it is the end of a myth that the fed relies on quantitative objective scientific data to assess the state of the economy linked to markets turbulence. greenspan acknowledged the socratic dictum and hence his own wisdom, i know that i dont know , and proof has leaked out that bernake consulted several large players to assess the situation instead of relying on independent analysts. the fed governor is forced to give a qualitative judgment and given its poor qualitative background ( no philosophical , rethoric , argumentative, psychological skills and above all , unlike greenspan, no political background to assess the real nature of the human being and investors , mors tua vita mea, in this case life to wall street and death to america) we can but shiver on the outcome of his decisions, certainly biased and influenced.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ae21h4HAD6Ag&refer=home
in this article several names are mentioned. what were the criteria chosen for the selection of these people and why hedge fund and mutual fund managers were consulted to assess the state of the economy, clearly partisan actors heavily exposed to the markets. another doubt that may be raised is whether some circles could gauge the next move of the fed better than the normal and prudent investor working with public information and common sense .
When the Saints Go Marching In
We are trav'ling in the footsteps
Of those who've gone before,
And we'll all be reunited,
On a new and sunlit shore,
Oh, when the saints go marching in
Oh, when the saints go marching in
Lord, how I want to be in that number
When the saints go marching in
And when the sun refuse to shine
And when the sun refuse to shine
Lord, how I want to be in that number
When the sun refuse to shine
And when the moon turns red with blood
And when the moon turns red with blood
Lord, how I want to be in that number
When the moon turns red with blood
Oh, when the trumpet sounds its call
Oh, when the trumpet sounds its call
Lord, how I want to be in that number
When the trumpet sounds its call
Some say this world of trouble,
Is the only one we need,
But I'm waiting for that morning,
When the new world is revealed.
Bernanke Spoke With Rubin as Credit Crisis Worsened (Update1)
By Craig Torres
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Oct. 3 (Bloomberg) -- The Federal Reserve's Aug. 7 decision to keep interest rates unchanged set off a chain of high-level discussions with Wall Street executives, money managers and cabinet officials that culminated in Chairman Ben S. Bernanke's public about-face 10 days later, according to records of his schedule.
Starting with a phone call from former Treasury Secretary Robert Rubin the day after the August rate meeting, Bernanke's appointments included Lewis Ranieri, founder of Hyperion Capital Management Inc., and Raymond Dalio, president of Bridgewater Associates.
The information on Bernanke's calls and contacts was obtained under the Freedom of Information Act by Kenneth H. Thomas, a lecturer at the University of Pennsylvania's Wharton School in Philadelphia. The records depict a chairman who ``has made a very good effort to get up to date with what is going on,'' Thomas said.
David Skidmore, a Fed spokesman in Washington, confirmed the authenticity of the document provided by Thomas to Bloomberg News. He said he couldn't provide details of discussions that Bernanke, 53, had with Rubin and others.
The conversations came against the backdrop of the worst global credit rout in almost a decade. After $38 billion in cash injections into the banking system failed to boost liquidity, the Fed on Aug. 17 cut its discount rate by half a percentage point, to 5.75 percent, and signaled a September reduction in the benchmark federal funds rate. The Fed cut the key rate a half-percentage point to 4.75 percent on Sept. 18.
Rubin's Message
Rubin, 69, now chairman of the executive committee at Citigroup Inc. in New York, told Bernanke that the Fed made the right decision on Aug. 7, even as traders complained the central bank was oblivious to weakening markets, according to a person familiar with the conversation.
On Aug. 9, Bernanke met from 11 a.m. to noon with Ranieri, a former vice chairman of Salomon Brothers Inc. and a pioneer in the mortgage-backed securities market. Fed Governor Randall Kroszner and Community Affairs Director Sandra Braunstein, who also runs an enforcement team, joined the conversation with Ranieri. Ranieri, 60, wasn't available for comment.
Dalio visited Bernanke at 2 p.m. the same day. Bridgewater is the fourth-largest U.S. hedge fund firm, with $32.10 billion in assets under management as of July 1, according to HedgeFund Intelligence's Absolute Return magazine.
Dalio's office in Westport, Connecticut, didn't return telephone calls seeking comment.
Exchange With King
According to the Fed records, Bernanke consulted throughout the month with staff experts, investors, congressional officials, community groups and Bank of England Governor Mervyn King.
Bernanke and King spoke by telephone at 1:30 p.m. on Aug. 17, following the U.S. discount-rate cut that morning. Bernanke was also in frequent contact with Treasury Secretary Henry Paulson, who said in an interview last month that he meets the chairman regularly.
Bernanke's schedule lists 35 Fed conference calls from Aug. 9 to Aug. 31, including at least two during the central bank's summer retreat at Jackson Hole, Wyoming. During the first full day of the symposium, Bernanke said in a speech that he would do what was needed to keep the six-year economic expansion going.
On the eve of the Aug. 7 rate decision, Bernanke received a briefing from Fed staff on markets. He also spoke with Timothy Geithner, president of the Fed's New York branch and the central bank's chief liaison with Wall Street.
Adding Reserves
In the days after the rate meeting, as Bernanke touched base with executives and investors, credit costs climbed. The Fed added more reserves to the banking system than any time after the terrorist attacks of Sept. 11, 2001, in an attempt to increase liquidity.
Yield differences between high-grade debt and riskier credit widened, according to a macroeconomic risk index tracked by Citigroup Global Markets. The index rose to 0.98 on Aug. 17, with a reading of one being a measure of high risk aversion, up from 0.89 on the day before the rate decision.
Wayne Passmore, a Fed expert on mortgage finance, met with Bernanke at least four times in August, including before and during Bernanke's Aug. 2 meeting with Freddie Mac Chairman Richard Syron, the schedule shows.
``He is going up and down his staff,'' gathering information on markets, Thomas said, referring to Bernanke.
The chairman continued to get reports on market conditions from investors after cutting the discount rate.
On Aug. 23, the schedule says Bernanke took a call from John Brennan, 53, chief executive officer of Vanguard Group. Senior Fed economists Brian Madigan, now in charge of the Monetary Affairs Division, and Patrick Parkinson, a financial stability expert, participated.
Vanguard managed $1.1 trillion in mutual fund assets at the end of 2006, according to the company's Web site. Officials for the Valley Forge, Pennsylvania-based firm couldn't be reached for comment.
To contact the reporter on this story: Craig Torres in Washington at
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