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MarkGB 

"Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world" - Henry Kissinger

and yet...

"Sooner or later everyone sits down to a banquet of consequences" – Robert Louis Stevenson

Larry Summers defends the Fed's 'openness'

In response to a piece in Larry Summers' FT Blog on 29th December 2015, entitled 'The Fed and financial reform'

http://blogs.ft.com/larry-summers/2015/12/29/the-fed-and-financial-reform/

Much of this is spurious nonsense - a denial of responsibility on behalf of the author and other policy makers:

"Loans to small businesses that he likes are far riskier than holdings of securities that are marked to market on a daily basis, so if banks focused on traditional lending they would be riskier than they are today"

The traditional banking model was built on 'relationships' not 'transactions', and as a result was significantly less risky than the slice and dice derivative charade we now have. As for 'mark to market' a more suitable term would be 'mark to the level of fantasy necessary to keep the charade running'

"Virtually everything that contributed to the crisis was not affected by Glass Steagall even in its purest form" 

This is garbage in its purest form. Glass-Steagall dismantled the wall between retail banking and gambling, provided the banks with a virtually unrestricted casino license, and effectively put the taxpayer on the hook for their losses. It was policy hatched on Wall Street, and subsequently sold to a President always eager to please his paymasters, by Goldman alumni Robert Rubin and his assistant Professor Summers.

It seems to me that Janet Yellen has done great work over the years in pushing the Fed to be more open and that if further steps are to be taken, they should be in the directions she has pioneered, such as more frequent press conferences.

These press conferences are jawboning exercises designed to move markets and keep the numerous credit fuelled bubbles from bursting. The Fed will not allow itself to be audited - there are far too many skeletons in that cupboard. It will eventually get its audit when we exit the eye of the financial storm that hit in 2008 and enter the trailing edge. This will finally convince a critical mass of people that these academics and politicos have not got a clue what they are doing, and have spent the past three decades starting the fires that they pretend to be putting out.

But an 'audit' will eventually come. This travesty will be 'tried' in the court of public opinion, in the history books, and perhaps in the form of televised Senate hearings, which will not be comfortable for the star attractions: 

1. Members of the Eccles Politburo from 1987 to Present I.E. from the date that the bailouts and bubble blowing activities were kicked off 69 days into the tenure of Mr Greenspan (when the Fed and the US government bailed out Goldman Sachs and others who were up to their necks in the Mexican crisis)

2. Various current and past inhabitants of the US Treasury from the same period.

The excuses we can expect to hear will beggar belief.

Mark Zuckerberg - hoist by his own petard?

Hillary Clinton says Donald Trump is the 'best recruiter' for ISIS