Thursday Brainstorming - part 1

1. The market is run by wild rumors and deception to the double high test and the manipulators want the SPX to close above 1150 to get more opportunistic buying in combination with short covering. As the VIX has not dropped below 17.5 yet we have to expect a extension above 1150 briefly that should happen rather within the next 2 weeks as the TRANS needs one higher weekly close above 4400 to finish the mission. We see a bit more with the NASDAQ chart I will discuss later today.

2. The replacement of the 3 vacancies within the FED will show us where Obama and his boys are heading for in the final phase of this cabal. Already now 4 are challenging the policy of Bernanke on his forever zero interest approach and he would need rather more of those Mr Brown does not like to see in those seats but I am afraid as Obama hired the man who did a lot of harm in the FED to the Treasury secretary we will see more of this kind. They can not risk that their system of lies and manipulation is disturbed but they still might hire one populistic figure like Roubini to cover up their operation with the claim that even critical members are on board now.

excerpt

Senator Brown Warns Summers And Geithner Not To Fill Fed Vacancies With Yet More Administration Puppets And/Or Idiots

In a letter to Larry Summers and Tim Geithner, Senator Sherrod Brown warns the administration to not simply place more Wall Street cronies in filling the three vacancies at the Federal Reserve, which will open up once Fed vice chairman Donald Kohn leaves this coming June. Instead of mere" maximum liquidity" automatons, Brown wants the new Fed members to be "committed to transparency, consumer protection and lowering the unemployment rate." Furthermore, Brown demands that "we need economic policy makers who possess the foresight to identify harmful economic trends, the courage to speak out about the necessity of addressing these practices before they inflict lasting damage to our economy, and the wisdom to listen even if their views are challenged." Alas, as transparency and rationa thought, coupled with proactive defensive actions means game over for the Fed, these conditions are an immediate deal killer, with the result being that the only affirmative criteria for new Fed membership is the endorsement of Lloyd Blankfein and current Fed Director Jamie Dimon. With the yield curve merely at record wides, there is certainly enough room for the current 2s10s spread of 282 to at least double as the American middle class still has a little money that can be stolen, in space or time, by Wall Street, with the Fed's endless blessings. Everything else is smoke and mirrors.

Full letter from Senator Brown, via Huffington Post:

March 10, 2010

The Honorable Timothy Geithner
Secretary
United States Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

The Honorable Lawrence Summers
Director
National Economic Council
The White House
1600 Pennsylvania Avenue, NW
Washington, D.C. 20500

Dear Secretary Geithner and Director Summers,

I write to you today to express my concern about the vacancies at the Federal Reserve, both on the Federal Open Market Committee (FOMC) and soon in the Vice Chairman's office. This is the financial equivalent of leaving open vacancies on the United States Supreme Court, and it is essential that we fill these positions.

As Chairman of the Senate Banking Committee's Subcommittee on Economic Policy, with jurisdiction over the Federal Reserve System's monetary policy functions, I am acutely aware of the importance of monetary policy at the Fed. Both the full Banking Committee and the Economic Policy Subcommittee have examined the causes of the financial crisis and the resulting effects on lending, access to credit, and employment. The evidence presented to the Committee about the role that Fed policy decisions played in the financial crisis and the economic downturn has led me to conclude that the Fed's monetary policy has focused almost entirely on controlling inflation rather than maximizing employment and that the Fed has too often put banks' soundness ahead of its other responsibilities. In light of this experience, there are several other important qualifications that I would urge you to consider in selecting the new Vice Chairman and new members of the FOMC:

1. Recognition of the causes of the financial crisis before it occurred.

Many economic experts, including some at the Federal Reserve, failed to anticipate the impending economic crisis. However, there were exceptional people who sounded alarms about the rapidly inflating housing bubble, the proliferation of subprime lending, and the packaging, selling, and investing in toxic financial products by Wall Street. Unfortunately, regulators, including the Fed, ignored or attempted to discredit many of these courageous individuals, rather than heeding their warnings. We need economic policy makers who possess the foresight to identify harmful economic trends, the courage to speak out about the necessity of addressing these practices before they inflict lasting damage to our economy, and the wisdom to listen even if their views are challenged.

2. Demonstrated dedication to protecting consumers and maximizing employment.

For years, the Federal Reserve's monetary policy has maintained an almost single-minded focus on inflation. This has been detrimental to the Fed's other core missions, particularly maximizing employment and protecting consumers. The results of this fixation speak for themselves. The national unemployment rate is more than double the Fed's statutorily mandated 4 percent unemployment target. The Fed also failed to act on repeated warnings about predatory mortgage lending and credit card abuses. Consumer protection experience is particularly important if the new consumer protection entity were to be housed at the Fed. Our economy will benefit from renewed attention to all of the Fed's priorities.

3. Commitment to releasing e-mails related to the Fed's involvement in the AIG bailout.

A growing number of experts - including economists, academics, and former regulators - have called upon the Federal Reserve to release all e-mails, internal accounting documents, and financial models related to AIG's collapse. The American taxpayers now hold the majority of AIG shares, and they have a right to know how their money is being spent. Providing greater detail about the AIG bailout is particularly important because that episode continues to taint the Fed's reputation. Focusing on candidates committed to full transparency related to this particular economic event would help to restore the Fed's stature and credibility in the eyes of many Americans.

The American public has lost a great deal of confidence in the Federal Reserve. Selecting a Vice Chair and FOMC members with the above qualifications will send the message that the Federal Reserve has learned from the financial crisis, and that the Fed's weaknesses are being addressed with more than just cosmetic changes.

I would be happy to discuss specific candidates with you at your convenience. Thank you for considering my views, and I look forward to working with you to address these vacancies at the Fed.

Sincerely,

Sherrod Brown
United States Senator