Central Banker: The New “It” Career
Young men and women, I invite you to consider a career in the “new and improved” Central Banking. The “old” central banker was pretty dull; you
traveled a lot and gave boring speeches on such topics as inflation targeting and the heterogeneity of investor expectations. The financial crisis changed that. Here are some noteworthy Fed actions in the current financial crisis:

1. Money For All
Historically, we restricted lending to depository
banks. This represented a “line in the sand” that
was not crossed for 75 years, since the Federal
Reserve Act of 1913. We have always found that Act
somewhat restrictive. Fortunately, we found an
obscure provision in the Act, which allows us to
lend to virtually anyone under “unusual and
exigent” circumstances. Under cover of this clause,
we bailed out Bear Stearns – an investment bank, and
AIG – an insurance company.

2. Liberal Credit Terms
Traditionally, the Fed loaned money based on secure
collateral at a penalty interest rate. Collateral
had to be top quality, and a substantial “haircut”
was applied. The penalty interest rate was above
the market rate, and was designed to encourage loan
repayment at the earliest time possible. In the
current crisis, the penalty rate was abandoned as
it conflicted with the more important goal of
rebuilding bank capital. We were also able to
assist our bank clients by expanding the range of
acceptable collateral to include “toxic” bank
assets.

3. Market Maker Not Just Liquidity Maker
A strict interpretation of the Fed’s Lender-Last-
Resort function limits the function to providing
short-term liquidity when markets are disrupted
and banks are unable to raise cash by selling
assets, except at “fire-sale” prices. Loans were
repaid when markets normalised.

We waited patiently for financial markets to
stabilize, but that did not occur; banks were
unwilling to sell assets at the new fair value
prices which were substantially below the pre-
crisis levels. Some even suggest that banks were
waiting for the Fed to “hang out its shingle”.
Regardless, we were not going to wait for markets
to self-correct; we stepped in , purchasing a wide
variety of mortgage related securities. We became
a Market Maker of Last Resort. Economic historians
will be discussing this event for a long time.

4. World Leader
New York city is rightfully regarded as the world’s
foremost financial center. This leadership was
threatened in the current crisis, as many of these
institutions, like Goldman Sachs, suffered losses.
The crisis threatened to downsize these
institutions and reduce their power. We infused
capital and used other measures to protect their
franchises and remain powerful players in world
markets.

Some observers suggest that our actions increase
moral hazard by encouraging banks to push risk to
the limit. We are mindful of the risks, but
believe the benefits exceed the costs. There were
also other issues related to market concentration
that we overcame; J.P.Morgan Chase, and Bank of
America bank acquisitions were approved, even
though long-standing rules of market concentration
were exceeded.

The current financial crisis was somewhat of a
surprise, but not totally unexpected. Crisis are a natural part of a dynamic economy. Excesses develop over time as a result of our “animal spirits” . Some
even suggest that ,we the Fed, contributed to its development with easy money policies and acquiescence to unfettered deregulation.You know, we may be independent, but we are not stupid; we know what
politicians and administrations want. The Fed has been in this business a long time; when we testify before congress, it is clear they want economic growth and low interest rates. Sure, there are occasional questions about financial stability, but Congress would “chew up and spit out” Fed officials who even hinted that interest rates would be increased without explicit evidence of excessive inflation.

The Fed has many career paths; we need people with a variety of skills. You will have ample opportunity to demonstrate your skills and advance careers.
Who knows , you may even aspire to be “top dog” – Fed Chairman. It is a position of supreme national importance. Greenspan was widely regarded as the
second most important person in government. Bernanke, the current Fed Chairman is hailed as a “savior” for his work in the current financial crisis. You might even consider the number two job as a stepping stone to the number one job – President. Then you can “save” the nation from the next crisis,
which is likely developing from the mountain of government debt. Now ordinarily you would not be able to move from the number two position to President, because of our two party system; but I suspect that the next crisis will be so big that the people will be looking for an independent candidate.
The time may come when a smart financier is called upon to lead our nation. That time may be sooner than you think.

La plus ca change, la plus c’est la meme chose

EU Unemployment

Complete coverage of the rise of euro and fall of dollar at : CLICK HERE

The rest are supposed to obey the rigged laws, pay the rigged tribute, be “civilized” in the rigged way, be good little sheep.

After all, you get to have your rigged elections and your rigged “free press”, don’t you?

Only the bankers get to be barbarians.

Follow up comments to original post as tribute to Mr. Simon Johnson and his cause to keep all informed:

This post has been front page since Friday on a building of Farfetched theme. I hope all will learn and appreciate the need for you folks and Mr. Johnson, with a big thank you from this Business Major in finance. I am not one to join the ranks yet until we upright the ship correctly…

Here is the latest post as can be read on all the major sites of Wallstreet Journal, Investors Business Daily and CNBC. This post started out due to school and a friend losing their home and job. Hit very close to home. The truth is critical for all to understand and become able to spread the word “No More” to the ones that can make change and fix this mess before it imploads.

The ability to understand the cost of economic recovery on the backs of the American Taxpayer has become blurred at best. The special interview on PBS had truly revealed the need for sweeping reforms. These reforms are critical to preserve the original separation of what banks are allowed to conduct as business practices. We cannot tolerate for one moment, when it comes to the likes of any financial Bank of Goldman Sachs, Bank of America, JP Morgan, Citicorp, Wells Fargo and a host of others, taking at the current Federal Rates, and use these fund rates against the American Taxpayer. These dollars of being scalped by the current non-regulated reform of the banking and financial entities; have created a vehicle for them to make investments in other countries. The irony of it all as they chose to not even invest within the building of our own country prospective recovery. All these comments are based upon the bank’s ability to use the arbitrage spread of what these financial institutions barrow from the Federal Reserve Current Rate, but as actually wear two or three hats to turn around as an investment brokerage model to be alive and well. The fact of these other hats these banks are currently allowed to wear, without serious banking reforms, has placed even a greater chance for an extreme economic collapse and a depression greater than any ever imagined.

The original collapse that had caused so much pain seen throughout the world and our own United States was on the backs of institutions making very bad investments and as in prior times we bailed out these same banks with about $145 billion and will make the final payment on this in the year 2013. Now we have bailed them out with over trillions of dollars with these same banks showing no respect and battle reforms that would take away their power and make them responsible to be either banks or investment financial firms. They cannot were two or three hats but one would be the needed reform.

Listen and review the video that is a revelation and a call for change and reform. It also puts a face on the current administrations lack of an ability to make critical changes. The following sites are paramount for you to learn the plight of every American is facing. We are facing the pompous attitudes of a banking industry having no mission to assist the failing unemployed or foreclosure based upon the very nature of the mistakes made by the bailed out financial sector. These same financial sectors are drooling at the opportunity to devour their original prey of the planned defaults they calculated, as they would buy back at such depressed rates. This is the SIN against God and Country! We cannot allow this to be business as usual and hold the Government through the Congress, Senate, and Presidential Administration and President Barak Obama accountable to reform this failed system. Taking money off the table until a true honest review of the following videos is critical to the wellbeing of intuitional investor and the private.

Get to know the name of Simon Johnson and his website at http://baselinescenario.com/

Watch the PBS special report to see why these views hold significant water for us to throw up our arms and say stop this crazy madness. Go to the following web link:

PBS channel under Bill Moyers “America’s Economy reformed”? http://video.pbs.org/video/1290388692

Wallstreet Journal Speed-dial Leaves Many Questions after Bill Moyers Guests…

http://online.wsj.com/video/pm-report-geithner-talks-most-to-goldman/0CF0CAE9-2213-46BA-B2FC-8657C3AB10A8.html

It is time we got Ethics and Morals in Order and Not What the Financial Banks Think as Business as seen possibly in this Dilbert video…
http://www.youtube.com/v/0WTkltRfphM

We need to become sellers into this current earnings season of the Financial Banking Sector and send the message that real reforms are forthcoming. It was interesting to see the whisper numbers elevated on the bases that if they miss these whisper numbers, they are considered missing on their earnings. This has become known based upon the unveiling of this huge disparity of analysts not seeing the original spreads of these banks earnings based upon the references above.

Thank you for the use of this forum as our professor tracks all our efforts to uncover micro-macro changes that effect us all.

James Gornick

If we are going to proceed according to “how the world works”, as ‘biofuel’ puts it, then we should draw and quarter the “bankers”, cast their innards to tell fortunes, and turn over their wealth as tribute to whomever enjoys the greatest power.

But I thought we were trying to progress beyond the Hobbesian state of nature.

how much dominance is enough dominance – it seems to me that over the millenia very very few rulers have been able to figure that out most had to contend themselves with either projecting too much or too little of it

and btw I remember the time when the Americans over here were not ashamed to show their superiority and I’d guess there was not more anti-Americanism than there is today probably less – one of my pet theories/fantasies is that the Iraqis only became rebellious when they found out that the Americans really didn’t want to occupy the country permanently – after all they must be smart enough to know how well Japan and we did under American occupation and believe me, even today I insist there is quite a difference between your “zone” and the British – living next to you has done us a whole lot of good even though you tended to consider us to be quite often at least slightly retarded (some of us hit back by claiming cultural superiority which I much to my chagrin found out to be not true)

Well guys, that’s how the world works. Banks “make” money and “bankers” are human and as every human they will deal themselves a better share of what they make. If you were a potter, wouldn’t you make better pots for yourself; or if you were a furniture maker, wouldn’t you make better furniture for yourself. You have most of what you make, and they happen to make money.

1. They think it is important
2. They think it will be interesting
3. They think they are different
4. They think public outrage is exaggerated
5. They think they will come out on top
6. They don’t know how anything real works and what else can they do except what they have been doing so far: make people think they are smarter than they are?

For 5% it will be a fine career choice. For the rest, they will at least learn you cannot trust anyone in authority or believe anything anyone ever says without scrupulous regard to how he is being rewarded for saying it.

This is useful in alternative employments: telephone sales, crime, politics, public relations, advertising, entertainment. It is also essential to understanding mainstream economics.