Art and commentary by Kimberly Harris

Posts tagged ‘Federal Reserve’

The Tragedie of Macben and the Bubble Economie

Macben is posing next to his printing press which is churning out new US currency

Macben is saving the economie with his magick prynting presse

Act 4
In an abandoned Metro tunnel deep below the nation’s capital, three witches are conjuring up trouble for Macben. As they parade around a steaming cauldron, the faint rumbling of an Orange Line train can be heard in the distance.

First Witch
Thrice the brittle hedge funds stumbled

Second Witch
Thrice and once the walled street tumbled

Third Witch
Speculators cry “‘Tis time, ’tis time.”

First Witch
Round about the cauldron go;
In the poison’d debt throw:
Freddie Mac and Fannie Mae
A-I-G and B-of-A
Goldman Sachs and rich folks tax
Dash of TARP and spoiled carp
Medicare and Medicaid
Student loans and underwater homes
Securitize and monetize

All
Double, double, toil and trouble;
Economy burn and cauldron bubble.

Second Witch
Pundits mumble, never humble
Irrational exuberance and unwise bets
Greek debt and subprime mortgages
Offshored jobs and moribund industries
Bloated bonuses and insider trading
Bernie Madoff and R. Allen Stanford
Into the cauldron hot and deep

All
Double, double, toil and trouble;
Economy burn and cauldron bubble.

Three witches are stirring a cauldron full of poisonous ingredients

The triple witching hour has arrived and the Weird Sisters are preparing a potion to cast powerful spells upon the economie

Third Witch
Real estate crumble, derivatives fumble
Bankers grumble and Congress bumble
Unemployment riseth and inflation loometh
Administration waverth and GSA partieth
Treasury selleth and China buyeth
Liquidity traps and shadow stats,
Mark-to-market, bondholder haircut
Moody’s, Fitch and S&P
Sovereign downgrades and party of tea
QE1, QE2 and QE3 soon to be
Manipulate and stimulate

All
Double, double, toil and trouble;
Economy burn and cauldron bubble.

Second Witch
Cool it with a failed IPO,
Then the charm is firm and good.

Enter Geitnercate with three witches

Geitnercate
Oh well done! I commend your pains,
And every one shall share i’ th’ capital gains.
And now about the cauldron sing,
Like bulls and bears in a ring,
Enchanting all that you invest in.

Second Witch
By the picking of my stocks
Something wicked this way comes.
Open, locks,
Whoever knocks.

Macben
How now, you secret, black, and midnight hags?
Has the dreaded hour of triple witching at last arrived?
What is ’t you do?

All
A deed that goes by many names.

Macben
I conjure you by that which you profess—
Howe’er you come to know it,
Insider information or salmon coloured journal
Answer me.
Though you untie the currencies and let them fight
Against the banks, though the yeasty valuations
Confound hedge fund managers and day traders alike
Though swaps be lodged and derivatives blown down,
Though investment houses topple on their warders’ heads,
Though online brokerage firms do slope
Their revenues to their foundations, though the treasure
Of the world economy tumble all together,
Even till destruction sicken, answer me
To what I ask you.

First Witch
Speak

Second Witch
Demand

Third Witch
We’ll answer

First Witch
Say, if th’ hadst rather hear it from our mouths,
Or from our masters’.

Macben
Call ’em. Let me see ’em.

First Witch
Pour in the tears of analysts that hath eaten red ink
Add lobbyist’s grease that graced the Congressional palms
Into the flame

All
Come, high or low;
Thyself and office deftly show!

The ghostly disembodied head of John Maynard Keynes
.

A burst of light flashes down the darkened tunnel.
An apparition slowly rises from the steaming cauldron.
It is the ghost of renowned stimulator John Maynard Keynes


.

Macben
Tell me, thou long lamented sage

First Witch
He knows thy thoughts
Hear his speech, but say thou nought.

First Apparition
Macben! Macben! Macben!
Beware McRon, the thane of Paul.
Be seduced not by his gilded standard
Instead manipulate and stimulate
Dismiss me. Enough!

The specter descends back into the cauldron.

Macben
Wherever thou art, for thy good caution, thanks
Thou hast harp’d my fear aright. But one word more—
Will fair Fedres be occupied, audited or perchance abolished?

First Witch
He will not be commanded. Here’s another
More potent than the first

The ghostly disembodied head of Richard Nixon.

.

A thunderclap is heard. A second apparition slowly resolves from the cauldron’s steamy mist. It is the ghost of Richard Nixon, slayer of the gold standard and champion of fiat money.

.

.

Second Apparition
Macben! Macben! Macben!

Macben
Had I three ears and Siri too, I’d hear thee, o tormented spirit.

Second Apparition
Be greedy, bold, and resolute. Laugh to scorn
The allure of gold and its falsehearted charm
For as long as the presses roll
No harm shall visit Macben

Macben
Then preach on. What need I fear of McRon?
But yet I can’t be double sure, so I take my chance
That the fates will prescribe no nomination
And that I may continue to voice pale-hearted lies
And slumber roundly innocent of inflationary dread.

Nixon’s ghost dissolves back into the eerie fog

The ghostly disembodied head of Alan Greenspan

.

.

A lightning bolt flashes. A third apparition rises from the steaming cauldron. It is the doppelgänger of Alan Greenspan, the architect of the great housing bubble

.

Macben
What is this spirit
That rises like the issue of an elder,
Wearing upon his bald-brow creases of wisdom
While pronouncing equivocal fedspeak

Third Apparition
Be lion-mettled, proud, and take no care
Who chafes, who frets, or where investigators skulk.
Fedres shall never ruined be until
Great Bretton Woods to Foggy Bottom
Shall come against Macben.

Macben
That will never be.
Who can impress the forest, bid the tree
Unfix his earthbound root? Sweet bodements! Good!
Inflation dead, to emerge never till the woods
Of Bretton rise, and our high-placed Macben
Shall live the life of leisure, pay his breath
To time and mortal custom. Yet my heart
Throbs to know one thing. Tell me, if your art
Can tell so much: shall Bankwoe’s issue ever
Govern in this land?

The apparition condenses down into the cauldron

The ghosts of Keynes, Nixon and Greenspan appear to Macben

Macben recoils in horror when he is confronted by the ghosts of Keynes, Nixon and Greenspan and hears their dire predictions.

All
Seek to know no more.

Macben
I will be satisfied: deny me this,
And an eternal recession shall fall upon you! Let me know.
Why sinks that cauldron? and what noise is this?

To be continued…

Illustration by Kim Harris
Story by Don Rudisuhle

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Green Hole Devours the Earth

President Obama, Ben Bernanke and Timothy Geithner flee Earth in a UFO

An artist’s rendering of the harrowing escape by President Obama and his trusted advisers just as the Earth is assimilated into the green hole of debt

NASA scientists recently announced that they have been watching a high-energy radiation beam emanating from a remote galaxy 3.9 billion light years away. Their findings were published last week and revealed that the beam, which astronomers have named Swift J 1644+57, was likely a black hole that was in the process of capturing and absorbing a hapless star that innocently wandered into its neighborhood.

Just a few days later, NASA scientists informed the White House that they had observed the possible formation of a similar black hole in close proximity to the Earth. Closer examination of the phenomenon revealed that it was actually a green hole that appeared to consist of a nebula of worthless US currency. Unprecedented government spending over the last several decades congealed into a critical mass of depreciated dollars circulating around the Earth and ultimately collapsed into a voracious vortex from which nothing could escape. The gravitational effects of this phenomenon were believed to be provoking earthquakes and spawning extreme weather around the globe and the anomaly was now beginning to digest the moon.

This horrifying discovery was promptly classified and White House staffers immediately declared a DEFCON 1 condition and sprang into action to execute the plan designed to protect the nation’s leaders in the event of imminent destruction of the planet. Frenzied calls were made to the Area 51 Air Force Base at Groom Lake, Nevada to secure a captured alien saucer to evacuate President Obama, Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke. The saucer was dispatched without delay and the trio was whisked away to an undisclosed location somewhere in the cosmos.

Democratic congressional staffers told Speaker John Boehner and Congressman Paul Ryan that a Commander would be waiting for them on the mall in front of the Capitol and proceeded to herd them into what the two legislators were led to believe was a nuclear powered evacuation pod.

Speaker Boehner and Congressman Paul Ryan think they are in nuclear powered evacuation pod

Speaker John Boehner and Congressman Paul Ryan were elated when they thought they would escape in a nuclear powered evacuation pod, but when the frenzy subsided they soon realized that they were sitting in a 1951 Studebaker Commander

Illustration by Kim Harris
Story by Don Rudisuhle

Secretary Geithner’s Failed Rescue Plan

Alien UFOs are beaming up valuable items at the Treasury Department

After the value of their investment in T-Bills dropped dramatically, the extraterrestrials sent a repo fleet to Washington to collect all the valuable items they can find

Secretary Geithner’s ingenious rescue plan is thwarted by the unexpected demands of unusual and unexpected bondholders.

The warning signs of the stress cracks in the US financial system had been appearing for some time now, but the cunning team of Geithner and Bernanke had it all figured out well in advance. The Chinese will continue to buy our Treasury debt no matter what, because they need to continue providing fuel to the American consumers to buy products from China and help deal with the growing overcapacity in that country’s manufacturing sector. Also, a selloff of their US Treasury holdings could trigger a drop in the dollar, which would deprecate the value of their investment.

For some months now, the financial press has been abuzz with increasingly alarming stories about the unthinkable prospect of a default on US Treasury obligations. Opposing congressional factions are far from agreeing on the prerequisites for containing the burgeoning national debt and President Obama has made it clear that any compromise the legislators arrive at must also conform to his vision for the country. Otherwise, he will not hesitate to exercise his veto power.

The storm clouds began to gather back in March when Pacific Investment Management Co sold off all the government debt from their $237 billion PIMCO Total Return Fund, the largest mutual fund in the world. Then, in April the respected ratings agency Standard & Poor’s announced that it was revising the United States’ AAA sovereign credit rating from ‘stable’ to ‘negative.’ That move was precipitated by the agency’s concern that a budget ceiling agreement between the parties might not be reached in time to be implemented and thus lowering the US’s creditworthiness with respect to other peer sovereigns who enjoy the same coveted rating.

Treasury Secretary Tim Geithner promptly shrugged off S&P’s ominous announcement and told Bloomberg Television that the low cost at which the US can borrow is proof that both local and foreign investors believe that the US economy is strong and that its debt will hold its value. However, S&P placed US sovereign ratings on formal credit watch, stating that there is a 50-50 possibility that the agency could downgrade the country’s debt. Yesterday, S&P reiterated that the country’s rating could be cut to AA as early as August, move that would likely trigger an increase in short and long-term interest rates.

At present, just days short of the predicted meltdown deadline of August 2nd, the polemics in Washington continue to rage unabated, with legislators seeming oblivious to the implications of S&P’s stern warnings which were soon echoed by Moody’s Investor Service, who also put the US on a downgrade watch. The Chinese credit ratings agency Dagong followed on Moody’s heels with a similar warning of their own, citing the sluggish growth and persistent deficits in the US.

Andy Xie, the former chief economist for Asia for Morgan Stanley, recently stated that China’s financial policy makers are “very, very bearish” on the US dollar and are seeking to diversify the country’s holdings away from America’s faltering currency. China’s purchase of euro-denominated bonds may provide them with some diversification of risk, although the Chinese recognize that the euro might be a poor substitute for the dollar due to the precarious financial state of the PIIGS countries, all of which may have to be bailed out in the future as the European Central Bank attempts to contain that continent’s sovereign debt crisis. Citing John Maynard Keynes’ supranational currency proposed back in 1940, the ‘Bancor,’ Zhou Xiaochuan, the Governor of the People’s Bank of China, has advocated replacing the US Dollar with IMF Special Drawing Rights (SDRs) as the new centrally managed global reserve currency.

Unbeknownst to Geithner and Bernanke, officials at the People’s Bank of China secretly devised a novel strategy to decrease their exposure to the dollar component of their portfolio currently estimated to contain in excess of $1 trillion in US Treasuries.

Those who follow UFO events are likely aware of the rumored existence of a secret alien base located in the vicinity of the Kongka La Pass in the disputed area of Aksai Chin on the India-China border. This bleak, frigid, inhospitable Himalayan pass sits at 17,000 feet elevation and has a population density of only 3 people per square mile. It is here where strange glowing cylindrical objects and silent triangular craft are said to emerge from the ground and depart vertically at unearthly speeds.

The Chinese have been aware of this base for a long time and some years ago established a friendship with the extraterrestrial beings who have built a vast underground facility in the area. At some point during a casual discussion concerning the mineral resources on Earth, the aliens mentioned that gold exists in abundance on their home planet and is mined principally for use in electronic circuitry, as it has no other real value to them. The Chinese delegation got the aliens’ immediate attention when they told them about their vast holdings of interest-bearing paper instruments issued by the richest and most powerful nation on the planet. The aliens were unfamiliar with the concept of lending something of value and actually getting back more than you lent out, and rapidly warmed up to the Chinese proposal to trade gold for US Treasury obligations.

A quick back-of-the-envelope calculation was performed, and it was agreed that the People’s Bank of China would trade 20,000 tons of gold in exchange for $500 billion of US Treasury notes. The deal, which represented about a 50% discount on the current market value of gold was quickly consummated and a cargo saucer was dispatched to fetch the gold.

Well, the end result was predictable. In spite of all the effort put forth by the Congress and President Obama, the dollar declined in value, interest rates soared and bond values collapsed. The extraterrestrial investors were outraged as they had been led to believe that their investment would be backed by the ‘full faith and credit’ of the most powerful nation on the planet

However, when the extraterrestrials went to cash in their T-Bills, they found them to be worth a lot less than they had been told and so they sent a repo fleet to collect whatever Earth items of value they could find. They felt it was appropriate to start with the US Treasury Department, so upon arrival they quickly put their tractor beams and giant vacuums to work to collect everything they could interpret as collateral.

Illustration by Kim Harris
Story by Don Rudisuhle

Ben Bernanke’s optimistic outlook for the economy

Picture of Ben Bernanke portayed as Pinocchio

Benocchio assures the public that inflation is under control

On Wednesday, April 27, 2011, for the very first time in history, the Chairman of the Federal Reserve held a press conference and took open questions from journalists representing prominent news organizations and prestigious financial publications.

During his opening statement, the Chairman denied that the liquidity being added through the quantitative easing program and the purchase of hundreds of billions in Treasury debt has contributed to inflation. He further asserted that the current rise in prices was a temporary phenomenon and that they would revert to historical norms in due time. The Chairman also reiterated the Federal Reserve’s commitment to maintaining a strong dollar. When Treasury Secretary Geithner made a similar statement in 2009 during an address to students at Beijing University, he elicited loud bursts of laughter from the audience.

These rosy predictions fly in the face of what ordinary consumers are experiencing on a daily basis when they shop for basic necessities. Just as the US Department of Agriculture predicted in October of last year, retail prices for fresh fruit and vegetables, bread, dairy products and meat have gone up dramatically, some of these registering annualized increases of as much as 14%.

The Consumer Price Index published by the Bureau of Labor Statistics concedes a 3.6% inflation rate over the last 12 months for food purchased for consumption at home, and this is likely to be understated. Even McDonald’s Corporation announced last week that it expects inflation in food costs this year, and everybody knows that when the clown speaks, people listen.

Also, people need to get to the store and to their place of employment, assuming they are lucky enough to have a steady job. Over the last six months, gasoline has increased at a rate of more than 6% per month from $2.82 to $3.87 per gallon and there is no relief in sight from the destructive impact wrought upon budgets of families already stressed by the long recession the country has been experiencing.

Maybe the government really does have inflation under control as we’re being told, but more likely, the wooden man with the nicely trimmed beard and the prominent nose hasn’t filled up his car or been to the grocery store lately.

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