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Sunday, February 27, 2011

Is Bernanke The Gangsta Rapper of the Financial World?

I have been wondering one thing lately: 

Is Ben Bernanke the gangsta rapper of the financial world? 

I think he is—Strait Old School G, 'Ben Wizzie' Bernanke. 
As a genre, Gangsta Rap hit the scene hard in the 80s and spoke to a repressed, depressed society of youth.  The message of the music was to live hard to make money on the streets at all costs—even killin' thy brotha.  The music carried a heavy political message that at times promoted violence, shooting, thievery, robbery and materialism.  A gangsta rapper was true to his hood, but always had his own back first and foremost.  There also tended to be a fair amount of exaggeration in the music in regards to booty and cash-money spending.   
If this is the true definition of Gangsta rap Bernanke is an Old School G—a beat boxing gangsta for shiz.  Bernanke’s reckless monetary policies are no different than the hard lyrics of Ice Cube, NWA or Public Enemy—improve the economy at all costs, even if it means destroying everything in the process.  His policies of dollar and bond manipulation have led to massive increases in commodity costs across the world, which in result has led to worldwide violence, deadly shootings, thievery of the dollar’s value, robbery of asset’s true valuations and materialism (False wealth effect due to stimulus based stock market super recovery) .  Bernanke is true to his hood, the US economy, at all costs and openly exaggerates and manipulates the economy’s true health by never ending stimulus shimulus.
I know nothing of his skylarking with the ladies, but it is Washington so I wouldn’t put it past him.
Life as a rapper has been good for Ben Wizzie, but Bernanke needs to watch his back—Gangsta rappers get killed for their words. (I am by no means saying Bernanke is getting killed here—it is a metaphor for him losing his credibility when his policies start to fail miserably, which I believe is already happening).
Some of Ben Wizzie’s hits: 
If you’re having Inflation problems I feel bad for you Yuan

I got 99 problems but inflation ain't one

China’s overheated inflation is starting to cause massive waves in the economy as citizens that make less than $1 a day are unable to buy basic needs.  This political unrest recently has created the need for massive tightening for the Red Dragon Empire.  China’s flame as the little red engine that can, and does, run the global recovery is about to be derailed.  China has Inflation Issues
CHINA’S INFLATION DATA (National Bureau of Statistics Feb 15)
*  China’s CPI increased at 4.9% year over year in Jan
*  Food cost were up 10.3%, including grain up more than 15% and fruit up 34%
*  The China cost of living rose 4.22% due to housing costs
*  Monthly loans by State-owned Chinese banks were 1.2 Trillion Yuan in Late Jan 2011—over DOUBLE the amount issued in Dec 2010, less than one month earlier (Chinese Business news)
*  China raised rates SEVEN TIMES ALREADY in 2010 to stop inflation and it has not worked.
Inflation is killing China, as shown in consumer confidence numbers.  China's Consumer Confidence has fallen dramatically since QE2 and is now at recession levels.  I expect China to raise rates rapidly to combat inflation which will freeze lending.

Ben Wizzie, however holds to his own that there is no inflation in the U.S., despite gasoline costs skyrocketing up to 10% in the last 10 days.  Why? The funny math of CPI does not take into account rises in food and energy costs.  Personally I think this is stupid.  Fuel costs affect everything, especially consumer spending. Please read this Washington Post piece about rising fuel costs-- Consumers spend less as gas rises. 

I agree with everything here especially the part about consumers being less able to take on increases due to higher unemployment and lower home values.  The one thing I disagree with is his call for $3.75 a gallon as the tipping point for the economy.  I feel that we have hit the tipping point already—The consumer is dead until Christmas. 
Ben Wizzie’s other hit being played right now:
It’s Me Against the World
Ben Wizzie is ripping this track from Tupac, but he is about to be ripped from everyone in the world for the lyrics of this tune.  Expect this song to be sung this week when Ben Wizzie speaks.  Expectations are that the Feds will NOT raise rates due to unemployment and will NOT stop QE2-MUCH due to the same reason. 
The problem is that the rest of the world has had enough of the Fed’s QE.  World economies cannot handle the steep inflation pressures and many are already raising rates, while others are planning to raise soon.

*  Already going up:  Indonesia, Australia, China, India, Russia, Vietnam
*  Expected:  Canada, UK, Brazil, ECB
Bernanke is heading into some nasty gangsta warfare here—On one side of the coin, raising rates will hurt his hood recovery in the US.  On the other side, failure to raise rates will kill the dollar, which could lead to a continual rise in dollar based commodities (OIL).  Any further increase in costs will bleed into his smoke and mirrors CPI data, which will creep prices higher for consumers or lead to massive layoffs to deal with margin erosion.  With no wage growth I don't see prices going up, but I do see companies handing pink slips to cut costs.    
Ultimately, Bernanke will probably do nothing but preform his version of Insane in the Membrane.  His version talks about how there is STILL no inflation in the US and that the recovery is crawling on the bottom.  He will probably talk about how QE2 worked, despite the initial intention of it lowering borrowing costs.  He will beatbox about how an OG like Ben Wizzie has to work hard for the economy, and that raising rates now would kill the recovery in its tracks.
Bernanke is not a rapper.  However, I believe he is convinced that he is a master wizard that can perform magic to raise the economy via monetary expansion.  Sadly though for Ben Wizzie, QE is not magic-- it is desperation.  The last attempt of a fiat currency to stabilize is through money printing.  Magicians are not real, neither is magic and neither is a sustainable recovery in the US without stimulus. 
The US cannot recover with rising prices either. 
This must be how Charlie Sheen feels when presented with choosing between a stretch Hummer full of drug hungry hookers or a mirrored plate of cocaine:  He needs the coke to satisfy the needs of the hookers, but he needs the hookers to justify the need for the cocaine.  For Sheen, he doesn’t have to choose—he will just take both.
Bernanke needs to choose between stoping inflation with raising rates or continual stimulus for the economy, and he can’t have both.  
COUNTERPOINT:  Remember though, that when economies melt down from inflation they often fall into recession.  Any recession at our current levels will lead to massive deflation.
I said a hip hop,
Hippie to the hippie,
The hip, hip a hop, and you don't stop, a rock it
To the bang bang boogie, say, up jump the boogie,
To the rhythm of the boogie, the beat – Sugar Hill Gang
That’s a Rap.  

1 comment:

  1. From that Washington Post piece -

    "For drivers such as Robert Wagner, 51, a high school teacher from Thornton, Colo., the higher fuel prices mean cutting back on movies and dinners out for him, his wife and their two children. "We're very, very frugal right now," he said as he trickled enough $3.09-per-gallon gasoline into his Chevrolet Suburban to get him to his next pay day."

    Cutting back on dinners out? How sad. You shouldn't be dining out in the first place! It's laziness and waste of money, unless you're tasting some fine cuisine of a high end restaurant, if you can afford it. And, driving a Suburban...what the hell is wrong with you? Trade that tank gas-gazzler for a Japanese gas-saver like Honda Accord, doesn't have to be new, 10-15 year old ones hold very well.