Read this Bernanke quote from November 8, 2007,

“Our forecast is for moderate but positive growth going into next year. We think that by the spring, early next year, that as these credit problems resolve and, as we hope, the housing market begins to find a bottom, that the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace.”

This, in my book at least, clearly demonstrates that this stooge has zero clue as to what is going on in the economy. When he made these remarks institutional balance sheets where leveraging at 25-40 to 1. There were no disclosures about off balance sheet swaps and derivatives. I was shorting the financial sector because of this and I am not the FED Chairman. The rest is history.

When Paulson and Bernanke came to request TARP in September 2008, after they had 6 months since Bear Stearns to act and they let Lehman just free fall onto the global markets, I would have shown them the door. They used some BS excuse that Lehman was a non-bank so legally they could not take control and conduct an orderly wind down. What am I missing with the Bank of AIG?

Now here’s what is really happening in the off balance sheet land of the Treasury. Geithner has pledged a 3-Year open checkbook to continue coverage of all mortgage losses at Fannie & Freddie. This is really Fiscal Policy but Congress is too ignorant to understand it. Geithner will raise $1.25 trillion in NEW US taxpayer debt and fund Fannie/Freddie taking back some additional Preferred Stock. Then watch, all of sudden WE will be overjoyed when Fannie/Freddie purchase back from the FED its excess reserves created through its click of a mouse or in FED speak Quantitative Easing!

So what has happened in this shell game? WE US Taxpayer now have more HIDDEN off balance sheet debt of $1.25 trillion dollars over at the Treasury. For some unknown very scary reasons Fannie/Freddie funded debt is excluded from Gross National Debt? Listen for the SPIN, the FED has successfully sold back its Mortgage Backed Security positions to the “private” sector. Rally time for the uninformed!

Why is unemployment not going down or potentially increasing? This NEW off balance sheet debt is going to pay for prior GDP transactions or losses. It is not used to fund productive projects which creates jobs and wage earners who then can buy a house. This is how you support the declining values in the residential real estate market……with.new buyers not paying off free falling home values with a bottomless checkbook!

All these proposed new employee tax credits and bonus equipment depreciation allowances are like pushing on a string. There is not ONE small business in the world who would hire new employees because of tax credits or buy new equipment unless its sales demand has increased!

Obviously I am very against Bernanke. I believe his economic policies will crater the US dollar under a mountain of non-economic debt. I have presented my findings above. IF you have a different take on why you support Bernanke policies, then I would be grateful for those insights that I have overlooked? Thanks.

- GarysOpinion

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