Hedge fund manager Mark Dow says all the stories you tell about the dollar are wrong:

Amazingly, San Francisco Fed Chair Jessica Yellen doesn’t think the Fed’s policy is dangerous…

Ron Paul’s Fed Transparency Act, which would require a fresh outside audit of the Fed, has passed the House, though it faces an uphill climb in the Senate.It’s got a lot of internet-borne support (duh!) in part, probably, cause nobody knows what the hell the Fed is or does, but […]

As we’ve said before, anyone who says something like “it’s a stockpicker’s market” needs a smacking.

Ben Bernanke’s performance on Capitol Hill doesn’t make him look so great. At issue is whether he overstepped his bounds by pushing Bank of America (BAC) to stick with its Merrill Lynch acquisition, while (possibly) threatening Ken Lewis with termination if he invoked a (legally dubious) MAC clause.

How many times will he end up saying that today?

Ben Bernanke’s appearance on Capitol Hill begins at 10:00, and you can watch it online here at C-SPAN (Nobody cares enough anymore to embed it, it would seem). The question: Did Bernanke and Paulson abuse their power to force Bank of America (BAC) to swallow Merill Lynch, and did they […]

Here’s some reading material for you in advance of tomorrow’s big hearings on the hill concering the Fed’s and Treasury’s role in the Bank of America (BAC)/Merrill Lynch merger.

Warren Buffett was doing the rounds today! After talking with the Quick-ster on CNBC, he met his old pal Liz Claman at Fox Business Network, and had the chance to expound on a few more topics CNBC didn’t hit on.

There was a time when Jim Cramer didn’t like Bernanke. You know, early on in 2007 he accused Bernanke of being asleep at the switch. But with the crisis abating, Cramer’s decided that Bernanke is the greatest Fed Chair ever, and he’s not happy that Darrell Issa would question Bernanke’s […]

Tim Geithner says it’s impossible because we have a strong independent Federal Reserve, but Warren Buffett has no reason to be politically correct. And in his interview with CNBC, he told Becky Quick: we are monetizing the debt. We are using printed paper to pay our government.

At some point in the last month, everyone came to the conclusion that Ben Bernanke had whipped deflation (“it”), and that the only question left was how to avoid inflation once the economy rebounded.

So it looks like those Treasury bills discovered in the false bottom of a suitcase carried by two Japanese businessmen were probably counterfeit, and may be the handiwork of the Italian Mafia. An Italian blog reported today that Colonel Rodolfo Mecarelli of the Como provincial finance police had said  the […]

The evidence is indisputable that in 2001, Paul Krugman advocated aggressive rate cuts in the hope that the Fed would spur the housing market and help get us out of the recession.

All day Paul Krugman has been involved in a brouhaha over a 2002 column which seemed to be advocating a housing bubble to get us out of the recession. He says he wasn’t calling for a bubble, just that he was just explaining Alan Greenspan was trying to do.

So apparerntly it’s TARP repayement day. In addition to JP Morgan Chase, seven other firms have made TARP repayments today.

JPMorgan Chase has repaid in full the $25 billion preferred stock investment it accepted through the Troubled Asset Relief Program, the company said today. It also plans to inform the Treasury today of its intent to repurchase the 10-year warrant issued to the Treasury in connection with the preferred investment.

Arnold Kling and Megan McArdle have pulled a funny and embarrassing quote from Paul Krugman, published in a 2002 NYT column:

You can harumph about inflation all you want, but for now it’s just not here yet.

Surprise surprise. Fox News is the only “mainstream” US news outlet to be interested in the story of the $134.5 billion in (probably fake) bonds that were seized in Italy. Host Glenn Beck had us on to talk about the story, and they even got the first quote from the […]

Dick Bove has a decidedly mixed track record in predicting bank performance through the financial crisis. For quite some time, Bove has been bullish on Bank of America. So the headlines about his call today got our attention. “In the second quarter, (Bank of America’s) position as the largest lender […]

The White House is set to unveil its much-anticipated revamp of the financial regulatory system this Wednesday, reports WSJ. Among the big, new changes: The Federal Reserve is set to get the power to unwind and shut down large institutions as the FDIC currently has for more plain vanilla banks.

What’s odd about market conspiracy theories (plunge protection teams, weird ‘buy programs’ etc.) is that there’s a perfectly sane-sounding explanation that’s no less worrisome: That all the buying is the result of the massive amount of cash that governments have poured onto the market.

The US House of Representative has joined the Cult of Paul.

With more and more people convinced that the recession will be over this year, this week officially marked the beginning of the discussion: When does the Fed go into tightening mode to prevent inflation? CNBC even did a long segment with inflation hawk James Grant.

From Reuters:  Mike at Rortybomb has the blog entry of the year I think; the background is here. Essentially he’s found a Rosetta-stone like table on page 6 of the stress test results, and has used it to create a fabulous spreadsheet which allows you to plug various different unemployment […]

Update: The picture on the right is of the seized “bonds”, via Italian site Adnkronos.

Inflationists and deflationists remain locked in constant battle with each other, each with a litany of reasonable sounding arguments and convincing stats.

Revered economist and monetary policy expert Anna Schwartz talked with American Public Media’s Kai Ryssdal yesterday about how the Federal Reserve and government have performed during our the economic crisis. She isn’t too pleased.

From Reuters:

I live on Bedford and South First in Williamsburg.  There is a building around the corner selling for $550,000, do I buy it? No brainer right?  Well, first check property shark and try to find one block that doesn’t have a brown field.  Then watch this little documentary: Toxic Williamsburg […]

There was lots of bated breath ahead of today’s 10-year auction, and for good reason. Treasury yields are ticking up again, as the yield now stands at %3.990, a fresh, multi-month high.

Perhaps it’s the limitation of the medium, but if your only introduction to Nasssim Taleb was his appearance on CNBC this morning, you’d think he was a very conventional thinker.

Fed funds futures contracts have been indicating a growing sense that the Federal Reserve will raise its interest rate targets by November. By Monday, the futures were showing a 58 per cent probability yesterday of a rate increase.

Peter Schiff was on The Daily Show last night. Believe it or not, he’s not joined the whole green shoots parade. He’s still talking about things like letting banks fail. That’s sooo March. Anyway, at least this disproves the idea that Schiff has been shunned by the mainstream media.

The New York Fed cannot effectively regulate Citi because it has been captured by the mega-bank, according to a top economic official inside the Obama administration. The close relationship between Citi executives and officials at the New York Fed is stymieing efforts to reform the bank and change its management, […]

Ford has been learning the danger of being a relatively successful company in the age of bailouts: higher borrowing costs.

The Treasury announcement today that 10 of the largest  financial institutions participating in the TARP’s Capital Purchase Program have met the requirements for repayment carefully avoided answering one important question: did any financial instituion fail to meet the requirements?

Earlier today we mentioned that the government should be considering seizing Citigroup and breaking it up. Unfortunately, it seems that the Obama administration is going in the opposite direction: protecting Citi’s chief executive from FDIC bosslady Sheila Bair, who has been agitating for changes to Citi’s top management.

It’s terrific news that 10 large financial firms are going to repay the TARP funds. But we’re still a long way from restoring market processes in the financial sector and getting taxpayers off the hook for Wall Street’s mistakes.

This morning the Treasury Department revealed that it has given the greenlight to repay $68 billion in TARP funds to 10 large financial institutions. At 10, the number of institutions given the greenlight is higher than many earlier reports had estimated. The Wall Street Journal, for instance, said this morning […]

TARP overseer Elizabeth Warren was on CNBC this morning, and since she’s always kind of a downer they stuck her on at 7:10, while people were in the car or the shower. But she actually had some interesting and reasonable points to make, including the fact that since unemployment is […]

One of the big complaints about our regulatory system is that we have a lot of different bodies regulating different parts of the financial system and that the proverbial right hand doesn’t know what the left one is doing.

 

What does the recent rise in treasury yields mean for the economy?  The debate currently raging between Paul Krugman and Niall Ferguson pits traditionalists who think rising yields signal rising investor confidence against declinists who think yields are rising because the US is trashing its currency by monetizing debt. Unfortunately, […]

After several days of a rapidly-steepening yield curve, with traders dumping the long end of the curve, things are reversing themselves a bit. Today it’s traders selling the short end, ostensibly on fears that a Fed rate hike could come before the end of the year, leading to a more […]

The rehabilitation of the original TARP crew, Hank Paulson and Ben Bernanke, is bad news for Larry Summers.

We mentioned this earlier in the day, but we thought it was worth separating into its own post. Cramer’s famous BERNANKE WAKE UP rant from August, 2007 was weirdly good, particularly for all the crap Cramer takes for his theatrics. All that stuff about the bond market being horrible, how […]

‘Tis the season for rehabilitation it seems. First is the rehabilitiation of Hank Paulson and the TARP and now Jim Cramer is out calling Bernanke the greatest Fed Chair in the history of Fed Chairs.

One of the key points made by Holman Jenkins in this piece we’ve been talking about all day is the fact that federal policy uncertainty was a key contributor to the crisis. Sure, the banks made a lot of mistake, and many deserve to have taken hard hits (and fail […]

We’ll post the video when we can find it… but the CEO of Knight Capital, Thomas Joyce just wrapped up a rather interesting interview with Bob Pisani on CNBC.

Ben Bernanke’s language yesterday on the future of the economy and the risks of our ballooning debt was startlingly frank coming from a Fed Chairman.

Yesterday, when Tim Geithner was being interviewed by CNBC’s Steve Liesman, he was asked about “monetizing the debt,” basically having the Fed print up money to pay for the government’s expenses.

The following remarks were delivered to the Congressional budget committee.

Fears among credit investors that threatened ratings downgrades of commercial real estate debt could thwart government efforts to revive the market are vastly over-stated. Standard & Poor’s warned this week that it was likely to downgrade tens of billions of dollars in triple A securities backed by recent commerical real […]

Are you among the many freaked freaked out by the steepening yield curve, convinced it means the world is pricing in massive inflation? Well, maybe it is, but first take a deep breath.

British Econ-god Niall Ferguson goes after US econ-god Paul Krugman, who made the mistake of being condescending to him on a panel last week.  The fate of the world hangs in the balance.

All this talk about inflation, hyper-inflation, an inability to pay off our debts, printing money, the steepening yield curve… Paul Krugman is having none of it. Not only that, he argues in his latest column, it’s all being driven by conservatives eager to torpedo the Presiden’t recovery efforts.

The Fed has finally responded to the soaring mortgage rates, and the apparent failure of quantitative easing.

The big story that everyone will be talking about is the rapidly increasing yield on longer-term maturities, and what that means for both the economic recovery and the US’ ability to finance its gigantic debt. Matters of previously theoretical concern (what happens if the world doesn’t want to keep financing […]

Are you like Ben Bernanke, scratching your beard while trying to figure out why quantitative easing isn’t working?

For years, Ron Paul has been a lone voice in Congress, questioning the wisdom of the Federal Reserve — both its various chairmans and the institution itself. His dogged questioning of Alan Greenspan, and then Ben Bernanke, make for great TV (otherwise, those hearings are total snoozefests).

Is the Fed bullish or bearish about the economy? Let’s go to the Minutes:

Former Fed Chief Alan Greenspanis usually a bit more sanguine on things, having recently pronounces his bullishness on stocks. So we wonder what his angle is with this.

The Fed has already spent $1.25 trillion to buy up Treasury securities in a (somewhat futile) attempt to reduce interest rates, spur borrowing and weaken the dollar. Unfortunately, Treasury rates have been climbing lately. It hasn’t worked. But it sounds like the Fed plans to do more of it. Whatever […]

The Wall Street Journal has run its own version of the the Fed’s stress test on 900 small and midsize institutions, and it claims they’ll see losses of about $200 billion by the end of next year.

The “stress tests” accomplished their main goal, which was to boost confidence in the banks enough that private investors would dig into their pockets and throw some money at them.  So hats off to Tim Geithner for engineering that one.

The Obama administration is thinking seriously about setting wage controls across all of Wall Street, including at firms that haven’t taken TARP money, says the Wall Street Journal. 

Even the government is finally beginning to admit that it helped cause this mess.  On Charlie Rose last week, Tim Geithner pointed the finger at Greenspan:

At the Federal Reserve Bank of Atlanta 2009 Financial Markets Conference, Jekyll Island, Georgia May 11, 2009 The Supervisory Capital Assessment Program

See: 10 Sports Teams That Should Be Eliminated —–

One reason the final stress test tab for the banks was lower than expected was that the banks persuaded the Fed to drastically reduce its estimate of capital shortfalls.  Bank of America saved $20 billion this way.  Citigroup saved $30 billion.

Now that the stress tests are over and banks are raising money from the private markets, the next step is TARP repayment.

People may not want to hear it, but once again, all credit to Tim Geithner and the rest of the folks in Washington for pulling off the stress test stunt.

One of the more embarrassing things made clear by the stress test results released earlier this evening is the terrible quality of Citigroup’s second lien residential mortgagge portfolio.

The big winner from the just-released stress tests: Tim Geithner. No doubt.

And they’re out…

So now that Ben Bernanke, Tim Geithner, and Sheila Bair have put banks  on notice that anyone who failed the stress test and needs to raise new capital (or recycle government capital) will need to review their existing management and board of directors, people are asking what this means.

We’re still clinging to our theory that it was Manny Ramirez that killed the stock market. When people realised that our most charished national institution deserved as much trust as a AAA-rating on your CDO, they sold stocks and lsot confidence.

The results of the stress test are due to be released at 5:00 PM to ensure minimum news cycle impact, and the Feds have released a statement on what to expect. By this point, there’s been so much leaking and throat clearing, it almost seems like an old story at […]

We’ll have to wait for tomorrow to get the official stress test results. But in the meantime, EconomPic Data, using data compiled by Calculated Risk, has prepared a useful chart of banks’ purported capital needs as a percentage of their bank assets. (Hat Tip: FT Alphaville)

The level of leaks coming out today about the stress test results that are scheduled to be official released tomorrow is simply outstanding. It’s all happened without much comment about the appropriateness of this kind of material information about public companies being leaked out through the press.