Busy Benjamin Bernanke

Melinda, my lovely Barbadian fellow volunteer server at the elderly center, might say to Benjamin Bernanke today, in her powerful yet intriguing islander voice, "Benj-ah-mihn, you are so busy to-day? You workin too hahd!" Federal Reserve Chairman Bernanke got busy today, that's for sure! After a 10:00 AM testimony before the House Budget Committee, his group of federal fiends put out the Beige Book of economic indicators, and then he had to skedaddle over to Richmond, Virginia, where he addressed the Federal Reserve Bank of Richmond and Community College Workforce Alliance Forum. A day like that can make you a little punch drunk (BTW: I loved Punch Drunk Love), and folks have a tendency of saying too much when they get like that. What did Ben reveal today? Keep reading...

Note in the photo above, from the left: Tolga (my Turkish friend from Constantinopoli), Valerie (the queen of cooking), Benjamin (nicknamed me "Hip Hop" because I "don't stop"), Melinda (hardest working girl I know) and yours truly The Greek in my USA hat.

"The Greek" earned clients a 23% average annual return over five years as a stock analyst on Wall Street. While writing for Wall Street Greek and others, he presciently predicted the financial crisis and housing and banking failures of the Great Recession. Visit the front pages of Wall Street Greek now to see our current coverage of business news, global financial markets, real estate, shipping, fine art, technical analysis and global affairs.

(Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: FNM, NYSE: FRE, NYSE: AIG, NYSE: BAC, NYSE: GS, NYSE: JPM, NYSE: MS, NYSE: C)

Busy Benjamin Bernanke

An unruly Congressman commented to Ben (like a back-handed biatch slap) "It must be nice being an economist." I could not help but wonder what could be going through that giant brain of the Fed Chief at that very moment. I expect he has already produced a synthetic organism from a vapor of saliva captured by a robotic fly Ben operated telepathically as he seemed to not notice the insult. That organism has likely already evolved into a heat seeking diuretic directed to locate target X. I fear for that man who misspoke behind the microphone... I really do. You just don't mess with Mr. B, cause "B" stands for BRAINIAC!

Congressman Ryan of Wisconsin started the hearing with a dire statement about the threat of sovereign debt, out of control entitlement programs, and America's trajectory toward a crisis similar to that of Greece. Then the sheriff took to the microphone, all cool, calm and collected, like an experienced soldier in the heat of battle. Busy Ben Bernanke indicated economic recovery was intact, with 2010 GDP projected at 3.5%; and he sees a faster pace next year.

That said, Bernanke warned of the casualties of war, the unemployed, who he says will likely stay that way for a while. Though GDP will grow, he sees employment recovering more slowly, thus the anchored unemployment we've been talking about here. Ben remains unconcerned about inflation, which he sees remaining "subdued." Bernanke also reassures that without government stimulus crutches, private activity can sustain economic growth moving forward. Bernanke pointed to consumer spending growth of over 3% this year (but against what comparables Ben!), and said that gradually improving employment and laxer lending (I'm sure he would prefer me to say less-tight lending) would only help matters. He says business outlays are increasing too, and that economic indicators show capital expenditure improvement in Q2 as well.

Now to the Juicy Stuff

Busy Ben Bernanke warned that housing remained soft, and without government incentive, looked to have an uphill climb ahead of it, due to distressed property and the unavailability of credit for construction companies (not to mention shadow inventory). He noted ongoing weakness in commercial real estate, with credit conditions, vacancies and light consumer spending weighing. Tight-to-underwater state budgets are keeping relative construction activity tempered as well. We were glad to hear Ben speak truth on employment, as he seemed to concur with our theories discussed in our copy on the Jobs Report.

Where we disagree though is clear, and it's on inflation. Ben talks about current conditions of subdued pricing, and we look forward toward runaway inflation (remember I said this) in an environment of no-confidence in fiat currencies. He talks about moderated inflation, and we remind that this is normal in recession. He speaks to the long-term, and we warn of currency disintegration. Ben did manage to bring up the euro (we're glad he noticed), and Europe's efforts to confront its crisis. He talked to the ECB's quantitative easing, and discussed our Fed's effort to help with Swap lines. Ben sees firm commitment in Europe, and we see Europe committed.

Then Busy Ben talked about what a wonderful position the US is in now, given the rest of the world's illness (mainly Europe). To fiscal issues, Ben says we took necessary spending actions and we agree. As spending is phased out, the deficit should narrow, but even when things return to normal, he says the budget appears to be on an unsustainable path. He finds a structural budget gap increasing over time, and notes the aging population seeking benefits. He says costs of care have risen faster than incomes as well. He agrees with Ryan that we should begin acting now. Ben says fiscal responsibility is a necessity, though we sense he enjoyed the helicopter ride.

Bernanke made a very important assessment, saying that the economy appeared to have made a significant transition. He says that economic recovery seems to have moved from an inventory restocking phase driving growth to privately driven consumer led sustainable growth. We disagree on the "sustainable" idea here, and Bernanke himself said that, "of course, a double-dip into recession could never be ruled out." That was scary for some I guess.

I liked Congressman Ryan's question to Bernanke as to what leading indicators he employs to build his forecast view for inflation. Bernanke responded by noting several tools, and addressed his ability to reverse expansionary activities quickly (too late would still be too late though). Ryan also addressed another concern of ours, the no-confidence issue regarding fiat currencies and the rise of gold that evidences it. I like this Ryan kid, and would probably vote for him based on what I've seen and heard so far.

You can see the full two hour hearing via this link.

The Fed's Beige Book can be found via this link.

Bernanke's address to the Richmond Fed can be read here.

Do you have thoughts to share on Busy Ben Bernanke's statements?



Go Flyers!!!


Today's most active stocks included: Rewards Network (Nasdaq: DINE), Central Federal Corp. (Nasdaq: CFBK), DJSP Enterprises (Nasdaq: DJSPU), HMN Fin'l (Nasdaq: HMNF), TTI Team Telecom Int'l (Nasdaq: TTIL), Seven Arts Pictures (Nasdaq: SAPX), Cybex Int'l (Nasdaq: CYBI), FSI Int'l (Nasdaq: FSII), Naugatuck Valley Fin'l (Nasdaq: NVSL), LML Payment Systems (Nasdaq: LMLP), Avanir Pharmaceuticals (Nasdaq: AVNR), AEP Industries (Nasdaq: AEPI), Trubion Pharma (Nasdaq: TRBN), Internet Initiative Japan (Nasdaq: IIJI), Hudson Technologies (Nasdaq: HDSN), Iridium Communications (Nasdaq: IRDMZ), Atlantic BancGroup (Nasdaq: ATBC), American Capital (Nasdaq: ACAS), Cereplast (Nasdaq: CERP), Alloy (Nasdaq: ALOY), Mitcham Industries (Nasdaq: MIND), Progenics Pharmaceuticals (Nasdaq: PGNX), FiberTower (Nasdaq: FTWR), Hanmi Fin'l (Nasdaq: HAFC), Oxford Industries (NYSE: OXM), Playboy Enterprises (NYSE: PLA), SFN Group (NYSE: SFN), Standard Register (NYSE: SR), FelCor Lodging (NYSE: FCH), Cal Dive Int'l (NYSE: DVR), KBR, Inc. (NYSE: KBR), Verso Paper (NYSE: VRS), Griffon (NYSE: GFF), Bank of America Bea (NYSE: SDE), Pall (NYSE: PLL), Standard Motor (NYSE: SMP), General Maritime (NYSE: GMR), Genesee & Wyoming (NYSE: GWR), Bluelinx (NYSE: BXC), Pilgrim's Pride (NYSE: PPC), Warner Music Group (NYSE: WMG), Ambac (NYSE: ABK), Crescent Banking (Nasdaq: CSNT), Anadarko Petroleum (NYSE: APC), Delcath Systems (Nasdaq: DCTH), Marshall Edwards (Nasdaq: MSHL), IPC, The Hospitalist (Nasdaq: IPCM), Community Central Bank (Nasdaq: CCBD), Rambus (Nasdaq: RMBS), BP (NYSE: BP), First PacTrust (Nasdaq: FPTB), Oxygen Biotherapeutics (Nasdaq: OXBT), Cyclacel Pharma (Nasdaq: CYCC), AspenBio Pharma (Nasdaq: APPY), NeuroMetrix (Nasdaq: NURO), First BanCorp (NYSE: FBP), Zanett (Nasdaq: ZANE), Onstream Media (Nasdaq: ONSM), Heritage Commerce (Nasdaq: HTBK), Cadence Financial (Nasdaq: CADE), ModusLink (Nasdaq: MLNK), National Financial Partners (NYSE: NFP).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.