America, These Are Your Leaders: Maxine Waters Edition

Check out this glorious exchange between Rep. Maxine Waters (D-Calif.) and Fed Chairman Ben Bernanke during today's testimony before the House Committee on Financial Services:

Rep. Waters, a member of the committee since 1990, doesn't understand the difference between the federal funds rate and the discount rate. The difference between these two very distinct concepts, for those interested (and Rep. Waters, if she is reading), is explained here.

CBS follows up with a reasonable question: "Is Maxine Waters really as dumb as she seems?"

Comments

[Ken Shultz]

"Is Maxine Waters really as dumb as she seems?"

Not if you consider that she might get a few votes for hammering on the fed, but neither she nor any other elected politician will ever lose an election for not knowing the difference between the discount rate and the federal funds rate. Ever.

...and is what she said really that much better than what you see Ron Paul say at the same meeting? Railing on the Fed for going against market signals--something it hasn't done in any meaningful way since 1981?

Nevermind that. You know what's really dumb?

Trying to persuade people that don't know the difference between the discount rate and the federal funds rate that they shouldn't vote for politicians that are ignorant like their constituencies.

A very famous philosopher, more influential than any of us will ever be, cautioned his followers not to do cast pearls before swine.

...we could learn a lot from that guy about how to win friends and influence people.

[The Road to Serfdom]

"A very famous philosopher, more "A very famous philosopher, more influential than any of us will ever be, cautioned his followers not to do cast pearls before swine."

And his context?

He was speaking about

[Sam Grove]

...and is what she said really that much better than what you see Ron Paul say at the same meeting? Railing on the Fed for going against market signals--something it hasn't done in any meaningful way since 1981?

How do you know?

[The Art-P.O.G.]

Oh, she's on the House Financial Services Committee, That makes it bad. If she wasn't, I probably wouldn't make a whole lot of that exchange. Of course, she wouldn't have had that conversation if she wasn't, I'm guessing...

[Ken Shultz]

How do you know?

Because 1981's when Paul Volcker cranked the Federal Funds rate up to 20%. The Fed hasn't gone against market signals for any significant period of time since.

Go chart LIBOR against the what the fed's done since '84. Can you show me where the Fed should have gone with the market but didn't for any meaningful period of time?

I know recently, certainly the period Ron Paul was talking about in those comments the same day as Maxine Waters, the one I linked above... He said that the Fed kept rates "too low for too long"...

Go look at LIBOR. Was the Fed supposed to go against LIBOR sometime before July of '07 (When New Century went belly up)? LIBOR's a market driven rate...

Go look at the TED Spread. Is there a better indicator of credit risk?

http://www.econbrowser.com/arc.....ing_t.html

Was the Fed supposed to know more than the market? Of course not! The Fed just did what the market told them to do--and they've been doing it since 1981...

Ron Paul is criticizing the Fed--in that session I linked above--for doing something it hasn't done since 1981. ...and that's a fact, by any market indicator you care to point to.

He's pandering.

[oaktownadam]

Can you offer any evidence of non-causality?

In other words, how do you know that the close correlation of LIBOR and the Fed's rate changes isn't driven by the Fed? Won't banks always choose the cheapest source of funds they have access to, and thereby drive the market price down?

[Ken Shultz]

I won't tell you that the people who are making the transactions that make LIBOR aren't taking the Federal Funds Rate into consideration. ...among a world of other things.

I will tell you that the Fed hasn't gone against market signals for any significant period of time in almost 30 years. ...in direct contradiction to what Ron Paul seems to be saying the Fed did in the run up to what happened in July of '07 and September of '08.

And if you can show me where the Fed went against signals, I'd really like to see it.

As an aside, there seem to be a lot of people in this thread looking for someone to prove a negative... We all understand that's problematic, don't we? Surely we can agree on that?

I've shown pretty good correlation...

http://www.wsjprimerate.us/usp.....-chart.htm

Can you show me where the Fed "kept rates too high for too long", like Ron Paul says they did, by pointing to any market statistic anywhere?

Notice, I'm not asking anyone to prove the nonexistence of anything--I've shown correlation. I'm simply asking for someone to show me where this lack of correlation exists.

There's a whole internet out there --knock yourself out. And, hey, if you don't find anything? Let us know about that too, okay?

[oaktownadam]

I don't recall Ron Paul ever complaining about rates being too high. He's always been far more concerned about inflation than deflation.

I agree that you've shown clear correlation between LIBOR and the Fed Funds. And you're absolutely right that correlation != causation. But the Econbrowser graphs you've linked to appear to show the Fed actions preceding the market moves, which would suggest causality to me.

Causality is important, because if the market is merely reflecting the Fed, then we would not expect the Fed to take action counter to the market signals.

The second chart looks fishy, because of the curves they've forced onto the FFTR line. That smoothing appears to have been done to avoid having the LIBOR and FFTR lines cross.

[fez]

Paul was probably arguing market signals for a credit bubble (I haven't watched it, but heard the argument framed this way a million times). Something the fed specifically said was not occurring on several occasions siting of all things the underlying asset having inherent value. Now mistaking the fed for being in charge or taking on the responsibility of stopping credit bubbles is generally wrong. The fed has never openly stated what the hell it uses as a yard stick but most agree it is not the suppression of bubbles. The interesting thing is that since the fed traditionally doesn't look at suppressing credit bubbles it's odd that it facilitates them by manipulating rates and keeping them low. So you have a group exacerbating a problem, but not taking responsibility for it.

[Constantine P. Cavafy]

Waiting for the Barbarians

What are we waiting for, assembled in the forum?

The barbarians are to arrive today.

Why such inaction in the Senate?
Why do the Senators sit and pass no laws?

Because the barbarians are to arrive today.
What laws can the Senators pass any more?
When the barbarians come they will make the laws.

Why did our emperor wake up so early,
and sits at the greatest gate of the city,
on the throne, solemn, wearing the crown?

Because the barbarians are to arrive today.
And the emperor waits to receive
their chief. Indeed he has prepared
to give him a scroll. Therein he inscribed
many titles and names of honor.

Why have our two consuls and the praetors come out
today in their red, embroidered togas;
why do they wear amethyst-studded bracelets,
and rings with brilliant, glittering emeralds;
why are they carrying costly canes today,
wonderfully carved with silver and gold?

Because the barbarians are to arrive today,
and such things dazzle the barbarians.

Why don't the worthy orators come as always
to make their speeches, to have their say?

Because the barbarians are to arrive today;
and they get bored with eloquence and orations.

Why all of a sudden this unrest
and confusion. (How solemn the faces have become).
Why are the streets and squares clearing quickly,
and all return to their homes, so deep in thought?

Because night is here but the barbarians have not come.
And some people arrived from the borders,
and said that there are no longer any barbarians.

And now what shall become of us without any barbarians?
Those people were some kind of solution.

[mojavewolf]

Mr. Schultz

How does pandering to constituents as dumb as themselves make elected officials smart? Being re-electible doesn't make a person smart.

Should the Fed Chairman pretend to suffer a severe concussion and agree with her, or should he patiently try to reach her through reason, even if he fail?

Yes, no matter what her motives, she's dumb. She isn't pretending not to get it for the cameras. She really, truly, sincerely doesn't understand.

[rOMAN]

LOL. If you actually believe that Maxine Waters, does NOT know the difference then you powers of perception are dull.

She is very, very obviously letting people know that in FACT, the BANKS, as is a BANKS business Policy, is to pass the cost on to you and me, THE CONSUMER. If you believe that the BANKS will suddenly STOP doing business as usual because you just want to believe it. Then you enjoy and LOVE to pay more money than you actually have to and I can sell you a used car and tell you "The increase in milage on this vehicle is unlikely to have an effect on you".

[Cyto]

Your rant has nothing to do with the topic at hand. Mortgage rates are ruled by mid and long-term rates which are controlled by market forces. The fed has a limited amount of influence on these rates, but only as a by-product of their success or failure at controlling inflation.

The overnight rate has crap all to do with the 10 year LIBOR or 10 year treasury, or any other indicator a mortgage lender might be looking at.

[shrike]

Granted, Maxine Waters is a dumbass, but it was Ron Paul who accused the Fed of arming Saddam Hussein for Reagan and financing the Watergate investigation in the very SAME day like a fucking total loon.

Jesus fucking Christ - between the idiot goldbugs and the Michelle Bachmann Waters loons - I, as an investor, am damn thankful that the Fed does not answer to idiots who inhabit Congress.

[Ken Shultz]

"Granted, Maxine Waters is a dumbass, but it was Ron Paul who accused the Fed of arming Saddam Hussein for Reagan and financing the Watergate investigation in the very SAME day like a fucking total loon.

You can say that again! Moynihan, if you can find that clip, you really should put it up! In its own way, what Ron Paul said in that same meeting was more embarrassing than the newsletters--'cause the newsletter embarrassment he can blame on other people. The Saddam Hussein thing, that's all him...

I guess Peter Schiff is busy on his own campaign!

You know what it reminded me of? It was like when Tom Cruise fired his publicist, that he'd used for years, and then hired someone new, I think it was his sister or something? And then all of a sudden you see Tom Cruise jumping up on Oprah's couch, he's ranting on the Today Show to Matt Lauer about how psychiatry is Nazi research...

That rant of Ron Paul's at that same fed meeting with the Maxine Waters clip there, it's Badnarik on drivers' licenses times ten! Really, he needs better handlers.

[Ken Shultz]

Here's a link to the YouTube...

http://www.youtube.com/watch?v=ncw39IADHa4

He blames the Fed for everything from Saddam Hussein buying a nuclear reactor to Watergate!

Watch for the look on Bernanke's face, it's priceless!

Also, he's talking about the fed keeping rates too low even while LIBOR quotes are going across the top of the screen...

The clip's a freakin' gold mine!

...and we're talking about Maxine Waters? It's the same meeting!

[John C. Randolph]

You know, flatly denying something that's so easily corroborated is rather stupid on your part. See the letter that I linked to below.

-jc

[shrike]

Because Bernanke knows that "Dr. Paul" is a fucking space cadet.

[roversaurus]

Perhaps the link was to here:
http://dailypaul.com/

The letter was introduced by Paul recently. It contains:
"Fed's coverup of the source of the $6300 in hundred dollar bills found on the Watergate burglars when they were arrested at approximately 2:30 A.M. on June 17, 1972 after they had broken into the Watergate offices"

And

"faulty examinations of the Federal Reserve of a foreign bank in Atlanta, Georgia through which $5.5 billion was sent to Saddam Hussein that a Federal Judge found to be part of United States active support for Iraq in the 1980s."

[Ken Shultz]

Y'all need to take a deep breath and listen to yourselves.

Besides the tin foil hats, what's the main thing truthers and birthers have in common?

It isn't that there isn't anything to what they're saying--it's that they sound like a bunch of nut-jobs to anybody who isn't already a believer.

I don't know that there isn't any way anyone can make a connection between the Federal Reserve and Saddam Hussein's phantom nuclear reactor. I don't know that there isn't any way anyone can make a connection between the Federal Reserve and the Watergate conspiracy...

But I do know that if I stayed up all night trying to think of the best way to discredit Ron Paul, I couldn't think of any better way to make him look like a lunatic than having him go on national TV with the Federal Reserve chairman blathering about how the Fed is somehow culpable for Saddam Hussein's phantom nuclear program and an elaborate conspiracy that eventually led to the downfall of Richard M. Nixon!

Personally, I couldn't care less if Ron Paul succeeds or fails--so long as the label I've called myself in front of my friends and family (libertarian) isn't tarnished by this kind of crack pottery, m-kay?

I am genuinely concerned that what impetus we have for libertarian ideas in this country may be squandered on someone with the bad judgment to espouse this kind of quackery on a national platform. ...and I'd really like to put it to some of my fellow libertarians, who may be only following this guy marginally--this is not the way to make friends and influence people!

And that's a pearl, right there.

[Flex Nasty B.I.G.]

+1

[fez]

Looking like a lunatic and being one are two different things. I think Paul takes the wrong approach 90% of the time. I also think he is usually pointing at things that need to at least be clarified. So the approach is wrong, but the idea or the need for a closer look isn't.

[JR]

Hold on. So you want to control who can be a libertarian or not so that the label you use to describe yourself isn't tarnished? Is that libertarian? I like Ron Paul and Rand Paul a lot, although I can't vouch that they won't say something to make libertarians look bad. Things are going forward for libertarianism because people distrust government, and if Paul is gaining constituents it's because there is no other leader on the playing field who is saying things that make sense. What is nuttier? Republicans who vote to extend spending consistently or Paul? I think the threat to the country right now has to do with our debt crisis, and unfortunately noone else is on the ball on this one. Gov. Cris Christie is making a start, but overall the party has a long way to go.

[Bill the Cat]

I second the +1

[mojavewolf]

Agreed, aside from not caring less whether or not Ron Paul fails. The reasons you cite in every other graf are reason enough to hope he fails.

[Ken Shultz]

He is a politician.

Unfortunately, there isn't much in the way of an alternative to that.

...but we should remain aware that although there is an alternative to politicians, the alternative to politicians is not Ron Paul.

He's as much a politician as the rest.

[Hazel Meade]

Ya know, I honestly don't think Paul sounds that crazy bringing that stuff up. I mean, he's not seriously making the allegation, he's just making a rhetorical point - we should know what actions the fed has taken in the past, and wouldn't you want to dispel such conspiracy theories, etc.

I happen to think that having this congress dig up dirt on the fed would politicize the fed right now, but in principle, the idea of opening the books up to 10 years in the past isn't that terrible.

Plus, he made some pretty good points on the ways in which the Fed is already politicized.

[Kolohe]

Ya know, I honestly don't think Paul sounds that crazy bringing that stuff up. I mean, he's not seriously making the allegation, he's just making a rhetorical point - we should know what actions the fed has taken in the past, and wouldn't you want to dispel such conspiracy theories, etc.

Jiminey Kriminey this is what Schultz just said - that the whole 'I just asking questions' and 'you can end this easily' is the *exact same thing* the truthers, the birthers, etc do *all the time*. It's now a reverse dog whistle, and will cause thinking people to dismiss your arguements out of hand.

[Hazel Meade]

Well, not exactly, the Truthers are a little bit more ovious believers in the "insude job" theory. So the "I'm just asking questions." "We want the truth to come out." thing is pretty clearly crap. IMO Paul really does just want to audit the fed, so he's throwing out these theories as random examples of things that we might want to know about. It's not like he's ranting about how the fed funded Saddam Hussein and he want The Truth to come out!

[Ken Shultz]

Surely you appreciate that for some people, the truth can never come out, and this really does smack of the same conspiracy stuff...

You heard Bernanke say they release their minutes 5 years after the fact, right? ...something tells me neither that nor anything else will ever be enough for some people, not if we're gonna get all the way to the bottom of the Deep Throat/Nuclear Iraq Connection.

I mean, like I said up top, how deep do you have to dig before you can finally prove a negative with a positive?

...it's like the old argument against torture in a way--about how you have to assume your victim knows something? How long do you have to torture somebody who doesn't know anything before they finally tell you what they never knew?

If the fed wasn't involved in Iraq or the Watergate break in, then it really doesn't matter whether you go on the witch hunt or not, you'll never find a real witch. ...and if you already believe in witches, then you already see them everywhere.

So the argument that if we don't go looking for witches, we're never gonna find them just doesn't appeal to me in the least. I don't want to be associated with McCathyesque witch hunts. And if that's what Ron Paul's going on about, then we should try to distance ourselves from that.

That's a poisonous gas.

[John C. Randolph]

Yo, Shrek: Read and learn.

-jcr

[Jordan]

Link's broken.

[John C. Randolph]

Dang it. Here's the link:

http://www.dailypaul.com/node/127167

-jcr

[TP]

JR, good. I posted that link before I got down here and read yours.

[Episiarch]

You NutraSweet'd the link, dude. And refer to it as "shriek"; it's more fitting.

[ap]

"I, as an investor, am damn thankful that the Fed does not answer to idiots who inhabit Congress."

so, you are in complete agreement with the idea underlying libertarian thought. good to hear.

[Old Mexican]

He was pointing out to two reports as an example of how the Fed is already subordinate to political expediency and how the lack of transparency gives place to rumors of shaddy deals, that Congress cannot even DEBUNK precisely because of a lack of conspiracy.

The loon here is someone else, Shrike...

[Old Mexican]

Sorry, that's lack of transparency.

[Robert Frost]

Range-Finding

The battle rent a cobweb diamond-strung
And cut a flower beside a ground bird's nest
Before it stained a single human breast.
The stricken flower bent double and so hung.
And still the bird revisited her young.
A butterfly its fall had dispossessed
A moment sought in air his flower of rest,
Then lightly stooped to it and fluttering clung.
On the bare upland pasture there had spread
O'ernight 'twixt mullein stalks a wheel of thread
And straining cables wet with silver dew.
A sudden passing bullet shook it dry.
The indwelling spider ran to greet the fly,
But finding nothing, sullenly withdrew.

[wayne]

You, as an investor, should consider gold. The idiot gold-bugs have been making money in a golden bull market for about ten years now.

[TP]

A loon? I guess you missed his response on the House floor.

[TP]

Damn, mess up that link. Oh well see JCR's link, above.

[swillfredo pareto]

Is there a connection between the increase in the amount of money that [banks] have to pay and the household interest rates?

That was excruciating. What is a household interest rate? And what is a mortgage with a 3% margin? Bernake was so psyched out he made her sound sentient.

[Hazel Meade]

He was probably just flagbbergasted that she apparantly has no idea that the Federal Reserve is supposed to be independent.

[Jerry]

Oh youtubes, where would we be without you.

[prolefeed]

I'm going to guess Waters won't get into trouble because the vast majority of her constituents also don't know the difference between the two rates, and still wouldn't even if it was patiently explained to them at length.

You're not pwned as a politician if your constituents don't understand you've been pwned.

[Episiarch]

This is why pwning a politician needs to take the appropriate form, such as crushing them unmercifully in a round of Counter-Strike.

[Jefferson]

Camper!

[fez]

Do you have to tbag them after crushing them? Or better yet can you frag them right at the start then bag them?

[Maverick]

Who plays Counter Strike anymore?

[Jamie Kelly]

Epi:
It'd be an easy job pwning the pols in any online FPS. Because they'd start playing without ever having read the manual.

[John Mackey Greene]

+1

[Hank]

That's mild in the world of Congressional intellectuals and the people charged with running this country.

http://www.youtube.com/watch?v=KgbBP9Em00A

or, for variety and even better

http://www.youtube.com/watch?v.....p;index=14

Surely everyone has seen this free marketeer and staunch obamacare opponent.

[Sudden]

the Gradulating the Gator video was awesome.

[Hank]

Go gator!!!!!

[Colin]

Remember, this is the same woman that threatened to "socialize" the oil companies.

[Tman]

Aside from Waters hysterics, what's actually more troubling is her attempts at "making sure" her constituents with adjustable rate mortgages don't see their rates get adjusted.

Umm, that's gonna happen sooner or later Maxine. The problem isn't that the rates will adjust, the problem is they have adjustable rates on a house they can't afford.

Which is why we're in this whole mess to begin with.

Which means it's time for me to go drink.

Happy Friday reasoners!

[William Shakespeare]

And therein heartens up his servile powers,
Who, flatt'red by their leader's jocund show,
Stuff up his lust, as minutes fill up hours;
And as their captain, so their pride doth grow,
Paying more slavish tribute than they owe.
By reprobate desire thus madly led,
The Roman lord marcheth to Lucrece' bed.

[Hazel Meade]

My fucking god.

What horrifies me though, is NOT that Ms. Waters doesn't understand the discount rate vs. the federal funds rate.

What horrifies me is that we have this Congressperson attempting to pressure the fed into keeping interest rates low, so that people will have lower mortgage payments.

That is exactly the kind of shit that got us into this mess, and now it is EXPLICIT. She is EXPLICITLY insinuating that the Federal Reserve should keep interest rates low to keep mortgage rates low. It's explicit political interference in the market in a way that is guarentees to lead to an asset bubble.

GAAAAAH!!!!!!!!!!!!!!!!!!

[Marc]

Exackly, 'nuff said.

[lannychiu]

I have a, mild, defense for Maxine Waters. I imagine what occured is that she heard something on the news to the affect of...the fed is going to do something that will raise mortgage rates. She then assumed that it was the Fed raising the discount rate, and preceeded with her nonsensical questions.

The action she heard about was probably the Fed ending its program of purchasing Mortgage Backed Securities (MBS). It is entirely unclear what impact this will have, although various forecasters have assumed anywhere from no impact, to a 1% increase in mortgage costs.

Clearly she doesn't understand how the Fed functions, or what these various interest rates are. But there was at least some reason for here to make her comment.

As for Ron Paul, he isn't dumb. Although he is obviously a bit of a conspiracy theorist.

[agreed]

A CBSNews commenter also suggested this:

The Federal Reserve is wrapping up its purchase program of Mortgage Backed Securities. Many analysts believe that upon conclusion of that program, mortgage rates will rise 30-50 basis points.

Bernanke CLEARLY understood her intent even if she was too stupid to articulate it. He is also the CORRECT person for her to be asking that question. He should have addressed her main concern about mortgage rates and the Fed's role in that instead of dragging a red herring in front of the Village Idiot.

[agreed]

A CBSNews commenter also suggested this:

The Federal Reserve is wrapping up its purchase program of Mortgage Backed Securities. Many analysts believe that upon conclusion of that program, mortgage rates will rise 30-50 basis points.

Bernanke CLEARLY understood her intent even if she was too stupid to articulate it. He is also the CORRECT person for her to be asking that question. He should have addressed her main concern about mortgage rates and the Fed's role in that instead of dragging a red herring in front of the Village Idiot.

[agreed]

A CBSNews commenter also suggested this:

The Federal Reserve is wrapping up its purchase program of Mortgage Backed Securities. Many analysts believe that upon conclusion of that program, mortgage rates will rise 30-50 basis points.

Bernanke CLEARLY understood her intent even if she was too stupid to articulate it. He is also the CORRECT person for her to be asking that question. He should have addressed her main concern about mortgage rates and the Fed's role in that instead of dragging a red herring in front of the Village Idiot.

[Ken Shultz]

Seriously, with the Maxine Waters/Ron Paul one-two punch?

It's like waking up in a nut house!

[Nooge]

Yo, fuck Maxine Waters.

[Nooge]

But don't, okay?

[Spanish to English Dictionary]

Apparently Nooge fucks Maxine Waters.

[Nooge]

Only in the wettest of your dreams.

[Spanish to English Dictionary]

I am a Spanish to English Dictionary, I have no dreams. I only have translations.

[jim]

Ken Shultz,

Explain how Maxine Waters is factually wrong in her accusations. (piece of cake)

Then explain how Ron Paul is factually wrong in his accusations (without sounding like you escaped the nut house)

[PIRS]

There is no need to sould like one escaped from a nut house in order to defend Ron Paul on this one. This person does a very good job:
http://theaustrianeconomists.w.....e-does-not

[heller]

Actually, I believe the Paulitarian (?) above was saying that you were a nutjob if you can prove Ron Paul wrong.

[heller]

Well let's see. First Ron Paul claimed that we could not see what the Fed was doing 10 years ago. Bernanke told him that he could. Ron Paul was wrong.

Then Ron Paul claimed that it was possible that the Fed could have done these things and covered it up. Can I prove that it is impossible? No, but I can't disprove that gremlins could possibly be living in your closet either.

[oaktownadam]

No, Bernanke said that the FOMC transcripts are released 5 years after the fact.

That's not exactly what Paul's point was about.

[heller]

What was Paul's point then?

[Ken Shultz]

Leave Ron Paul out of it for a second...

How does anyone talk about the Fed's connection to Saddam Hussein's phantom nuclear reactor AND the Fed's connection to Watergate--in the same sentence--and not sound like a Brazil Nut?

Don't look to me for explanations! I'm not the one that did it. I didn't make these statements to Ben Bernanke in front of the TV cameras and the world.

I didn't make this stuff up.

I'm just tellin' you what was said, and that it sounded like something a crack pot would say. There's nothing more to prove here.

What's the suggestion on the table, anyway? That we should get rid of the Fed because it financed Saddam's nuclear reactor and we can't have any of that in the future? That for all we know there's another Watergate break in in the works, and we have to shut down the Fed and put a stop to it before that happens again?

Am I supposed to take that seriously? ...coming from anyone?

We're entering LaRouche territory.

I'm sure when the Moonies I used to see at the airport first took Moonie 101, they started off with something simple--they weren't sent out to the airport the first day. They had to buy in a little bit at a time.

And I'm sure most of the Paul people didn't start with thinking that the Bilderberg Group Fed was all over Saddam Hussein's nuclear program and the Watergate break in too, right? 'cause you have to believe the Fed's bad before you can get someone to believe that, am I right? It's a step by step thing, you didn't just get there in one giant leap?

[TP]

Yeah, and the allegation that Ollie North sold arms to Iran and funded the Nicaraguan rebels was also made by a whack-job.

So, Americans should just keep their mouths shut for fear of appearing like a whack-job?

...coming from anyone?

No. Coming from a distinguished member of Congress and

Robert Auerbach is Professor of Public Affairs at the Lyndon Baines Johnson School of Public Affairs, The University of Texas at Austin. He was an economist with the House of Representatives Financial Services Committee during the tenure of four Federal Reserve Chairmen: Arthur Burns, William Miller, Paul Volcker, and Alan Greenspan. Auerbach also served as an economist in the U.S. Treasury's Office of Domestic Monetary Affairs during the first year of the Ronald Reagan administration and as a financial economist with the U.S. Federal Reserve System. Auerbach has been a professor of economics at the American University in Washington, D.C. (1976-83), and a professor of economics and finance at the University of California-Riverside (1983-93). He has written numerous articles, and two textbooks in banking and financial markets. He received two Masters degrees in economics, one from the University of Chicago and one from Roosevelt University, where he studied under Abba Lerner, and a Ph.D. in economics from the University of Chicago, where he studied under Milton Friedman.

http://www.utexas.edu/lbj/faculty/robert-auerbach/

These allegations have been long standing, and the fact that Bernanke had no knowledge of the allegations shows his incompetence.

http://www.nytimes.com/2004/01.....gewanted=1

http://news.google.com/newspap.....77,2777644

[Ken Shultz]

Again, I'm not the one making the accusation. I don't have to justify anything.

To reasonable people, I think his accusations sound about as plausible as the truthers' and the birthers'. ...and I don't want to sound anything like the truthers or the birthers.

Doesn't he already have enough to talk about? I mean, we've got some serious problems in this country that libertarian ideas address directly...

So why the witch hunt? One plausible explanation is that it resonates with certain people--but the people that kind of conspiracy stuff resonates with? ...we'll never make any headway if we're associated with that.

It might get Ron Paul reelected, but that's not my primary concern--I want wide scale acceptance of libertarian ideas as practical solutions to real problems. ...and I think Ron Paul's shootin' that in the foot.

[fez]

I'm not a huge Paul fan, but jesus christ he is light years ahead of Waters in every aspect. Fuck Biden is light years ahead of Waters and he's a fucking idiot.

[fez]

One fucking "hate ron paul" article and the demographic on this site shifts faster than the increased coefficient on cross dressers during ladies nights at the bar closest to the gay district.

That should rile up the gender confused, ron paul people, gay people, liberals (to defend everyone), cross dressing conservatives and at least on or two other groups.

[Julie Newmar]

Hey Wong Foo! Fuck you.

[Mad Max]

I have no idea if any of the allegations about the Federal Reserve vis-a-vis Iraq and Watergate are true, but as the links in this post indicate, Paul didn't simply invent them. There's a NY Times op-ed, a book by a former Congressional economist, and an old article in the Milwaukee Sentinel.

It's quite possible that these claims are full of crap - it's not as if the NY Times and Congressional economists never committed mistakes before! - but it doesn't fit with the narrative that there's only this lone kook making such claims.

If only there were a way to investigate the allegations of the Times op-ed, the ex-economist's book, and the Milwaukee paper. If only some investigative body, such as the Government Accountability Office, would look into these and other claims against the Federal Reserve.

Then, of course, the GAO would issue a ringing report vindicating the Fed and showing that the claims of the NY Times op-ed, the economist, and the Sentinel are false.

No wonder Paul is trying to block any investigation by the GAO!

Paul *is* the one blocking the audit, right?

[Qiadron]

Your logic is not wanted here, son.

[BakedPenguin]

It would have been well for Paul to mention some sources.

[TP]

Perhaps, but questioning periods are time restricted. He did provide sources the following day.

http://www.house.gov/apps/list.....bach.shtml

[robc]

Footnotes are not a standard part of speechmaking. Bernanke should have been familiar with those sources already.

[BakedPenguin]

"As reported in Milwaukee Sentinel on July 8, 1998: ..." How hard is that to fit in? It gives a grounding to everyone else. Otherwise, even if Paul's right, he comes off sounding like an X-Files fan screaming "Roswell! Roswell!!"

Also, are these really the biggest items on the plate at this time? Are you telling me there aren't more substantial criticisms that could be leveled against Bernarke than shit that happened 5-20 years before he even took the job?

How about "what is your current plan regarding monetary policy, and do you intent to monetize the debt?" Etc.

[Ken Shultz]

"Are you telling me there aren't more substantial criticisms that could be leveled against Bernarke than shit that happened 5-20 years before he even took the job?

Of course not!

http://en.wikipedia.org/wiki/B.....of_America

[Mike]

She would get made fun of by The Daily Show if she was a fat white Southerner.

[prolefeed]

I believe she already has been made fun of there, and will likely be featured there again at some point ...

[Paul]

Maxine Waters is proof that with hard work and sticktoitiveness, you can achieve anything.

[S. Palin]

"Is Maxine Waters really as dumb as she seems?"

Oh, you betcha!

[Sanford Watts]

Prety scary stuff aint it? Wow.

Jess
http://www.total-anonymity.cz.tc

[bagoh20]

Maxine Waters is my representative. I have never voted for her, but still I must say: "I'm sorry, I'm very very sorry." a large portion of my district has many idiots, racists and and a culture of kleptocracy. They love her riding on their backs.

[bagoh20]

Ms. Waters was also responsible for much of the death and destruction in the 1992 LA riots when she repeatedly fanned the flames and called for "No justice - No peace." The city got neither, just as she requested.

[Kant feel Pietzsche]

There's this thing economists talk about called "voting with your feet".

[ed]

Waters represents California's 35th Congressional District. We know who lives there. The names and addresses are publicly available. It's easy to target one individual, but she's the representative of thousands. They keep her in Congress year after year after year. Waters is shameless, but a strategy of compiling and publicizing her biggest bloopers and whoppers over the years with the intent of shaming and embarrassing her constituents might bear fruit. The safe and anonymous 80% of voters who keep her in Washington would find themselves under a microscope, the target of national ridicule. But would they care enough to toss her out?

[Maverick]

Here's Hitler ranting about losing his ass in real estate--with a shout out to Waters. 3:41 is pretty funny too.

[Maverick]

If you can take it, here's Corrine Brown and Maxine Waters trash talking each other while wearing their respective NBA team's jersey ('09 NBA Finals participants). It's high concentrate stupid, so chase it down with this.

[Zoology Saturday]

The cougar (Puma concolor) has 38 chromosomes, whereas the ocelot (Leopardus pardalis) has only 36 chromosomes. Nevertheless, ocelot-cougar hybrids were reported by G Dubost & J Royere in 1993 in "Zoo Biology 12". The parents were a captive male ocelot and a captive female puma sharing an enclosure in a private collection in French Guiana. They had shared their enclosure since 1986 and had been raised together. The ocelot is one third the size of the cougar, but the pair produced four litters of hybrid offspring between 1990 and 1992 and possibly an earlier litter in 1989.

In September 1989, the 3.5 year old cougar appeared to be pregnant, but was assumed to have miscarried. In May 1990 she gave birth to 3 hybrid cubs (2 males, 1 female) which all died within a day due to lack of maternal care. In October 1990 she produced 2 cubs (1 male, 1 female) which were hand-reared, but all died between 5 and 12 days old due to lack of suitable milk formula. In 1991 3 female hybrid cubs were born, but failed to survive. In 1992, a fourth litter was born, but were eaten by the mother.

The body size of the cubs was intermediate between cougar cubs and ocelot cubs. Their spot patterns bore more resemblance to the ocelot than to the juvenile pattern of a cougar. The markings were similar to that of an ocelot but with less continuous on the back and with less pronounced throat/belly markings. The backs of their legs were darker and unspotted (a cougar-like trait) and they had ringed tails.

A subsequent cub born in French Guiana apparently survived. The adult female ocelot/cougar hybrid is shown at L'Ocelot-Puma

[Dee Snuts]

90% of politicians I have ever met (especially at the national level) simply speak with a voice of authority on shit they know absolutely nothing about.

I wonder how many hours Maxine Waters has spent in front of the mirror practicing her "serious lady" face.

[Kant feel Pietzsche]

Makes me proud. Only 60% of posters on this site speak with a voice of authority on shit they know absolutely nothing about.

[Kant feel Pietzsche]

30% margin, bitches!

[interesting]

that 60% don't know what they are talking about and more than 59% of the posters are male. So nearly 60% of men are full of bullshit. I think that figure is a little low;-)

[Kant feel Pietzsche]

Women don't need the outlet of a blog post when they're feeling snarky. They have their husbands and boyfriends to berate.

True story..... ;^)

[Chris Rock]

I don't condone it when a man pushes his woman down the stairs.....BUT I UNDERSTAND!

[PR]

she seems to be one of those liberals with the vaunted 103IQ.

while the Fed can affect the mortgage market some and temporarily, what really drives mortgage rates are 30 Year Treasury Bond rates, and what drives those most of the time are inflation expectations. I wish Bernanke had lit her ass up and said Congress' spending is more likely to drive up mortgage rates than anything else. we've only been enjoying the unusually low rates for the last year due to the worldwide financial crisis and investors seeing Treasuries as a safe harbor. that cannot and will not last forever with trillion dollar plus deficits. but simpletons like Waters and the media will always believe the Fed sets mortgage rates instead of the market. as Ken Schultz said above, the Fed follows the market.

[Mad Max]

Congresswoman Waters doesn't need to be intelligent; she can get by on her looks. After all, she's one of the 50 most beautiful people on Capitol Hill.

And I wouldn't be at all surprised to discover that she's one of the 50 *smartest* people in Capitol Hill, as well.

[fez]

You know you'd hit that. Don't lie.

[Maxine Waters]

"Mr. Bernanke, why don't you just set interest rates at negative 100%? We could all be debt free in a year."

[John Maynard Keynes]

She likes me! She Likes me! She really likes me! Fap fap fap fap fap

[willyrob]

How can a person serve on this House committee, or in Congress for so long, and not understand basic economics 101 concepts?

[Bud Light]

salutes you Congresswoman Waters

[AD]

Is Maxine Waters that dumb?
Yes!
This, after all, is the Kongresskritter who accused the CIA of introducing Crack into the Inner-Cities of America;
Who defended Franklin Raines back in (what?) 2003 for doing such a wonderful job at Fannie Mae (which just this week dipped a $15B toe back into the Federal Treasury);
That threatened to "socialize" the oil industry;
and the hits just keep rolling...

[TP]

This, after all, is the Kongresskritter who accused the CIA of introducing Crack into the Inner-Cities of America;

That was Malcolm X, and it was Heroin in Harlem. That's why the CIA made a deal with Louis Farrakhan to off his ass.

[Jamie Kelly]

"America, these are your leaders."

She ain't my leader.

[jcv123]

I find it interesting (and infuriating) that waters is concerned about banks passing on increased capital costs, but she appears oblivious to the fact that increased taxes on business would do exactly the same thing. Raising taxes she is something she advocates at every opportunity.

Saying that she is as stupid as a rock insults gravel everywhere.

[Amakudari]

...and is what she said really that much better than what you see Ron Paul say at the same meeting? Railing on the Fed for going against market signals--something it hasn't done in any meaningful way since 1981?

If you're talking about overnight LIBOR, it is more or less tied to fed funds. Looking to basis spreads in general isn't going to help you, by the way. The 3v6 1Y basis swap spread is here. Bottom line is that if you want to enter into a 1Y swap of 3M LIBOR for 6M LIBOR, during March you had to add a spread of almost 0.5% (50 bps) to 3ML. If you want to get into why, it's more a discussion of credit spread, supply-and-demand, and market dislocation, not 6ML disregarding 3ML.

Example: Power reserve dual currency notes (PRDCs) are usually yen-denominated and pay [%change vs initial exchange rate] * [foreign currency LIBOR] - [yen LIBOR] - [some spread], flooring at 0%. For example, if the dollar strengthens 10% and USD LIBOR is at 5.50% vs the yen's 1.50%, you get paid 1.1 * 5.5 - 1.5 = 4.55%, before the issuer takes his cut via spread. They repay principal after 30 years, but are callable at par until then. Most buyers were Mrs. Watanabes. Usually, issuers would be opportunistic and buy them back every 1-2 years and reissue, making them pretty vanilla short-term instruments with few hedging demands. In the past few years, the yen has strengthened enormously and USD LIBOR has fallen off a cliff. Since few expect these PRDCs to ever get back to par, they've become 30Y zero-coupon bonds with cross-currency optionality, creating huge hedging demands in foreign basis, correlation, and receiving at the 30Y point. The 30Y swap spread (swap vs Treasury) is negative, and it's largely due to exotics hedging (the conspiracy theory, of course, is that 30Y Treasury seller are making a sovereign risk play).

The point is that spreads are meaningless without context and subject to forces beyond simply market views (or bond vigilantism). Also, looking at FF in the early 80s versus LIBOR ignores that a) the Fed didn't explicitly target FF until 1995, and b) LIBOR was much less tied to contractual payment rates the way it is today. Evidence of the Fed bucking the market (which is its job, to some extent) will only be found elsewhere. Take purchasing $1.2tr in MBS to hold down mortgage yields constitutes "regarding" price signals, accepting subprime-heavy CDOs as collateral or purchasing them outright through Maiden Lane III, and the entire concept of the discount window.

[Ken Shultz]

So taking that into account, considering LIBOR, the TED Spread, Fed Funds Futures...

Do you agree that if Ron Paul is serious about wanting to replace the Fed with a market rate, then he must be bs-ing about the Fed not following the market?

'cause they haven't differed much, you know.

Honestly, I'd understand if Ron Paul were out there saying that a market rate (like LIBOR, for instance) doesn't necessarily tell us what we need to know--indeed, even with market rates dropping between July of '07 (when New Century cratered) and September of '08 (When Lehman cratered), rates were dropping (despite the spike around Lehman's collapse) even as credit was tightening...

Sometimes that happens. Sometimes rates drop, even as credit tightens, because the only people who can get a loan are the people with stellar credit, and they get the stellar rate--so a market rate doesn't always tell us everything we need to know about what's going on with credit quality or volume...

But that isn't what Ron Paul is saying at all. Is it. What he's saying doesn't seem to jibe with anything I've seen in the markets.

If he's saying, "We should have raised rates sooner!", then wouldn't that have required the Fed to go against market signals? And if he's saying that the Fed went against market signals, and that was the problem, then my question is "Where?"

In times of crisis with high volatility, like on Black Monday of '87, maybe things diverged. But I can't find any examples of that happening for any meaningful length of time since 1981.

So that leaves me with one other highly plausible possibility--maybe Ron Paul is a pandering politician!

For some of my fellow libertarians, for some reason, that seems to be unthinkable. I understand, I guess; I mean, I wish he were for real too. But I can't get behind a guy like that whose rhetoric just seems to be calculated for effect. ...and I guess I just don't see anything more to it than that.

[Marg]

Thomas Jefferson was right!
The average citizen is too dumb
to govern.

[Amakudari]

Holy fucking shit, she's a damn idiot. The discount rate only applies to around $90bn of borrowings. How much is 25 bps on $90bn going to affect the financial system, much less its $10tr mortgage market?

And she's worried about ARMs with a 3% margin paying too much? MTA (12-month moving treasury average) is at 0.50%. If you can't afford your mortgage at 3.50%, you'll never be able to afford it, period. The same thing applies to COFI/CODI/COSI loans, all of which have indexes at historical lows. If she's concerned so much about short-term rates hurting the financial system, look at commercial loans, which are very often tied to 1M LIBOR.

But no, is this modest increase in the discount rate to start moving it back to a historical relationship with Fed Funds going to impact people who still have an ARM? What an imbecile.

Good thing she's on the Committee on Financial Services.

[jgreene]

Maxine Waters is one dumb bitch! She has no clue as to what she is asking or talking about. Just how stupid is she?

[Kant feel Pietzsche]

Some things are just immeasureable by science.

[interesting]

I guess you could formulate whether you fit into the 60% who don't know what they are talking about and go from there.

[Kant feel Pietzsche]

MSG, is that you? (MNG will forever be known to me as MSG after this weekend, because he gives me hives)

I have this wierd personality quirk. I read, I troll, I occasionally make smart-ass remarks when one occurs to me.

You will RARELY read an authoritative post from me, because I am aware that there is very little that I am an authority on. But, whatever.

[interesting]

"I am aware that there is very little that I am an authority on." I see that includes women.
Kant feel Pietzsche|2.28.10 @ 6:25PM|#
Women don't need the outlet of a blog post when they're feeling snarky. They have their husbands and boyfriends to berate.

True story..... ;^)

[.]

Just how stupid is she?

Probably runs a close second to Obama.

[Zombie Welch]

Congresswoman at long last, have you no sense of BRAINS?

[KRS One]

I want all my daughters
to be like Maxine Waters

[RealRick]

She does look smart - if you put her next to Sheila Jackson Lee (who still thinks Neil Armstrong landed on Mars).

[jersey]

I see that includes women.