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Bernanke Press Conference & Market Reactions - June 19, 2013

For all of posterity, here is the final market close of June 19, 2013:

Here are the realtime quotes, for as long as the links last:
Gold Dollar
CNBC Live Stream
Dow Nasdaq

Former Fed governor says Obama 'essentially fired Bernanke'
Seven top candidates for Ben Bernanke's job at the Fed

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Michael Nystrom's picture

The reaction continues...

Market's conclusion: "Don't like."

"I'm So Dizzy I Can't See, My Head Is Spinning" - Tommy Roe

"I'm So Dizzy I can't See, my head is spinning" - Tommy Roe

maybe he'll pack his ditty

bag and slither back to GA. from whence he came, giving me the pleasure of bumping into him here, whereupon a mudhole proceeds to be stomped dry.

I bet RP wrote this early

I bet RP wrote this early this morning and told his staff to post it once the announcement happened as he expected. The Fed will keep on doing as they have been doing, ramping it up if anything.

Ben sound nerves. I wonder WHY?

Ben sound nerves. I wonder WHY? blog says

Only down 1.34%? Greenspan's sneeze did more damage.

Only down 1.34%? Greenspan's sneeze did more damage back in the day when the Fed chairman was considered God on Earth.

"Cowards & idiots can come along for the ride but they gotta sit in the back seat!"

Michael Nystrom's picture

We're not done yet

Michael Nystrom's picture

Down 150,

ten minutes into the open.

Michael Nystrom's picture

Here's what a friend of mine just texted me:

I think Bernanke knows now for sure that he's not going to be renominated, so he's going to protect his legacy and mare sure he goes out as preventing inflation. So I would expect a more conservative Fed until the next Fed head.


And some full blown 10-year heroin addict texted me for the 297th time acknowledging the detrimental effects drug use has on his image and health. So I expect more conservative heroin use in the near future.

And he might consider

And he might consider tapering back his heroine use in January if it is still bad for his image and health.

Michael Nystrom's picture

Here's the text he followed up with later

Also I think he wants to give Obama the middle finger, since he's not getting renominated. Bernanke has nothing to lose now from tightening a little.

In other words, "short timer's disease:" I'm out of here, so screw all of you! Yeah!

How ironic, tapering/ending

How ironic, tapering/ending QE is the best thing he can do.

Michael Nystrom's picture

Press conference summary

"If that train was mine." - Johnny Cash, Folsom Prison Blues

2 minutes. Johnny Cash, acoustic guitar, orchestra bass, & drums. 1959. May 25th, 1968 it entered Billboard's Hot Top 100 chart; eventually it peaked at #32 and spent 12 weeks on the Top 100... The song was originally released in 1955 as the B-side of "So Doggone Lonesome", which reached #4 on Billboard's Hot Country Singles chart...

R.I.P. Johnny Cash {1932 - 2003}

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Bernanke: "Labor Market Continues To Improve" - Really?

What country is he efing talking about?

Says inflation to come right back up? What? Lots of friggin double talk from this snake oil salesman...I have no idea what the F he is talking about..

QE, QE, infinitum...

Says, no information on personal plans.. Maybe Obama hasn't fired him just yet..

Helicopter Ben - Gotta love em..


I will give Ben credit where it is due. He is a master of manipulation. His deflections of issues, phony optimism, references to [manipulated government] reports, telling people what they want to hear, doublespeak, etc... -- all flow so naturally. And unlike Obama, he does not even need a teleprompter.

Another typical day in the land of Oz. All is green.

When the Fed & the Boyz are scheduled to speak, markets obey. The band plays on.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Casey Jones Bernanke.

As long as Bernanke keeps printing the money. Like Casey Jones putting more coal in steam engine train. Things will go fine until they run out of track. WOO Woo. Until then its all aboard the Crazy Train. AYE,AYE,AYE

Money talks and dogs bark

The train coming: I ain't seen sunshine since I don't know when.

1 minute. Ellwood Hayman of Osnaburg Township, Stark County, Ohio.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Last night's blog post called this exact circumstance

Michael and I discussed in the comments

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If something cannot go on forever, eventually it will stop.

Since the Federal Reserve pays its profits to the Treasury, they can monetize the debt forever and the Federal budget won't suffer. So long as the Fed monetizes the debt, the only people that suffer are you and me. If the Fed monetizes the debt, there is no interest payment death spiral, since the interest paid returns directly to the Treasury.

However, if the Fed stops monetizing the debt, treasury rates would return to historic norms. At 6%, the $17TN debt would result in around $1 trillion in interest annually (a $750BN increase in the deficit), and that interest wouldn't be flowing directly back to the treasury. Ballooning deficits mean ballooning debt, which would in turn mean more interest, more deficit and more debt. Read: Disaster.

That's what this article was about:

The show, it seems, must go on.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.

Also author of Stick it to the Man!

They don't return ALL of the

They don't return ALL of the interest to the Treasury.

Michael Nystrom's picture

Interesting observation. What about this:

If the government stopped spending more than it takes in. The unwind could go smoothly. Interest rates would not rise.

But then the problem they'd have on their hands is deflation... Like at the end of the Clinton years.

That would be totally insane

if they did something intelligent like that.

Interest rates would rise to normal rates, though, and the Feds would have to spend around $750BN extra on the existing debt.

To balance the budget AND kill QE, we'd need to cut the existing trillion dollar deficit AND cut another $750BN, essentially removing the cost of Social Security and Medicare combined.

Deflation, I think, is blown out of proportion as a threat to prosperity. People imagine a deflationary spiral where everyone stops eating, driving and investing, but even if the price of everything was going to drop 5% per year forever, I'm still going to buy almost everything that I currently buy.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.

Also author of Stick it to the Man!

Michael Nystrom's picture

"Deflation is the only source of economic growth"

I heard someone say that the other day.

I've been thinking about that statement over the last few days. Whenever someone says, "the only thing" I'm skeptical.

But deflation definitely is A source of economic growth. Look at the deflation in cell phones, computers, etc. It has allowed the technology to spread throughout the economy & all the efficiency gains that resulted in...

You're right, and the breathless reporting

You're right, and the breathless reporting of increasing housing prices, as if it were a good thing, is just embarrassingly bad economics.

I've heard people talk about the threat of falling prices to an economy at large, as if, as you mentioned, cell phone and computer companies had done badly in the past 25 years because of falling prices. As if people delayed the purchase of electronics because they were rapidly improving. As if people wouldn't buy a car if the price might fall by 1.1% year over year.

People point to Japan as if falling prices were the source of their woes, not demographics and cronyism.

Deflation doesn't cause economic growth, but efficient production causes deflation.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.

Also author of Stick it to the Man!

How can he sleep

feeding this crap to everyone? He can NEVER stop printing. This card house would fall soooo fast.