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Entries in Recession (76)


ALG Calls on Senate to Reject Bernanke Reconfirmation; Says Fed "Helped Cause the Crisis" 

"For his failure to acknowledge one of the principal causes for the financial meltdown, and to take any responsibility whatsoever for his role in shaping the monetary policies that accommodated the housing bubble, Ben Bernanke must be rejected by the Senate." ALG President Bill Wilson.

January 27th, 2010, Fairfax, VA—Americans for Limited Government (ALG) President Bill Wilson today called upon the U.S. Senate to reject the confirmation of Federal Reserve Chairman Ben Bernanke to a second term, saying "the Fed with its easy money and loose credit policies throughout the 2000's accommodated the housing bubble that, when it popped, wrecked the economy."

Bernanke's cloture vote is scheduled for Thursday morning.  Wilson specifically urged members to vote "no" on cloture, saying "The best way to defeat Bernanke's reconfirmation is to vote 'no' on cloture."

Wilson said that Bernanke needed to be held accountable for his role in the financial crisis: "For his failure to acknowledge one of the principal causes for the financial meltdown, and to take any responsibility whatsoever for his role in shaping the monetary policies that accommodated the housing bubble, Ben Bernanke must be rejected by the Senate."

Wilson cited Stanford economist John Taylor, who in writing for the Wall Street Journal stated, "the simple observation that the Fed's target for the federal-funds interest rate was well below what the Taylor rule would call for in 2002-2005."

Taylor continued, "By this measure the interest rate was too low for too long, reducing borrowing costs and accelerating the housing boom. The deviation from the Taylor rule, which had characterized good monetary policy during the previous two decades, was the largest since the turbulent 1970s."

"Bernanke does not share this widely-accepted critique," said Wilson.  "He lays blame for the crisis at the feet of Fannie Mae and Freddie Mac for their roles in the sale of mortgage-backed securities all over the world."

"How can the Federal Reserve be expected to fulfill its mission of price stability and prevent another dangerous bubble if it will not even acknowledge what it did to inflate the last bubble?" Wilson asked, adding, "The Senate must consider the culpability of the Fed, which helped cause the crisis under Bernanke's watch."

Wilson said that "While it is fair to hold Fannie and Freddie accountable for the trillions of dollars of worthless securities they sold, what Bernanke fails to acknowledge is that the Fed's easy money policies incentivized the mortgage loans to be given in the first place through lower-than-called-for interest rates."

In a recent column on the topic, ALG Senior News Editor Robert Romano wrote, "The Fed's complicity in the crash of 2008 cannot be understated. The housing bubble was greatly accommodated by the Federal Reserve, which poured the necessary cash into the banking system through monetary easing and low interest rates throughout the 1990's and 2000's. The spigots were on—and the 'liquid' flowed into banks on a gargantuan level, much of it into home sales."

The article points to the True Money Supply index from the Ludwig Von Mises Institute which found that the money supply rose from about $1.787 trillion at the end of 1990 to about $5.268 trillion by the end of 2007, representing a 295 percent increase. 

Mortgage debt grew even faster than the money supply. In 1990, outstanding mortgage debt held was $3.805 trillion. By the end of 2007, total mortgage holdings rose to $14.568 trillion, a 383 percent increase.  Romano wrote that without the money from the Fed initially, the bubble would have been "impossible."

Wilson said that "In order prevent the next crisis, we need an accurate accounting from government officials as to what went wrong with the housing bubble, so that steps are taken to ensure that it never happens again.  We're not getting that from Ben Bernanke or the Federal Reserve at all under his leadership."

Wilson concluded, "For helping to cause the crisis and for failing to take responsibility for the errant Fed policies that contributed to it, Ben Bernanke must not be reconfirmed by the Senate."



Daily Grind: State Recessions, Big Government Obsessions 

State Recessions, Big Government Obsessions
It's time for wayward states to fire public employees.

Peddling Our Way to Tomorrowland
The new Obama "Velocipedes for Clunkers" program will be a great success.

The Wire: Scozzafavaing the Local Yokels
Today's edition covers the GOP base, false stimulus facts, and an update on NY-23

ALG in the News: Slumlord Millionaire
Americans for Limited Government's own cartoonist William Warren is featured in the St. Mary's Today's website in Southern Maryland.



Daily Grind: Simulating Misery 

Stimulating Misery
With recoveries like this, who needs recessions?

Return to Sender
The latest News Release from the National Press Club about the US Postal Service needs to be read word for word.

The Barstool Economist: Where Are the Defenders of Capitalism?
The real question is posed.

Too Hot Not To Note: Obama Poised to Cede US Sovereignty in Copenhagen, Claims British Lord Monckton
Anthony Watts transcribes Lord Monckton's great speech at the Minnesota Free Market Institute on the current proposal that would cede U.S. Sovereignty.



NetRight Daily: Today's Top News on NRN 

The Panic Bloom:  The U.S. could well be in the midst of a panic bloom. As noted by Gabor Steingart in 2006—brilliantly foretelling of the global economic crisis to come—right before a plant is about to die, it produces "one last batch of healthy shoots." These, he writes, "can hardly be distinguished from healthy plants." And so it is with the U.S. economic recovery that, some misguided analysts conclude is now fully underway.

Fishing the Free Markets:  I found a stretch of river with pools and pockets of easy-flowing water. After 20 minutes, I felt a strike on my line, and a brown trout surfaced in his struggle to free himself from the hook. I nearly had the trout to shore, but with one last thrash he freed himself and slipped back into the river.

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Daily Grind: The Panic Bloom 

The Panic Bloom
Is the U.S. economy in the midst of a healthy recovery, or is this the one last batch of healthy shoots before it wilts?

And They All Said, "Amen"
A special message from the Heavenly Host Committee to name Obama, "God."

Chronic Depression
With recoveries like this, who needs recessions?