So once again the leader of the Fed is more concerned with enlarging the power of his (the Fed's) fiefdom than recognizing the realties of what actually happened. Bernanke's defense of interest rate policy (Monetary Policy) begs the question of economic policy in lieu of admitting or exposing the fact that the Fed failed to regulate Bank Holding Companies. (And the SEC forgot about 10B5 violations as well.) When is anyone or any newspaper going to point out that the Fed (and the SEC) failed to enforce their own regs - regulations which would have prevented the sales of "complex securities" that were supposed to be explained well enough to be understood. So it was a severe violation of regulations to have sold all the CMOs and CDOs that "guaranteed" the lenders debt obligations which enabled them to have sold the volume of mortgages necessary to have created a housing bloat - "bubble." ( Severe violations of significant regulations have the force of law behind them! ) And the sales of the too complex to explain continue unfettered!
Congress, in its ultimate wisdom, continues to miss this fact, and laps up whatever the head of the current head of the Fed contends, just like it did when Greenspan confused and impressed Congress with his so-called brilliance and degrees. Congress has continually failed to look past all the huge credentials of their appointees to the lack of insight and wisdom behind verbal behavior primarily offered to get Congress off their backs so they can continue to promote a lack of common sense and hide underneath a shroud of economic Financial Darwinism. Remember Greenspan admitted that he did not understand the "too complex to explain financial instruments;" and if Bernanke did why didn't he stop it. Why didn't Bernanke, when he was on the Fed Board of Governors, once question the lack of any substance behind the empty promise of Credit Default Swaps. And why does brilliant Bernanke not cry out about the fact that to continue to the existence of Credit Default Swaps is to allow one of the major culprits in our financial sea of quicksand to continue live on to kill us again. Credit Default Swaps may be analogous to a serial rapist - a serial financial rapist.
When Swindled is in print you will know just how self-serving and self-absorbed Bernanke and his financial leadership cohorts are, and have been. This is not to say that he is the major culprit, but he was watching silently while the Fed allowed severe violations of its regs to flourish. You will clearly understand that Obama's appointee's recommendations to Congress to reregulate are based on expanding their own power rather than on curing the disease. You will become aware of the fact that since 1980 economic theory has been fueled by the greed of Financial Darwinists, as economists have diverted reality by focusing on Monetary Policy and Money Supply at the expense of the fabric of our society. Geihtner, Summers, Bair, whoever was in charge of SEC, Schapiro, Bernanke and a number of other very important heavily credentialed genius' apparently were blinded by the glare of all money that was made and overlooked how it was made.
David Satterfield, with 2 Pulitzers, former business editor of the Mami Herald and managing editor of the San Jose Mercury News, said this about my book: "With keen intellect and searing wit, Henry Schoenberger's How We Got Swindled exposes the myriad financial hijinks and colossal leadership failures that have turned the first decade of the new century into an economic disaster. Schoenberger not only identifies the causes, rationales and human failings the led to this mess; he provides some ready answers for how we must go about fixing it. This should be must-reading for every policy maker in Washington and every student of economics and finance."
Although this final thought is out of context (I have not had the time lately to add to my blog) - it is important to point out that James Norris, business editor of the NYTimes listed Fox's book, The Myth of the Rational Market Theory, as one of the six most important books of 2009. In this book Fox concluded that until Yale's Robert Shiller, a behavioral economist, pointed to clear evidence that many of us do not act rationally - the Efficient Market Hypothesis was accepted as gospel. How ludricious that gospel had nothing to do with generations of psychologists noting man's inablility to think straight; or that Ellis and Harper's New Guide to Rational Emotive Therapy was published 50 years before Fox stumbled upon Shiller and Shiller stumbled upon the history of man's irrationality and man's inhumanity toward his fellow man. Coo-coo! Over 300 pages devoted to how man is not rational economically! Man, of course, has a long and lofty rational history regarding religion and wars and seeking revenge for 9/11 in the wrong country. Divorce and its aftermath of joint custody is steeped in rationality, and burkas and slavery make irrationally seem tame. Our legal system is also a paragon of rationalty, always seeking truth. So thank god for Yale's Robert Shiller who discovered that man may just not be rational about money.
Happy New Year - i hope.