Fisher is well-aware that these credit markets were "debauched" as a direct and proximate consequence of the policies of The Federal Reserve
and he is a Fed President (The Dallas Fed, to be precise.)
Specifically, the policies of The Federal Reserve have, over the last twenty years:
- Created the Tech Bubble by providing bailouts to LTCM and other market participants from the time Alan Greenspan took office.
- Held liquidity far too loose for far too long after 9/11 and the Tech Wreck, allowing the housing bubble to occur, and even recommended that consumers take ARM mortgages at the bottom of the interest rate cycle, an insanely destructive suggestion.
- Refused to reign in the BANKS, over which The Fed has control (Countrywide anyone?), while they were making demonstrably unsound and even fraudulent loans.
- Refused to force the BANKS to either prove the capital adequacy of their "counterparties" in swap agreements OR reserve under the base, underlying credit quality of their instruments they were allegedly "covered" on - both of which are within The Fed's power.
- Prodded Congress, by one Ben Bernanke's speech and questioning under oath just a few months ago, into even more deficit spending to "bail out" the housing crisis, a speech that was followed in less than two months by the very deficit spending recommended in the amount of $300 billion dollars.
- Refused to stop the banks from continuing to play the "swap" game, the "sweep" game, to run negative depository reserves and to not only claim "Level 3 assets" but to even swap that used toilet paper for Treasuries rather than be forced to recognize their losses!
- Continues to on a daily basis flood the system with over $250 billion in "extra slosh", thereby creating the commodity bubble and $130 oil; extra liquidity which The Fed could withdraw at any time, forcing those who are swimming naked to recognize their losses and come clean along with solving both the $130 oil problem and the dollar problem.
So Mr. Fisher, is this REALLY a sea change in your thought process and that of The Fed? Or is this one of those speeches where someone throws out all sorts of prescriptions but refuses to act on any of them, thinking that this will provide them cover when the inevitable Category Five fiscal Hurricane comes through town - a storm you're afraid the people will hold YOU to account for?
If its the latter, you won't get that pass from anyone who has read this Ticker.
Some of us, myself included, are well-aware of what The Federal Reserve has and continues to debauch the credit markets, including all of the above and the flatly-improper, if not outright illegal, "bail out" of Bear Stearns.
I challenge Mr. Fisher to show we, the people, that this is not just smoke - a speech, correct though it is, that is not and will not be backed by action, for talk is cheap.
If Mr. Fisher really means what he said, he needs to stand up RIGHT NOW.
Carrying a sandwich board, if he must.
Asking for hearings in Congress to address this, whether Bernanke likes it or not.
IN FACT, SPEAKING ON EVERY PODIUM WHERE YOU CAN FIND A MICROPHONE AND AUDIENCE - UNTIL AMERICA WAKES UP AND TAKES THAT BATON FROM YOU.
Guess how much airtime CNBC gave this speech?
ZERO.
The entire morning was spent with bullish market callers ignoring the 900lb Elephant in the room. Marketwatch butchered their report on that speech, twisting its meaning beyond all recognition.
IF this is not just a bunch of BS, after nearly a year of inappropriate and in fact deeply damaging words and actions from our Federal Reserve I want to see the evidence.
Talking out both sides of one's mouth has gone on long enough.
Either you mean it, Mr. Fisher, in which case I expect to see action - today, now, and going forward - or your "tough talk" will be discounted by myself and the rest of America just as has been the outright lying that Bernanke and others have participated in over the last year with regards to the state of our economy and capital markets.
Let's talk about what is really going on here in the markets today - namely, that the Treasury is printing up Bills and Bonds like a Mad Hatter (Bernanke did challenge them to in that recent testimony referenced above), which is driving up the long end of the yield curve. Oil and energy in general, along with agricultural products, are exploding higher in price as the "excess liquidity" The Fed is providing, now north of $250 billion, is looking for anywhere it can go that hasn't been debased.
That money is finding a home in things that have actual value.
See, The Fed and Congress can't debase the inherent value of a gallon of gasoline. If your car would go 30 miles on it ten years ago, it will today. And tomorrow. And 20 years hence. The utility value can't be destroyed, unlike the "paper value" of a Treasury Bond if The Fed takes $400 billion worth of trash on its balance sheet in alphabet-soup swaps!
This is extremely dangerous because when utility commodities start being treated as a currency you're done as a Central Banker.
