Has Bernanke Pulled the Economy Back From the Brink?

Weekend Edition
May 8-10, 2009

Depression Interruptus

Has Bernanke Pulled the Economy Back From the Brink?

By MIKE WHITNEY

Fed chief Ben Bernanke's understanding of financial crises may have kept the country from sliding into another Great Depression. That doesn't mean that he's fixed the credit system, removed the non-performing loans from the banks, or stopped housing prices from crashing. It simply means that pumping liquidity into the system -- via huge increases in the money supply, zero-percent interest rates, and multi-trillion dollar lending facilities -- has either slowed or reversed the rate of decline in many sectors of the economy. Monetary stimulus works. Manufacturing, industrial output, world trade and global stock markets had all been falling faster than during the Great Depression. Bernanke changed that. His aggressive monetary policy helped to stabilize the financial system and pull the economy back from the brink.

In April, retail sales rose slightly as did consumer spending. The service industries contracted less than expected and manufacturing (ISM) showed modest gains. There are also signs that housing prices are flattening out although future price declines are still expected to be somewhere in the range of 10 to 20 per cent. (Housing prices have already slipped 29 per cent since their peak in 2006) The underlying problems in the economy have not been fixed, but green shoots are popping up

Wall Street has taken these first signs of recovery and turned them into an impressive 8 week rally. The S&P 500 has soared 35 per cent in the last two months while the Dow is up nearly 30 per cent. Traders have shrugged off grim earnings reports and myriad other distress signals and joined in the festivities. On CNBC, the financial channel, they're calling it the TARP Rally. The $700 billion bank bailout bill is now credited with lifting the market out of the doldrums and sending stocks higher. It should be renamed the "Bernanke Rally”; without the Fed chief's quantitative easing and toxic asset lending programs the Dow would be languishing in the 6,000 range.

http://www.counterpunch.org/whitney05082009.html

Wall Street has taken these first signs of recovery and turned them into an impressive 8 week rally. The S&P 500 has soared 35 per cent in the last two months while the Dow is up nearly 30 per cent. Traders have shrugged off grim earnings reports and myriad other distress signals and joined in the festivities.

In other words, it's considered economic "success" that stocks go up despite the lack of any rationale for it doing so. Unemployment goes up? Stock rally!!11!! GM bankruptcy? Rally!11!!

And what about this non-sequitur? "There are also signs that housing prices are flattening out although future price declines are still expected to be somewhere in the range of 10 to 20 per cent. What is that supposed to mean? Sure, housing is still way overpriced. So the rate of decline is decreasing? So happy days are here again? Oh, I see. I guess it's time for another ... rally!!11!

The fact is that, until wages start going up and employment rises, nothing is going to improve. This sucker's rally only means that the pit bosses are having a field day trading among themselves. I guess this is the next "bubble" -- the stock bubble. As the suckers take the bait planted by media pundits spinning like this, stock prices will go up. Then the traders will swoop in and take their "profit," the market will go back down, and even more of our money will be shoveled into their offshore tax havens.

8000+ out of work within 40 miles from where i live....

:)

and all this towel slapping is giving me a headache. There are serious problems that our leadership is ignoring, and that aren't going to go away by tossing a few trillion at it.

We need to seriously address the issue and stop the high-fiving.

Bernanke has done nothing of the sort, and he, Goofy Geithner, Stammerin' Hank, and all of their Merry men should be in fucking jail, their assets seized, and fed a steady diet of three hots and a cot, which is infinitely more than they deserve.

The Banksters and The Criminals have stolen 12.5 Trillion to continue to fund their Ponzi Economic Schemes, and they are going to steal, loot, and rob every last cent from the taxpayer unabated until they are STOPPED. PHYSICALLY stopped.

There is NOTHING being done to improve the fundamentals of the real economy, and the Media continues to brainwash the public into believing the largest global collapse in history will be over by June, but not to expect any changes that LOOK like a recovery anytime soon, but just TRUST US, it's coming.

But hey, why should anyone give a shit? The Playoffs are on, and who can be bothered with boring things like accountability and the rule of law when there is still plenty of cheap bobbles, trinkets, and crap from China to buy, plenty of imaginary "Service" jobs to go around, plenty of cheeseburgers, fast food, and GMO Food to gobble, plenty of cheep beer to swill, plenty of Junk Culture and Sports to intravenously inject via the Cathode Help Boxes, and a never ending amount of Propaganda, Upbeat Rhetoric, and Breathtaking Spin from Politicians, Talking Heads, and even your friends and neighbors to repeat it to you ad nauseum to numb the senses from reality.

America just can't be bothered.

The country is Falling Apart and we feel DAMN good about it.

and that's it

maybe he's kicked the can down the road a bit and bought breathing room to try and fix what needs fixing. Now if Obama and company can and do just fix what needs fixing....time will tell.

That's about as positive as I'm capable of mustering.

when you're far enough away and you scrunch up your eyes all funny.

Maybe the patient isn't really dead after all!






What's that smell?