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Happy 86th, Roy!
Since Hilsenrath wasn't able to talk the market up for more than a couple hours on Friday, Kocherlakota is trying now.
Unless we drop again by the end of the day, many of the indexes will have put in dragonfly dojis two days in a row. The vix in putting in a bit of a reversal today and the NYAD is extremely low. Short term bottom?
Good article. Thank you.
Oh. Shows you what I know...g
I thought it was funny it got halted.
Seems like if they wanted to avoid being hypocritical, they'd halt stocks on days when they beat guidance and go up 10%.
Depends on whether Hilsenrath comes to the rescue and assures everyone that the Fed stands ready to provide any and all liquidity necessary to protect Google shareholders from ever suffering a loss.
Dunno. I'm not sure if google has issued any guidance yet. As far as I know, they reported early and missed rev and eps estimates by a long shot, but I supposed guidance will be in the conference call after the close.
And it looks like they halted trading. How convenient.
http://www.zerohedge.com/news/2012-10-18/165-hedge-fund-suddenly-cried-out-terror-and-were-suddenly-silenced
Hi, Teapot, good point. I know the leveraged ETFs are death to hold long term. They inevitably bleed one dry if held long enough. I'll stop out if RUT gets above 810. You're right, shorting Russell futures is probably a better idea. Haven't seen you around SI lately.
John? Nice to see you. What's with the Dragon thing? Now we need appearances by Dave and Farooq to help round things out.
Ron, I've got a short position in RUT (TZA) that I've held since early July, but other than that, no active trading lately.
Work has exploded, which is a good thing, but it's a product of circumstances unique to our firm, not the broader local economy. Everything is good on the home front. I hope on yours as well.
Ron, I guess you've been missing out. He's been buying Greek bonds, shorting corn and wheat, and was an enthusiastic buyer of Facebook's IPO. His TV spots are more fun and informative than Suzy Orman's and Jim Cramer's combined. He's a miracle.
(I PM'd by mistake. Good to see you, Ron!)
Are you interested in buying a bridge? I know of a good one...g
I'd just as soon take financial advice from Pee Wee Herman.
The FDIC is underfunded in the sense that it would not be able to cover all "insured" deposits if enough banks were to fail at the same time. This has been true for quite a while. The likelihood that enough banks will fail for the FDIC to run through its assets is another question.
The extent to which the FDIC is underfunded was the subject of a lot of debate in 2008-2009 when banks were failing rapidly. Google "FDIC underfunded" and you'll find a bunch of articles on this.
Roy, I'll PM you a bit later, probably over the weekend. I hear from Jimmy infrequently now, maybe once every few months, but I did hear from him a couple of days ago. He's the same, fiesty and crazy, spouting offbeat insights that leave my head spinning. Gotta love the guy. Everything's good here. I'll catch up with you via PM.
Hi, Roy. The RUT is showing conspicuous weakness relative to the other indexes. It's got near term support at 800 and 770, currently at 800.65. It's broken its 13dema and its 20sdma. The 50sdma is at 790. It could just be in correction mode since the early Feb top. Time will tell. Good to see you banging out the trades as usual.
As Ollie used to say, I'd like to bring a little something in my beak to the board here this morning. Here's an excerpt from today's letter from Art Cashin:
" “The Facts Ma’am. Just The Facts” - That was the classic interrogatory posture of Sgt. Joe Friday (Jack Webb) in the popular and long running radio and TV series, “Dragnet”. Just the facts was the posture taken by Lakshman Achuthan of ECRI in two recent interviews on the economy.
Last week Becky Quick interviewed Achuthan to see if he had adjusted or tempered his call that the U.S. was headed into a recession. That interview created enough of a stir that Bloomberg called him in for an interview on their network. We don’t have the transcript on Becky’s interview but here’s a bit of Achuthan’s Bloomberg interview:
Q: Lakshman, in three years there has not been a more anticipated set of interviews than with you today. Reaffirm your recession call.
A: Consider it reaffirmed, and let me explain why. Since our recession call five months ago, the definitive, hard data used to determine official recession dates have gotten worse, not better, despite the consensus view that things have been improving since we made that call in late September.
Q: Is the beginning of a consumption slowdown apparent?
A: Let’s go to those key, hard facts. GDP growth, year-over-year, peaked in the third quarter of 2010 at 3.5%. By the second quarter of 2011, it had fallen to 1.5% and it’s basically flat-lined from there. It has not reaccelerated. It’s a similar pattern for personal income growth and it’s a similar pattern for the broad measures of sales growth. As of January, when you look at industrial production growth, year-over-year, it has now declined to a 22-month low. Taking all of these key aggregate measures of output, jobs, income, and sales, putting it into our Coincident Index, the growth rate has now dropped to a 21-month low. The economy is weaker today than it has been in 21 months.
There’s more to the interview but you get the gist. Given a chance to modify his stance in the face of new, apparently improving data, he declined. He’s sticking with his call and that bears watching, given the excellent record of ECRI."
http://www.zerohedge.com/news/art-cashin-why-economy-weaker-it-has-been-21-months
Italy has a GDP about the size of California (~2 Trillion).
Greece has a GDP about the size of Maryland (~300 Billion).
Spain has a GDP about halfway between the GDPs of Texas (~1 Trillion) and California.
Greece has over 500 Billion in external debt. California has about 380 Billion.
Italy has about 2.6 Trillion in public debt. Spain has about 650 Billion in public debt.
Italy is the really nasty one of the three, with Spain a close second.
The real problem is the derivatives that have been written on these debts by banks and hedge funds. Which, thanks mostly to Summers and Paulson and Greenspan and Bernanke, are completely opaque, with no one knowing their real size. Other than it's probably worse than when Lehman and Bear Stearns went down.
Yes, they want to inflate away the debt by debasing the dollar slowly, but that policy creates little tidepools and eddies in the flow of things, which can turn into whirlpools...like people setting themselves on fire in Tunisia to protest food inflation and unemployment, thereby sparking a widespread uprising, etc.
I get your drift and agree completely, Roy. After a few more weeks of theatrics, the debt ceiling will probably be lifted for the 71st time in the last several decades.
The question is how does all that additional debt get financed. The Fed could just buy it, like they've been doing for the last year or so, but I do think the Fed's stomach for the consequences of that policy are weakening.
It finally became apparent to the Fed that funneling money at the primary dealers, ostensibly to monetize the Treasury issuance, was stoking inflation in commodities. The Fed can't control what the PDs do with the cash they receive from the Fed in exchange for Treasuries, and the PDs don't care about anything other than turning an easy profit. If a profit can be made in running up food, metal and oil prices, then they'll go to town.
The Fed started getting a lot of heat for commodity price increases, and although the Fed publicly denies its actions have anything to with commodity inflation, I think they know it's true.
So I think QE3 has a pretty high hurdle to overcome. We will get it, but not until commodity prices come back a bunch. If the risk off trade becomes popular in July and August so that commodity prices come down, accompanied by weak econ data, hot money will probably run from stocks to bonds at the same time. Dropping yields and weaker commodity prices will give the Fed cover to go the QE3 route and maybe we get several more months of kicking the can, assuming the eurozone doesn't blow apart. It's a dangerous game.
I would hope professional people's own self-respect would be enough
It generally is, among the good ones. The threat of malpractice keeps the rest of them more or less in line.
I'm currently trading, but only swing trades. I've got a short on the RUT through TWM and have had for several weeks. I don't have the time to daytrade right now. I've been incredibly busy lately, more so than in any time in the past 15 years, I think. We've been hiring and out-sourcing work to contract attorneys in order to get it all done. It's more a function of what's going on at my firm than a reflection of business in my neck of the woods in general. The workload will probably subside somewhat in the next few months and I'll trade more actively again. I'm out of town on business right now, with a few minutes before a breakfast meeting.
Love the work you're doing on the board, Newly. I regularly log in to see what you and Roy and the folks are up to. It's good to see Jimmy popping in. I'd like to see Ron and Farooq and Dave and Joanne and Bill and Ollie if they have time, too. Haven't heard from Hippie or Cliff in what seems like forever. Hasta.
Thank you Jimmy and Roy, even if Jimmy often delivers his compliments in his patented backhanded manner...g
I think laying blame on plaintiff tort lawyers for higher prices is overblown. The threat of medical malpractice liability does to some degree cause doctors to order unnecessary tests, but I think the profit motive of insurance companies and drug companies is a much bigger factor in the rise in medical costs.
I can tell you first hand, as a lawyer who lives with the constant threat of malpractice, that threat does make lawyers and doctors more careful than they would otherwise be. Remove the threat, and a lot of professionals will be tempted to lapse into sloppiness. It's a trade off.
Same thing with products. Product liability suits to increase prices, but they also tend to force manufacturers to make products safer. Bought any Chinese drywall lately?
The rise of alternative dispute resolution - arbitration and mediation - have reduced the cost of litigation a great deal, and it's a good thing all around. Punitive damage awards by juries aren't what they used to be and that's generally good, too. A considerable amount of tort reform has been enacted in the last decade or two.
I think a lot of the hooting about tort reform these days is political hyperbole by people who like to rabble rouse on the far right end of the spectrum, Jimmy. It was a much more relevant issue 15 years ago than it is now, since so many disputes these days get resolved relatively cheaply by private arbitration and mediation.
I thought she looked kind of small for a collie, and she didn't have the coloration of a Border collie, but Sheltie didn't occur to me. Been reading a good book on how a dog's mind works. It's amazing how they live mostly through their noses and what they can perceive with those schnozzes of theirs. They can smell far better than we can see.
Ron! Sent you a PM.
Collie pure-bred?
Here's the article I got that last post from:
http://moneymorning.com/2011/04/27/did-ben-bernanke-hint-at-qe3-during-historic-fed-press-conference/
April 27, 2011
Did Ben Bernanke Hint at QE3 During Historic Fed Press Conference?
By Keith Fitz-Gerald, Chief Investment Strategist, Money Morning
While the first press conference ever held by U.S. Federal Reserve Chairman Ben Bernanke grabbed most of the headlines this afternoon (Wednesday), it was the post-meeting statement issued earlier in the day that grabbed my attention.
In particular, I zeroed in on the part about the policymaking Federal Open Market Committee (FOMC) regularly reviewing "the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability."
Maybe I'm reading too much into this, but as a former longtime trader this is a subtle change in wording that says to me that "QE3" - a third round of "quantitative easing" - is on the way. After all, Chairman Bernanke said himself that inflation remains low, unemployment will not drop all that much and gross-domestic-product (GDP) expectations are falling.
So why not go to the QE "well" again?
After all, it "worked" before - U.S. stocks have zoomed some 90% as a result of the central bank's machinations.
However, the trick here is that "QE3" won't actually be QE3 in the manner that QE2 was QE2.
Instead of actually printing more money to purchase U.S. Treasury securities and other paper, the Fed is going to let QE2 end then start selling the $1.4 trillion in toxic "securities" that it acquired during the crisis. It will likely use those proceeds to buy yet more federal debt as a means of supporting more "normal" conditions - although those new securities purchases will probably be farther out on the yield curve.
As for the rest of yesterday's much-awaited - and closely watched - event, it was about what I expected - a lot of speaking, but not much clarity. (Speaking of "closely watched" ... I happened to be in the Money Map Press offices today; most of the staff and I stood together in a conference area and watched this event as a group, sharing insights as it unfolded.)
A Stunning Statement
I have to say that my jaw hit the floor when Bernanke put forth the notion of "transitory inflation" - especially when he stated that the Fed would "have to respond" to that if it is not "well anchored," and stated quite candidly that companies were having to pass those higher costs along to the public.
Last time I checked, inflation costs were anything but well anchored and companies are, in fact, passing along costs as fast as they can. McDonald's Corp. (NYSE: MCD), Nestle SA, and Wal-Mart Stores Inc. (NYSE: WMT) are just a few of the companies that have spoken out about the specific impact that higher component and ingredient costs have had on their earnings. Many have adjusted their guidance.
The press conference was historic. And it was also clearly stressful for Chairman Bernanke. Just for kicks, I ran a voice stress analyzer during the conference. And I was very surprised to see readings that were consistent with high stress or perhaps even evasiveness during the early part of his talk. (In fairness to Bernanke, I'd have been nervous, too.)
Once the question-and-answer session began, those stress readings came down significantly, most notably when Bernanke defended the Fed's actions as heroic and extreme. This suggests that Chairman Bernanke truly believes that part - whether anybody else does is another matter entirely.
Wall Street, of course, is off to the races again, with traders having concluded that the band is, indeed, playing on. Gold and silver rallied, while 10-year Treasuries saw yields rise 1.45% to 3.37%.
Historic Fed Press Conference
Today's Fed statement, historic Fed press conference and Q&A session followed a two-day meeting of the policymaking FOMC and was historic in a number of respects. First and foremost, the FOMC statement was released nearly two hours earlier than in the past - in order to make room for the press conference. I've referred to this as a historic Fed press conference because that's just what it was; it was the first time in the central bank's history - and it's nearly a century old - that the Fed leader made himself available immediately after a monetary-policy gathering.
During this first-ever Fed press conference, Bernanke defended the central bank's strategies and said that the Fed policies will help navigate the U.S. economy through a temporary economic growth slowdown and transitory inflation.
The press conference followed the Fed's announcement that it will continue with its purchase of $600 billion in U.S. Treasuries known as the second round of quantitative easing, or QE2, and will end the purchases in June without tapering.
Bernanke did not indicate there would be a third round - but as I noted earlier, many traders felt the central bank is headed in that direction.
The Fed will also maintain interest rates at an "exceptionally low" level between 0.00% and 0.25% "for an extended period" - the key language in place since March 2009 that signals no rate change is expected any time soon.
The Fed said that escalating prices of oil, energy and other commodities have pushed up inflation, but Bernanke reiterated that those increases aren't expected to translate into "core" inflation over the long haul.
Bernanke stressed to reporters that "longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued," and Fed policies would keep "transitory inflation" under control.
In economic projections released at the conference, the Fed raised its inflation outlook to 2.1% to 2.8% in 2011 from its January predictions of 1.3% to 1.7%. It expects inflation to fall to 1.2% to 2.0% in 2012, and to remain at 1.4% to 2.0% in 2013.
The Fed also said it expects the U.S. economy to grow at a rate of 3.1% to 3.3% this year, down from the 3.4% to 3.9% previously projected. The central bank expects growth to rise to between 3.5% and 4.2% in 2012 and to as much as 3.5% and 4.3% in 2013.
"The markdown of growth in 2011, in particular, reflects the somewhat slower than anticipated pace of growth in the first quarter," Bernanke said in prepared remarks before he took reporter questions. "I would say that ... most of the slowdown in the first quarter is viewed by the committee as being transitory."
Reporters were also eager to question the benefits of QE2. Bernanke said that it was never intended to be a panacea for the economy, but to help support recovery.
"I do believe that the second round of securities purchases was effective," Bernanke said. "We saw that first in the financial markets. The way monetary policy always works is by easing financial conditions. We saw increases in stock prices. We saw reduced spreads in credit markets. We saw reduced volatility. We saw all the changes in financial markets and quite significant changes one would expect if one were doing a normal easing of policy regarding the federal funds rate."
Analysts and economists expected these decisions and answers. While the economic recovery continues, Bernanke wants to maintain the central bank's record stimulus initiative, especially while unemployment is slow to improve.
So far, the central bank has purchased more than $2 trillion of U.S. Treasury and mortgage bonds to pump money into the economy.
Economists think the Fed is still at least a few months away from reversing any stimulus measures as it tries to help the sluggish job market.
The Fed expects the U.S. unemployment rate of 8.8% to fall to between 8.4% and 8.7% by the end of the year, and get as low as 6.8% to 7.2% by 2013.
The Fed's statement was very similar to its last policy announcement in mid-March. It said economic recovery continued at "a moderate pace," with the labor market "improving gradually." It also noted further increases in household spending and business investment.
"The Fed's view of the world hasn't changed very much," Gary Stern, former president of the Minneapolis Fed, said in an interview with Bloomberg Radio. "They continue to emphasize the transitory nature of inflation" and "continue to talk about the economy improving at a moderate pace."
The trouble spots identified by central bankers aren't a surprise - it focused on the "depressed" housing market and elevated unemployment rate as the economy's weak spots.
The Fed gave itself some flexibility with its securities holdings and said it "is prepared to adjust those holdings as needed," and would "pay close attention to the evolution of inflation and inflation expectations."
A Look at Interest Rates
The inflationary impact on the U.S. economy has been a hot topic as the more-hawkish Fed regional bank presidents have said policy changes might be necessary to control rising prices, but today's FOMC decision to keep rates low was unanimous.
Although Dallas Fed President Richard Fisher and Philadelphia Fed President Charles Plosser have said inflation concerns could lead to an interest rate hike later this year, Bernanke gave no clear indication of when to expect higher rates.
The Fed's refusal to raise rates comes when the European Central Bank (ECB) and central banks in many emerging economies are hiking theirs to curb inflation. China raised rates April 5 for the fourth time in six months, and the ECB followed suit on April 7.
Even though the central bank seemed unconcerned about inflation, investors acted otherwise and pushed up inflation-hedge investments gold and silver after Bernanke spoke. Gold rose $13.60 an ounce, and closed at $1,517.10. Silver climbed 90.8 cents and ended the day at $45.958 an ounce.
Investors have flocked to gold and silver as the U.S. dollar continues slipping. After the Fed statement the U.S. Dollar Index fell to 73.284, its lowest level since August 2008.
When asked about concern over how the Fed policies affected the U.S. dollar, Bernanke said he felt the central bank's decisions were the best they could do to keep purchasing power strong and create a stronger U.S. economy. He believes the policies will support a stronger, stable dollar in the long term, which is in the best interest of the United States.
The Fed's statement and Bernanke's policy defense gave a boost to markets that had waited all morning for the news before making moves. The Dow Jones Industrial Average rose 95.59 points, or 0.76%, to close at 12,690.96, while the Standard & Poor's 500 Index rose 8.42 points, or 0.62%, to finish the day at 1,355.66.
[Editor's Note: Money Morning Associate Editor Kerri Shannon contributed to this analysis.]
I think what the Fed is going to do after June is sell some of the junk it's got on its balance sheet and buy treasuries with it.
I believe the Fed has something like 1.2T on its balance sheet in various kinds of assets it took off the hands of banks in late 2008 and 2009. Taking toxic assets off the hands of the banks was part of the bailouts.
Now they can sell those assets back into the markets and use the proceeds to continue buying treasuries from the PDs.
So, call it QE quasi-3, or something.
If they do this, which they indicated in the policy statement, it will continue to provide hot money to the PDs that they will in turn funnel into risk assets. So if Ben wants to continue propping the indexes, this is how he can do it without continued direct monetization.
Since this isn't printing new money the way QE2 is, I suspect it would have less of a negative impact on the dollar.
Newly, see PM re the password.
Newly, I didn't notice the statement in your header that political posts are not appropriate before I made my last two posts. Roy got me fired up...g
Even though this board is focussed on options trading, are you ok with the posting of futures trades? I don't intend to now, but I may later.
Dead right, Roy.
The political pendulum keeps swinging back and forth, with the electorate throwing out the bums from 2008 who threw out the bums from 2004 who threw out the bums from 2000, who threw out the bums from 1996. etc.
Doesn't seem to occur to many that neither "side" has workable answers, as long as both sides are primarily answerable to the biggest corporate interests, which fund both sides in key elections to ensure that whoever wins is always in their debt. And the SC's decision in the Citizens United case put the official seal of approval on that system.
I read a number of articles over the last several days suggesting that something more than that is probably priced in to both stocks and treasuries already.
Steve Liesman is now saying that the Fed is heading the QE toward >$600B.
Thanks, Roy. Excellent call on the reversal, yet again.
Roy, I should know this, but I can't remember for sure. Do you use the same settings on your 5-min charts?
I have a friend who swears FOX is the only 'real' news channel, and she believes everything they tell her to believe. She thinks because it isn't the 'mainstream news' it is more truthful, an alternative news source that tells you what the government-controlled mainstream media does not want you to know and therefore it must be the 'real' truth.
Ain't that the truth. Gathering data and reaching reasoned conclusions takes a lot of work.
Anyone who actually wants information from outside the mainstream media has to turn off their TV, for starters. They can also ignore virtually all newspapers and magazines. Little corners of the web are the only places you're going to find information that is not generated by the mainstream media.
And even those little corners of the web outside the mainstream are often populated by nut-jobs with extremist points of view. But some of those nut jobs are so obsessively driven that they do a much better job of gathering raw data than any MSM outlet.
There was a great scene on the sci-fi series "Fringe" lately with Clint Howard, Ron Howard's little brother. The main characters are investigatig an incredibly complex series of events and their clues lead them to Clint Howard, who plays a nut who spends all his time in front of his computer researching the weird events. Everyone else the investigators have talked to are confused about what's going on, or they are in denial. When the investigators question Clint Howard, it turns out he's the only one who has all the right information, and the puzzle pieces all start to click into place for the viewer. He seems like the only voice of reason in this crazy scenario. Then, at the end of the scene, Clint goes completely sideways and says it's obvious the Klingons are behind it all. The main characters look at each other and politely leave. But they do make use of his information, all of which was right, up until the Klingon bit.
That's how I view a lot of these web pundits like zerohedge and slider on the black and automatic earth and many others. They gather a lot of detail you don't see elsewhere, but you have to be suspect of their conclusions and be aware of their biases.
Most people who bother with news at all seem to stick their thumbs in their mouths, turn on Fox or MSNBC, and call it good. Being informed is a lot more work than that.
Dave, I posted something to you on the NJ aux board regarding your e-mail address.
This is being used to run some short stops above resistance at 1088:
"Pending Home Sales Post Modest Rebound
The National Association of Realtors' (NAR) pending home sales index rose 1.0% in December -- exactly what the consensus expected.
The small increase in the index comes after a 16.4% decline in November, which was the largest monthly decline in the history of the index. NAR believes the rebound in December signifies a stabilization in home buying rates and that prices should also maintain their modest upward trend. While it is significant that the pending home sales index did not trend down for the second consecutive month, it is still too early to call for a stabilization in buying trends...
The government is very involved in the housing sector with both fiscal and monetary stimulus. The big question is what will happen once these programs end. The Federal Reserve has announced that it will pull out of the mortgage market in March. While rates are expected to rise, the market should not expect the Fed to re-enter the sector anytime soon unless the jump in mortgage yields is disorderly.
Further, the homebuyer tax break is scheduled to expire in April. While it is more likely that this piece of legislation gets extended, deficit hawks have proved to be popular and spending cuts may prevent an extension from occurring...
Given these obstacles for future home sales growth, we expect the pending home sales index to stay at its current level or trend slightly upward until March and then possibly face another November-type collapse in April."
Interesting entry in zerohedge this morning. The charts speak for themselves:
http://www.zerohedge.com/article/next-leg-housing-crisis-five-simple-charts
This comment to the article seemed to sum things up:
"It was once proposed in the Roman Senate to have all slaves marked, to more easily distinguish them from Roman citizens... it seemed OK until someone realized it might not be such a good idea to let Roman slaves know just how many of them existed. Better not encourage revolts and riots...
The non-disclosure of the so-called Shadow Housing inventory is but one more piece of the Smoke and Mirrors show, to keep Americans from rioting in the streets.
Our governments and the Banksters have not accepted that continuing to rob our economic future by printing, borrowing, postponing, and outsourcing has burned out the engine of the economy.
This economy is jacked up on wooden blocks and our politicians are making the vrooom,vroooom, sounds, trying to pretend they have a real engine.
It is truly pathetic to watch this gong show."
Hey Dave, your profile says you're 49. Is that a Jack Benny kind of thing?
The other site still seems to be down. Up for a while this morning, now down again.
Yes, hubris, definitely. Goes with the territory.
Last September and October, when Geithner, Paulson and Bernanke had to make a lot of snap decisions, they defaulted to the options that were best for Wall Street. That was the easiest thing for them to do at the time. Their Wall Street buddies were clamoring for them to do this and that, and taxpayer interests were not not being represented.
Now, when they're being attacked for not putting the taxpayer first, they claim that what they did was the only reasonable option open to them at the time.
I think that's an after the fact rationalization. If they had not been so immersed in Wall Street interests since the beginning of their careers, they might have seen other taxpayer-friendly options as being more feasible when the crisis hit.
But about the cover-up of paying AIG's CDS holders 100 cents on the dollar, it looks to me like he's lying.
Yup, the timing of that was far too convenient...
what did you make of the Geithner testimony/grilling? Or Bernanke's
I had Geither's testimony running in the background on my monitor day before yesterday, but I was doing other things and wasn't able to focus on it. I had the volume on low and when it sounded like something interesting was happening I turned it up and would watch for a few minutes. I maybe watched a half an hour of it altogether. I haven't seen any of Bernanke's yet. I may find time to look at some clips tomorrow.
What I saw of Geithner the other day was interesting. He is not a shrinking violet. He was under pretty harsh attack and his job and reputation are obviously on the line, but he did not back down. His answers were fairly controlled and for the most part respectful even though he was clearly wound up.
Having said that, it's pretty clear he's lying like a rug. During the testimony I saw, he kept saying that there was no better choice available to him and Paulson and Bernanke than to bail out AIG and to allow AIG's counterparties to collect 100 cents on the dollar for their CDS contracts. Hogwash. I don't buy it for a second.
He kept playing the card that it's easy to criticize with the benefit of hindsight, but I think it's pretty obvious that at the time they must have known they had the ability to 1) isolate from the rest of AIG the London division of AIG where the main CDS problems were, 2) halt trading in AIG, put it in receivership, and wind the thing down over time while assuring AIG's counterparties that the world would not end, 3) negotiate a far better deal for the taxpayer than permitting GS and AIG's other counterparties to collect 100 cents on the dollar on their CDS contracts, and 4) release all relevant information about the transactions as they occurred rather than cutting deals that favored GS and then covering them up.
It seems likely that he's going to get caught in a lie regarding what he knew about paying GS and others 100 cents on the dollar, when he knew about it, and what he knew about the decision to bury information about it. I still think he's likely to be gone by the end of the year and I hope he is. He's a smart guy, but he's serving the wrong master, and he's unapologetic about it. Same goes for Bernanke, in general.