billing cycle. This is not Uncle Ben's first attempt at bringing about positive changes to protect the economically challenged amongst us who form the credit card industry's 'target market' for new sales. Is there a showdown cooking between the Fed and the financial industry? Is Uncle Ben being-proactive to stop the next bubble?. Also crucially is the Fed itself in agreement on this direction? "If the Federal Reserve Board is not lobbied into paralysis, Bernanke's new credit-card rules could be in place by Jan. 1." (see full article at my blog, including links to news, profile of Ben Bernanke and his research into the Great Depression http://yourmoneyourworld.blogspot.com/2008/05/high-interest-in-credit-uncle-ben-puts.html_)

Obama's proposed Credit Bill of Rights is on the same lines as proposed by the Fed Chairman!. Support Barack Obama and send the lobbyists home!!