Bernanke, “We Got out Alive”

That in essence is what Ben said about how the Fed handled the 2007 to 2009 economic crash.  In a short term thinking world he might be right, but I would venture that the big picture is still out of view.  And the short term view is really not that clear.

It is too bad that they don’t make many Fed chiefs, like Paul Volcker,  who have a strong activist sense and really tackle the problem to provide long-term solutions.

Ben could have stood up to congress after the 2010 elections and risked his position by outlining the fact that it would take a combination of Fiscal and Monetary actions to spur a strong economy with full employment.  Instead, Ben being Ben, basically a pompous elitist ,  was more concerned about maintaining a regal status and some day returning to Princeton to teach another group of pompous elitists.

So where are we now, we have endured a trickle down philosophy that has kept most of the funny money at the top.  Consumers in the bottom 70 percent are strangled, many have lost their homes, many in the past year have borrowed more money to feel better by buying a new pickup or car, but in aggregate they are worse off than they were in 2007.  Look at the Michigan Consumer Sentiment numbers, they topped out this past July.  Our Fed Intervention chart which we published here on December 3rd also peaked this past summer.  If where you live is anything like where I live, Christmas activity in the stores is lackluster, granted Amazon is a factor.  Interestingly Business is buying a bullish 2014 scenario and is building inventory.  Without a consumer to buy the stuff, first quarter earnings should be an interesting read.