Wednesday, October 27, 2010

Gross on Bonds dead right. On Bernanke responsibility, dead wrong

In a Bloomberg News report today “This is not a Bernanke scheme, because this is his only alternative and he shares no responsibility for its origin,” Gross wrote.

You're kidding me - Mr Bernanke he of little awareness of all around him (when the review of HIS college textbook Principles of Economics published 2003, encourages students to become Economic Naturalists, talk about a primo example of do as I say not as I do). Tell me that real estate values which did not just amble up BUT rocketed in certain LARGE sand - based markets at 2, 3, 4, 5 times or more 200 year historical trend for 3 years or more running were unknown or unknowable??? This was "normal"?
Tell me that Mr Bernanke was not aware of house "flipping" rampant speculation; for goodness sake there was even a freakin TV show called "Flip this house!!!"

Mr Bernanke did NOT have to accept the position of Fed Chair in Feb 2006 did he?
Mr Bernanke admitted himself in print that he failed to see (and connect the dots) of the flaws in sub prime.

MAJOR flaw he missed 2,000 X L-E-V-E-R-A-G-E!
The most basic is 2,000 X financial and economic leverage.
Huh? Correct Take a group of zero down (=100 x leverage for the borrower) mortgages, pool them into MBS then an Investment Bank levers them 20 to 1, total leverage = 2,000 X (100 x 20). And remember that to begin with these were often NOT the most credit worthy risks!

Come on Bill wake up; you're so much better than that.

Correct the the Fed's Ponzi scheme is exactly that, virally infecting all asset classes, commodities, food prices, energy NOT JUST BONDS. Distorts global capital flows. Too much newly printed dollars; when even just one extra is too much.

Better to turn off the printing presses, shrink the supply of USD; the opposite of what investors expect. But rightful homage to the ALMIGHTY US DOLLAR. Including returning so - called AAA rated "assets" too long on Fed balance sheet to rightful issuers, creators / owners largely in a certain Federal Reserve district east of the Hudson.

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