The Greatest Bubble Ever: Why You Better Believe It, Part 2

During the 40 months after Alan Greenspan’s infamous “irrational exuberance” speech in December 1996, the NASDAQ 100 index rose from 830 to 4585 or by 450%. But the perma-bulls said not to worry: This time is different—-it’s a new age of technology miracles that will change the laws of finance.
It wasn’t. The market cracked in April 2000 and did not stop plunging until the NASDAQ 100 index hit 815 in early October 2002. During those a heart-stopping 30 months of free-fall, all the gains of the tech boom were wiped out in an 84% collapse of the index. Overall, the market value of household equities sank from $10.0 trillion to $4.8 trillion—-a wipeout from which millions of baby boom households have never recovered.
Likewise, the second Greenspan housing and credit boom generated a similar round trip of bubble inflation and collapse. During the 57 months after the October 2002 bottom, the Russell 2000 (RUT) climbed the proverbial wall-of-worry—-rising from 340 to 850 or by 2.5X.
And this time was also held to be different because, purportedly, the art of central banking had been perfected in what Bernanke was pleased to call the “Great Moderation”. Taking the cue, Wall Street dubbed it the Goldilocks Economy—-meaning a macroeconomic environment so stable, productive and balanced that it would never again be vulnerable to a recessionary contraction and the resulting plunge in corporate profits and stock prices.
Wrong again!

This post was published at David Stockmans Contra Corner on December 29th, 2017.

The Greatest Bubble Ever: Why You Better Believe It, Part 1

During the 40 months after Alan Greenspan’s infamous “irrational exuberance” speech in December 1996, the NASDAQ 100 index rose from 830 to 4585 or by 450%. But the perma-bulls said not to worry: This time is different—-it’s a new age of technology miracles that will change the laws of finance forever.
It wasn’t. The market cracked in April 2000 and did not stop plunging until the NASDAQ 100 index hit 815 in early October 2002. During those heart-stopping 30 months of free-fall, all the gains of the tech boom were wiped out in an 84% collapse of the index. Overall, the market value of household equities sank from $10.0 trillion to $4.8 trillion—-a wipeout from which millions of baby boom households have never recovered.
Likewise, the second Greenspan housing and credit boom generated a similar round trip of bubble inflation and collapse. During the 57 months after the October 2002 bottom, the Russell 2000 (RUT) climbed the proverbial wall-of-worry—-rising from 340 to 850 or by 2.5X.
And this time was also held to be different because, purportedly, the art of central banking had been perfected in what Bernanke was pleased to call the “Great Moderation”. Taking the cue, Wall Street dubbed it the Goldilocks Economy—-meaning a macroeconomic environment so stable, productive and balanced that it would never again be vulnerable to a recessionary contraction and the resulting plunge in corporate profits and stock prices.
Wrong again!

This post was published at David Stockmans Contra Corner on December 28th, 2017.

A Realistic Decomposition Of Rates, Or At Least A Realistic Interpretation Of It

Last April, former Fed Chairman Ben Bernanke wrote a series of blog posts for Brookings that was intended to explain one of the biggest contradictions of his legacy. If quantitative easing had actually worked as he to this day suggests that it did, why wasn’t the bond market in clear agreement? In order to try to reconcile the huge discrepancy, Bernanke offered several possibilities, even titling his effort ‘Why Are Interest Rates So Low?’ to further emphasize the difficulty.
The fourth part of his series treated with ‘term premiums’, an element of Fisherian rate decomposition that economists use to try to understand bondholders and their motivations. In many ways, however, ‘term premiums’ are a plugline, a leftover after considering the other perhaps more visible (this is a relative designation, as we always need to keep in mind that nothing presented here or that is discussed in policy or mainstream circles about these ideas is visible) parts of rate decomposition – expected path of real short-term interest rates and inflation compensation.

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ September 28, 2016.

At Last – – Even The FT Says Fed on Ropes as Yellen Seeks to Fend off Trump Blows

After a fusillade of excoriating and in many ways unprecedented attacks on the Federal Reserve by the Republican presidential candidate, Janet Yellen, the US central bank’s chair, finally hit back.
Ms Yellen last Wednesday dismissed as emphatically wrong Donald Trump’s claims that she and her institution were keeping short-term interest rates low at the behest of the Obama administration. ‘Partisan politics play no role in our decisions,’ she declared.
Mr Trump is throwing punches at a time when the US central bank is under assault from both sides of the partisan divide, and at a time when polling suggests public confidence in its leadership has declined during a subpar economic recovery.
Some experts say the Fed is vulnerable and that the populist attacks could fuel demands by politicians for tighter constraints on its policy freedoms. Mr Trump ‘is tossing a lot of fuel on the fire’, says Sarah Binder, a professor of political science at George Washington University. ‘It intensifies the partisan criticism of the Fed and keeps the Fed in the politicians’ crosshairs.’ Mr Trump’s interventions by no means mark the first time the Fed has been turned into a political punching bag. Previous Fed chairs have been the subject of barbs during presidential campaigns – including in 2011 when Republican candidate Rick Perry accused former Fed chair Ben Bernanke of ‘treasonous’ behaviour by conducting quantitative easing. Past administrations have seen outbreaks of tension with Fed chiefs, including under presidents George HW Bush and Richard Nixon.

This post was published at David Stockmans Contra Corner By Sam Fleming, Financial Times ‘ September 28, 2016.

At Last – – FT Says Fed on Ropes as Yellen Seeks to Fend off Trump Blows

After a fusillade of excoriating and in many ways unprecedented attacks on the Federal Reserve by the Republican presidential candidate, Janet Yellen, the US central bank’s chair, finally hit back.
Ms Yellen last Wednesday dismissed as emphatically wrong Donald Trump’s claims that she and her institution were keeping short-term interest rates low at the behest of the Obama administration. ‘Partisan politics play no role in our decisions,’ she declared.
Mr Trump is throwing punches at a time when the US central bank is under assault from both sides of the partisan divide, and at a time when polling suggests public confidence in its leadership has declined during a subpar economic recovery.
Some experts say the Fed is vulnerable and that the populist attacks could fuel demands by politicians for tighter constraints on its policy freedoms. Mr Trump ‘is tossing a lot of fuel on the fire’, says Sarah Binder, a professor of political science at George Washington University. ‘It intensifies the partisan criticism of the Fed and keeps the Fed in the politicians’ crosshairs.’ Mr Trump’s interventions by no means mark the first time the Fed has been turned into a political punching bag. Previous Fed chairs have been the subject of barbs during presidential campaigns – including in 2011 when Republican candidate Rick Perry accused former Fed chair Ben Bernanke of ‘treasonous’ behaviour by conducting quantitative easing. Past administrations have seen outbreaks of tension with Fed chiefs, including under presidents George HW Bush and Richard Nixon.

This post was published at David Stockmans Contra Corner on September 28, 2016.

The ‘Wealth Effect’ Didn’t Die, It Was Never A Valid Concept No Matter How High Stocks Go

Over the years, the ‘wealth effect’ has been taken as a core component of monetary policy. Central bankers will not admit it, of course, but particularly stock prices are a central element of their strategy. It almost has to be that way given that the modern version of econometrics applies rational expectations theory as a literal condition. Since expectations form the basis of orthodox understanding about how an economy works and why it changes, the biggest effects, economists believe, of any policy are achieved when they impact consumer, financial, or business expectations the most.
So it is with record stock prices. By the nature of the Great Recession in terms of its depth (not that it was actually a recession), monetary policy was hugely constrained in how it might respond. As then-former Chairman Ben Bernanke wrote in November 2010 explaining why QE2 was in his viewnecessary:
This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ September 20, 2016.

The Folly Of Economists: Negative Interest Rates

Bernanke, the person nicknamed ‘Helicopter Ben’ because he said it would be easy to fight deflation even if it had to be done by throwing money out of helicopters, gave us ‘ZIRP,’ which means ‘zero interest rate policy.’ Now he seems to be leaning toward ‘NIRP,’ ‘negative interest rate policy.’ He is an economics professor now. We can only hope that his students do some outside reading, like Ludwig von Mises.
Jeff Cox and Katie Kramer of CNBC wrote this:
Former Fed Chairman Ben Bernanke thinks policymakers should give serious thought to implementing negative rates.
‘Since that can’t be assured, and since the current low-interest-rate environment may persist, there are good reasons for the Fed and other central bankers to consider changes in their policy frameworks,’ he added. ‘The option of raising the inflation target should be part of that discussion. But … it is premature to rule out alternative or potentially complementary approaches, including the possibility of using negative interest rates.’

This post was published at David Stockmans Contra Corner By Bert Dohmen, Forbes ‘ September 19, 2016.

Will the Bank of Japan cause a Global Bond Tantrum?

As investors anxiously await the key monetary policy decisions from the Federal Reserve and the Bank of Japan next week, there have been signs that the powerful rally in bond markets, unleashed last year by the threat of global deflation, may be starting to reverse. There has been talk of a major bond tantrum, similar to the one that followed Ben Bernanke’s tapering of bond purchases in 2013.
This time, however, the Fed seems unlikely to be at the centre of the tantrum. Even if the FOMC surprises the market by raising US interest rates by 25 basis points next week, this will probably be tempered by another reduction in its expected path for rates in the medium term.
Instead, the Bank of Japan has become the centre of global market attention. The results of its comprehensive review of monetary policy, to be announced next week, are shrouded in uncertainty. So far this year, both the content and the communication of the monetary announcements by BoJ governor Haruhiko Kuroda have been less than impressive, and the market’s response has been repeatedly in the opposite direction to that intended by the central bank.
As a result, the inflation credibility of the BoJ has sunk to a new low, and the policy board badly needs to restore confidence in the 2 per cent inflation target. But the board is reported to be split, and the direction of policy is unclear. With the JGB market now having a major impact on yields in the US, that could be the recipe for an accident in the global bond market.

This post was published at David Stockmans Contra Corner By Gavyn Davies, Financial Times ‘ September 19, 2016.

The Myth Of ‘Morning In America’ – – How The Public Debt Went From $1 Trillion to $35 Trillion in Four Decades, Part 1

……… One of the great virtues of the Trump candidacy is The Donald’s propensity to lob wild pitches – knowingly or not – at the sacred cows of Imperial Washington, thereby exposing the tissue of hypocrisy and can’t, which surrounds them.
But within the herd of revered ruminants none is slathered in more hypocrisy than the federal budget and official Washington’s unctuous professions of devotion to safeguarding the ‘full faith and credit of the United States.’
The truth of the matter, of course, is that our rulers have been marching the nation’s fiscal accounts straight toward national bankruptcy for the last 35 years, at least. And since the arrival of Ben Bernanke at the Fed, Washington’s actual policy with respect to the nation’s ‘credit’ has been to debauch it.
So Donald Trump’s recent rumination about negotiating a ‘discount’ on the federal debt was priceless. It caused a Beltway chorus of fiscal house wreckers to loudly harrumph and admonish the GOP candidate about the sanctity of Uncle Sam’s credit promises.

This post was published at David Stockmans Contra Corner on September 2, 2016.

Coming Soon: Trumped! (Part 6. Government Entitlements – – The Sixth Biggest Economy On Earth

Government Entitlements – Sixth Biggest Economy On Earth
…….. Because the main street economy is failing, the nation’s entitlement rolls have exploded. About 110 million citizens now receive some form of means tested benefits. When social security is included, more than 160 million citizens get checks from Washington.
The total cost is now $3 trillion per year and rising rapidly. America’s entitlements sector, in fact, is the sixth biggest economy in the world.
***
Yet in a society that is rapidly aging to the tune of 10,000 baby boom retirees per day, this 50% dependency ratio is not even remotely sustainable. As we show in a later chapter, social security itself will be bankrupt within 10 years.
Still, there is another even more important aspect of the mainstream narrative’s absolute radio silence about the monumental entitlements problem. Like in the case of the nation’s 30-year LBO, the transfer payments crisis is obfuscated by the economic blind spots of our Keynesian central banking regime.
Greenspan, Bernanke, Yellen and their posse of paint-by-the-numbers economic plumbers have deified the great aggregates of consumer, business and government spending as the motor force of economic life. As more fully deconstructed below, however, this boils down to a primitive notion of bathtub economics.

This post was published at David Stockmans Contra Corner on July 28, 2016.

What Oil Price Recovery – – -It’s August Again, Stupid!

On February 6, 2008, oil prices (WTI) dropped to $87.16, the lowest price since the prior October. Oil had been rising as the market misunderstood and dramatically mispriced what was going on; buying on the idea of monetary policy accommodation in growing intensity, while at the same time not factoring the hidden monetary destruction that was far greater. It was in many ways an extension of then-Fed Chair Ben Bernanke’s March 2007 Congressional testimony that, ‘problems in the subprime market seems likely to be contained.’ Whatever was happening in global finance, the illiquidity was expected both to stick to MBS and mortgages exclusively while being overcome by the ‘Greenspan put’ of greater monetary effort under Bernanke.
From early February on, despite all the unfolding disaster leading up to Bear Stearns that March, oil prices were financially insulated by those misconceptions. There was only a brief pause in the surge just after Bear, as WTI fell from about $110 to $100 only to take off again once it appeared (as was repeatedly claimed and emphasized) that monetary policy was working. It wouldn’t screech to a halt until oil hit $145 per barrel the day before the July 4th holiday.
There was some volatility in the days following, but on July 14, 2008, WTI was right back at $145. In between, Indymac had failed and, more troubling, the giant GSE’s had come under severe funding strain, with their stock prices tanking dramatically. As a result, the SEC announced on July 15 that it would effective July 22 ban naked short selling of not just the GSE’s but also primary dealer banks. It was, effectively, an announcement that dollar funding was really much more than Fed talk, and that all the optimism about the dollar in response to monetary policy was dangerously misplaced.

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ July 27, 2016.

Japan’s Lemming Syndrone

The financial world is buzzing about former Fed chairman Ben Bernanke’s recent trip to Japan, where he advised Japan’s central bank chief Haruhiko Kuroda on how to manage his nation out of multi-decades of stagnant growth. Channeling economist Milton Friedman, Bernanke warned that Japan was vulnerable to perpetual deflation and stagnate growth and that helicopter money – where the government issues non-marketable bonds with no maturity date and the Central Bank buys them with counterfeited credit – was the most useful tool in overcoming this condition.
Bernanke encouraged Japan to carry on with the Abenomics policies that have failed to date by supplementing monetary policy with even more fiscal stimulus – as if Japan’s 230% debt to GDP ratio wasn’t enough. And he assured Abe and his staff that the Bank of Japan (BOJ) has instruments to ease monetary policy yet further.
And in case this village needed another idiot, Nobel laureate Paul Krugman, also chimed in. Arguing that Japan should raise its inflation target to 4 percent and embark on a significant but temporary fiscal stimulus to boost prices in the economy. Speaking at a conference on Thursday in Singapore, Krugman called for ‘a big burst of government spending and maybe also cash donations.’
But the truth is that despite pumping trillions of yen into the financial system, Japanese money printing has had little or no effect in restoring growth. In fact, Japan has already undertaken the largest quantitative easing program – much larger in relative terms than the U. S. Federal Reserve and the European Central Bank.

This post was published at David Stockmans Contra Corner on July 25, 2016.

What Is Helicopter Money? Goldman Explains

Whether Japan admits it or not, helicopter money – thanks to Ben Bernanke – is here, and the market’s reaction this week was simply the first stage of pricing it in, as confirmed by the biggest drop in the Japanese currency this century.
Incidentally, we are “confident” that the SEC will inquire whether Citadel- Ben Bernanke’s official employer – was actually short the Yen ahead of its employee going to Japan and advising the Bank of Japan what to do, and how to crush its currency. Obviously that would be a grandiouse, and criminal, conflict of interest.
We won’t be holding our breath, but while we wait here is a useful primer for all those wondering just what is coming, courtesy of Goldman Sachs, which explains the nuances of monetary policy’s endgame: Helicopter Money.
Q1: What does helicopter money refer to in the first place?
A1: Literally, it is a policy whereby the government or central bank supplies large amounts of money, as if it were scattering money from a helicopter. A more practical definition, however, is a policy whereby the central bank has primary responsibility for funding to facilitate more flexible and active fiscal spending by the government. The concept of helicopter money has been around for years. Professor Milton Friedman was first to propose the idea in 1969, and in the early 2000s then Federal Reserve Board Governor Ben Bernanke raised it as one prescription to prevent deflation.[1] Very recently, a July 13 Sankei Newspaper article suggesting Prime Minister Abe and his advisers were considering helicopter money sparked debate on the subject in Japan.

This post was published at Zero Hedge on Jul 15, 2016.

Woe To Seasonality

So much of the basis for monetary policy was put in place in the 1960′s study of the 1930′s. It has become commonplace simply to assume 21st century tactics as being directly lifted from the start of the Great Depression. One of the causes of that calamity was certainly restrictive money supply, but any dereliction on the part of the Federal Reserve under that condition should not be judged by the current paradigm.
Ben Bernanke has claimed that he ‘had’ to act lest the panic in 2008 turned into something worse (it did anyway, so the mainstream imagines an even worse counterfactual to make it seem that monetary policy achieved at least something). In 1929 and really 1930, that wasn’t the Fed’s job. At the outset of the Great Depression, the Fed had only one job to do and that was currency elasticity. The economic implications of that task, or in that case not doing it well, were tacked on later. Economic management wasn’t something envisioned until 1935 under the reorganization of Marriner Eccles and really Lauchlin Currie.
Currie re-imagined a Federal Reserve System empowered to do much more than the mechanical; the typical god-complex that you see today in economists who task only themselves to save the world (and end up making it worse). In Currie’s case, it was almost explicit, as he advocated a private banking system backed by only government monopolized money. But it must not be forgotten that one of the primary reasons its supporters used to justify the Fed’s own existence in the first place was a very real and very large cyclical swing in the semi-annual money supply. Owing to the agrarian nature of the US economy even in the early 20th century, there were vast changes in money supply distribution as crops flowed one way and money the opposite.

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ July 12, 2016.

Bernanke’s Black Helicopters Of Money

Ben Bernanke is one of the most dangerous men walking the planet. In this age of central bank domination of economic life he is surely the pied piper of monetary ruin.
At least since 2002 he has been talking about ‘helicopter money’ as if a notion which is pure economic quackery actually had some legitimate basis. But strip away the pseudo scientific jargon, and it amounts to monetization of the public debt – – the very oldest form of something for nothing economics.
Back then, of course, Ben’s jabbering about helicopter money was taken to be some sort of theoretical metaphor about the ultimate powers of central bankers, and especially their ability to forestall the boogey-man of ‘deflation’.
Indeed, Bernanke was held to be a leading economic scholar of the Great Depression and a disciple of Milton Friedman’s claim that Fed stringency during 1930-1932 had caused it. This is complete poppycock, as I demonstrated in The Great Deformation, but it did give an air of plausibility and even conservative pedigree to a truly stupid and dangerous idea.

This post was published at David Stockmans Contra Corner on July 11, 2016.

The Fed’s Third Mandate And The Destruction Of Honest Finance

California Rep. Edward Royce had the temerity yesterday to ask Janet Yellen whether the Fed was propping up stock prices. Imagine that!
In fact, he hit the nail on the head when he characterized the Fed’s unrelenting intrusion in financial markets and constant dithering on rate normalization as a ‘third pillar’, and one found nowhere in its statutory authorities:
ROYCE: I’m worried that the Federal Reserve has created a third pillar of monetary policy, that of a stable and rising stock market. And I say that because then-Chairman Bernanke, when he appeared here, stated repeatedly that, ‘the goal of QE was to increase asset prices like the stock market to create a wealth effect.’ That seems as though that was goal. It would stand to reason then that in deciding to raise rates and reduce the Fed’s QE balance sheet standing at a still record $4.5 trillion, one would have to be prepared to accept the opposite result, a declining stock market and a slight deflation of the asset bubble that QE created. Yet, every time in the past three years when there has been a hint of raising rates and the stock market has declined accordingly, the Fed has cited stock market volatility as one of the reasons to stay the course and hold rates at zero. So indeed, the Fed has backed away so many times from rate normalization that – and I think this is a conceptual problem here that the market now expects stock market volatility to diminish the odds of a rate increase. So Madame Chair, is having a stable and rising stock market a third pillar or the Federal Reserve’s monetary policy if I go back to what I originally heard Ben Bernanke articulate?
Yellen’s reply is a risible insult to the intelligence of anyone who can fog a mirror. The sum and substance of what the Fed does these days is wealth effects pumping via the Greenspan/Bernanke/Yellen Put, but that did not stop our duplicitous school marm from denying the obvious:

This post was published at David Stockmans Contra Corner by David Stockman ‘ June 23, 2016.

The Dangerous Conceit Of Central Bankers And The Deceitful Case For ‘Independence’

In February 1999, the Bank of Japan announced that its call money rate would be zero ‘until deflationary concerns subside.’ Other than a temporary shift in 2001 and 2006, deflationary concerns remain. How effective was monetary policy? That point has been partially answered by the introduction of QE over and over and over again. The zero lower bound is to orthodox economists a major problem. They do not, however, have an answer for why it is now a global problem as the ZLB spread out everywhere.
In a speech to the ASSA in Boston, MA, in January 2000, Princeton professor Ben Bernanke criticized the Bank of Japan for its, in his view, reluctance to act. Though he applauded ZIRP and BoJ’s announced intention to keep it in place for as long as ‘necessary’ (without addressing why that might be forever forward), it was nearly enough as he said in conclusion:
Policy options exist that could greatly reduce these [economic] losses. Why isn’t more happening? To this outsider, at least, Japanese monetary policy seems paralyzed, with a paralysis that is largely self-induced. Most striking is the apparent unwillingness of the monetary authorities to experiment, to try anything that isn’t absolutely guaranteed to work.
There is enormous conceit in that statement, compelled by an inflated sense of duty. Why, if monetary policy isn’t working, does that necessarily lead to more of it? The easy answer is because that is the task central banks have given themselves, covered politically by governmental paralysis on any central bank question. The more central banks fail, the easier they cry ‘independence.’

This post was published at David Stockmans Contra Corner on June 22, 2016.

The Keynesian Conceit: If It Works In Theory, It Must In Practice

Walter W. Heller was said to have been an ‘educator of Presidents.’ As an economist and Presidential advisor in the inner circles of DC, Heller worked with more candidates and officeholders than perhaps any other man. As he himself described, his influence went all the way back to Adlai Stevenson and kept on through Kennedy, Johnson, Carter, and Mondale. To his mind, he takes credit for turning Presidents into thorough Keynesians starting with JFK in January 1963 and the tax cut ‘stimulus’ that Heller claims was ‘born on my desk.’
As an economist and advisor, Heller seems to have spent a lot of time about the 1960′s and almost none describing the 1970′s. Perhaps his greatest contribution to that decade was a quote attributed to him describing economics. ‘An economist is a man who, when he finds something works in practice, wonders if it works in theory.’
Among the most pernicious of these theories to have been backward applied in exactly that manner is ‘rational’ expectations theory. This was developed in the 1980′s to try to explain the disaster of the 1970′s in terms that would save econometrics. Thus, it is applied in great detail and mathematics to ‘inflation’ and is often discussed only in that context. Among the most influential to have used rational expectations theory was John Taylor as the basis for the Taylor ‘rule.’
In a 2007 speech, then-Federal Reserve Chairman Ben Bernanke described the updated expectations framework as it at that time related to inflation and gradualism in monetary policy (into the onrushing storm).

This post was published at David Stockmans Contra Corner on June 15, 2016.

A Rare Loss For The HFT Lobby? SEC Staff Recommends Approval Of IEX Exchange Application

In what may be a long overdue victory for the “good guys”, the WSJ reports that the SECs staff has recommended that the agency approve IEX Group Inc.’s “controversial” bid to launch a new stock exchange, signaling likely approval when the agency’s commissioners vote on the order Friday. This decision takes place despite vocal objections of not only Nasdaq, by not only the entire HFT lobby, as IEX’s technology would provide an HFT-free exchange as a result of its 350-microsecond speed bump which would force all traders to be on an equal footing, but most notably despite the repeated complaints by NY Fed darling, HFT powerhouse Citadel (and employer of one Ben Bernanke), which has argued in the past that granting IEX an exchange status would corrupt US equity markets.
That would end months of debate and lobbying over the startup’s proposal to launch the first platform that slows down trading, countering the decadelong trend toward ever-greater speed.
There is still a chance IEX may be rejected in the last moment: according to the WSJ, “the SEC’s three sitting commissioners aren’t required to support the staff’s views, and one may vote no. But the full commission rarely rejects a formal staff recommendation. If the SEC’s commissioners give the green light to IEX, which stands for Investors’ Exchange, it would be the first major new stock exchange in the U. S. since the SEC approved several venues in 2010 that are now owned by BATS Global Markets Inc.”
For regular readers, IEX’ campaign – and symbolism, in a dramatically fragmented market, catering exclusively to well-paying HFT clients who spend millions for the opportunity to frontrun orderflow – is familiar, but here is a brief recap:

This post was published at Zero Hedge by Tyler Durden – Jun 14, 2016.

A Critical and Ignored 2008 Email by Ben Bernanke on the Lehman Collapse

A little noticed 2008 email from former Federal Reserve Chairman, Ben Bernanke, raises serious questions about his official narrative on the collapse of Lehman Brothers. We’ll get to the email in detail, but first some necessary background.
A lot of eyes rolled on Wall Street last October when Ben Bernanke, who chaired the Federal Reserve in the lead up to and during the financial collapse in 2008, released his memoir of the financial crisis with the title: ‘The Courage to Act: A Memoir of a Crisis and its Aftermath.’ Many Wall Street observers felt the title would have more correctly captured the facts on the ground had it read: ‘The Lack of Fed Courage to Supervise Mega Banks Led to an Epic Collapse.’ (In the leadup to the crisis, the Fed allowed Citigroup CEO Sandy Weill and JPMorgan Chase CEO, Jamie Dimon, to sit on the Board of its Federal Reserve Bank of New York, among numerous other conflicts of interest.)
Throughout his memoir, including Chapter 12 titled ‘Lehman: The Dam Breaks,’ Bernanke goes to great pains to paint a portrait of the Fed and himself as being intensely on top of the situation at Lehman Brothers from March 2008 forward, following the Bear Stearns collapse and its absorption by JPMorgan Chase.

This post was published at Wall Street On Parade on June 10, 2016.