Blog Posts by Aaron Task

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Most Americans have a sense TARP was a badly managed program that bailed out "fat cat" bankers at the expense of U.S. taxpayers. Well, it's even worse than you think, according to Neil Barofsky, former special inspector general for TARP (SIGTARP).

Officials in both the Bush and Obama administrations took the attitude "bankers know best," Barofsky recalls. "It was somewhat shocking how much control big banks had over their own bailout [and] the overwhelming deference show by Treasury officials to the banks."

Much has been made about Barofsky's criticism of Treasury Secretary Tim Geithner, who told CBS News he is "deeply offended" by how he's portrayed in Barofsky's book Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.

Barofsky pulled no punches in our earlier segment about the ongoing rate-rigging scandal. (See: "I Hope We See People In Handcuffs": Neil Barofsky Weighs in on LIBOR Scandal)

In the

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Financial markets rallied around the world Thursday morning after European Central Bank President Mario Draghi declared "the ECB is ready to do whatever it takes to preserve the euro...and believe me, it will be enough."

By suggesting that rising sovereign bond yields could "hamper the functioning of the monetary policy transmission channel," Draghi seemed to identify a loophole that will allow the ECB to act more aggressively to address the crisis, including a Fed-style round of quantitative easing.

What's important here is not so much Draghi's pledge to preserve the euro, which was understood, but his opening the door to QE -- direct bond purchases by the central bank vs. the "cash for trash" program it offered the banks earlier this year, known as LTRO. To some market watchers, this is the "big bang" out of Europe that could mark the beginning of the end of the crisis.

"There is finally light at the end of the tunnel," writes Chris Rupkey, chief

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The Fed is coming! The Fed is coming!

Renewed hope the Fed will take additional action to stimulate the economy helped pare the market's loss Tuesday and contribute to a modest rally Wednesday morning -- which had dissipated by 11:00 a.m. EDT.

"Amid the recent wave of disappointing economic news, conversation inside the Fed has turned more intensely toward the questions of how and when to move," writes Jon Hilsenrath in The WSJ.

Another round of quantitative easing (QE), focused on buying mortgage-backed securities, is the most likely action the Fed would announce. In addition, the central bank could extend its commitment to keep rates at zero beyond 2014 and/or directly extend credit to banks via the discount window to spur lending, The WSJ reports.

The New York Times had a similarly themed article, suggested a concerted effort by the Fed to jawbone the market after three days of triple-digit declines and renewed concerns about Europe's debt

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Every week, it seems somebody else is calling a "bottom" in the housing market and this week is no different. On Tuesday, Zillow joined the crowd, reporting its U.S. home value index climbed 0.2% in the second quarter vs a year ago, the first increase since 2007. The index rose 2.1% vs. the first quarter, the strongest gain since 2005.

"It seems clear that the country has hit a bottom in home values," Zillow Chief Economist Stan Humphries said in the report. "The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own."

So why is this "housing bottom" call different from all the other "housing bottom" calls?

Unlike many (many) other pundits, Humphries had steadfastly resisted the temptation to call a bottom until now, as faithful viewers of The Daily Ticker will recall. (See: Bank of America Pilot Program: There's No 'Silver Bullet Policy' to Fix Housing)

"Generally, we've

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Much has been made about China's huge investments in resource-rich Africa in recent years and Chinese President Hu Jintao pledged another $20 billion in loans during his visit last week.

But it's not just Africa where China is looking to secure access to commodities, notes international economist Dambisa Moyo. "There's not a single region left untouched," she says in the accompanying video, noting China's extensive trade with Brazil, its recent "laptops for pork" deal with Canada, pacts with Kazakhstan and Russia for uranium and oil, as well as land-development in Australia. And on Monday, Canada's major oil producer Nexen announced it has agreed to be acquired by China's CNOOC in a $15.1 billion deal, giving the Chinese oil company a strong position in the North American oil market.

"Simply put, the Chinese are on a global shopping spree," Moyo writes. "And its voracious commodity appetite is unlikely to abate significantly even if China's

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Testifying on Capitol Hill Tuesday, Fed Chairman Ben Bernanke conceded the obvious: "Economic activity appears to have decelerated somewhat during the first half of this year."

"Risks to economic growth have increased," he said, citing Europe's debt crisis and the U.S. "fiscal cliff" as big concerns.

Predictably, the Fed Chairman reiterated the Fed's pledge to "take further action as appropriate to promote a stronger economic recovery."

But Bernanke did not give any additional specifics about the timing of additional policy easing, prompting a midday sell-off in stocks. (The Dow fell about 155 points from its morning high near 12,800 but was back in positive territory in recent trading.)

"The market was hoping he'd a least hint, if not show some sort of commitment to changing from an extension of Operation Twist to outright quantitative easing in the near term," says Michael Pond, managing director and co-head of U.S. rates strategy at Barclays

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The economy is the main event but the LIBOR scandal will be on the under-card when Fed Chairman Ben Bernanke testifies before Congress today and tomorrow. (See: Bernanke Ready to "Throw in the Towel on Inflation": Jim Rickards)

At issue is what the Fed, and other bank regulators, knew about manipulation of the key lending rate and whether they condoned banks giving low-ball estimates of LIBOR in order to make themselves look healthier during the crisis of 2008.

Bernanke is likely to face some inquires about this issue, but the U.S. regulator most questions are being asked about is Treasury Secretary Tim Geithner, who is set to testify about the matter before the House Financial Services committee next week.

In 2008, while President of the NY Fed, Geithner sent a memo to British regulators to raise concerns about potential manipulation of LIBOR, as has been widely reported and confirmed Friday by the NY Fed.

The question now is why Geithner didn't

Monday's weak retail sales data provides more evidence of the economy's sluggish state, raising the stakes for Fed chairman Ben Bernanke's Congressional testimony this week.

The slowing economy -- and what Bernanke plans to do about it -- will top the agenda during the chairman's appearance before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. (Bernanke is also likely to face questions about the fiscal cliff and the brewing LIBOR scandal, among other topics.)

At issue is whether Bernanke will tip his hand about prospects for another round of quantitative easing (a.k.a. QE3) or some other form of policy easing. While Bernanke is unlikely to provide any specifics on the plan of action, he's almost certain to reiterate the Fed's prior pledge to "take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability."

Despite chatter about the Fed