Bernanke (left) builds up a cushion as we dance on pins ... We are all of us balloons dancing in a world of pins, noted Sir Anthony Montague Browne, one of Winston Churchill's private secretaries. That seems to describe our economic condition. Share prices drop like stones in response to action by Greek civil servants, or an oil spill in the Gulf of Mexico, or an Israeli attempt to enforce its blockade against Hamas, or rumours that the Chinese regime is attempting to slow its economy. And then soar when Spain manages to borrow a few billion from unwary investors. Uncertainty is the order of the day. Which makes life difficult for economic forecasters, who are more comfortable basing their effusions on non-random, hard data that point in one direction. That happy circumstance is denied them. Just when the housing market seemed to be stabilising and the manufacturing sector to be recovering, along comes a report that only very few private-sector jobs were created last month. Retailers, seeing sales drop 1.2% in May, wonder just how much stuff they should order in anticipation of the Christmas season. And just when the financial sector is preparing to hire large numbers of laid-off workers, a 2,000-page financial regulation bill introduces an unnerving degree of uncertainty. Equally important, just when the American economy seems to be regaining its footing, news from Europe turns gloomy. Retrenchment is the order of the day; Germany refuses to stimulate domestic demand; the European Central Bank declines to loosen monetary policy to offset the new austerity programmes; and a shrivelled euro threatens the export market for American goods. – Times OnLine

Dominant Social Theme: The problems with Western economies are grave but not insurmountable if central bankers do the right thing.

Free-Market Analysis: It is so interesting to see the ways that people construct the various realities of modern day life – and their evolution. In our opinion, the London Times has gotten a lot more aggressive and honest in terms of covering the current economic crisis. This fits into our understanding of how elite messaging operates. As we tend to see it, the Anglo-American power elite uses the London Times as a mouthpiece (along The Economist newspaper and some others) to present theses that it wishes to promote. These have lately tacked hard toward libertarianism and frank acknowledgement of the West's financial mess.

In this article by Irwin Stelzer, we can certainly see a determination to acknowledge just how bad things are. This is necessary to set up the conclusion, which is of course not nearly so rational or forthright. Stelzer spends considerable time being blunt about the fix the West is in – but then when it is time to offer a conclusion, he pro-offers a predictable power-elite dominant social theme of the wise central banker. Who is Stelzer, anyway? Here is some background from Wikipedia:

Irwin M. Stelzer (born 1932) is an American economist who is the U.S. economic and business columinst for The Sunday Times (UK) The Courier-Mail The Guardian and a contributing editor of The Weekly Standard. He is also an occasional contributor to The Daily Telegraph. He resides in London and the United States. Stelzer has served as a managing director of the investment banking firm of Rothschild Inc and was co-founder and president of National Economic Research Associates, Inc which became NERA Economic Consulting and which was subsequently sold to Marsh & McLennan, Inc. ... Stelzer received his bachelor and master-of-arts degrees from New York University and his doctorate in economics from Cornell University. (- Wikipedia).

Quite a biography. And yet, despite Stelzer's obvious sophistication and economic knowledge, we can find areas of disagreement. We don't believe, for instance, that central banking is the antidote to the economic crisis or that individuals should be in charge of fixing the price of interest rates or the quantity of money. Not even bankers putatively as wise as Fed Chairman Ben Bernanke. Here's some more from the article:

There is talk in Washington that soon after the November congressional elections the president's commission to reduce the deficit will come up with a combination of cuts in entitlement spending and increases in taxes, including some form of Vat. That will give Obama the occasion he needs to "pivot", as he calls changing course. If, as we now expect, the Democrats sustain heavy losses in the congressional race, the president will indeed pivot, and jettison profligacy for prudence, presenting himself to the electorate in 2012 as a born-again fiscal conservative. ...

Meanwhile, Bernanke, who says a double-dip recession "can't be entirely ruled out", will keep interest rates low. He wants to offset any budget tightening the president might be able to push through a Congress in which fiscally conservative Republicans have increased their presence, help the lagging jobs market to recover, give the economy a bit of a boost should the sinking euro cut into American exports, and buy some insurance against contagion rolling across the Atlantic.

That might, just might, make his forecast that the US will grow at an annual rate of 3.5% stand up to some of the harsher realities that have not yet been faced as the world economy pays the bills it ran up in the boom years. In short, Bernanke knows we are dancing on pins, and wants to have some recourse should we get a bit too heavy-footed and burst a balloon or two.

We can see, ultimately, in this editorial, an attempt to put the best possible light on Ben Bernanke and the Federal Reserve itself. The problems are spelled out clearly and then, as well, like a sub theme in a symphony, Obama's future fiscal moves are introduced. Stelzer has veiled contempt for these projected notions, and contrasts them unfavorably to what Bernanke has done and will doubtless do.

In fact, Bernanke is presented as a far-seer who is attempting not only to counteract various negative economic trends but must also deal with the destructive moves of fickle politicians. Yet Stelzer's approach is a non-starter in our view. In America, especially, the mythology of central banking is nearly as gutted as global warming. These fear-based promotions are punctured (like the balloons Stelzer refers to) and cannot in our estimation be re-inflated.

Let us be as blunt as Stelzer is in certain places in this article. We are curious as to how the power elite intends to defend its most basic memes, and always, these days, we are astonished by the responses. This article by Stelzer would have served its purpose at the end of the end of the 20th century but is a lamentable defense of central banking, in our humble opinion, in the 21st century.

From an investment standpoint, such articles deliver a kind of warning: The elite is running out of ammunition. This defense of central banking does not, for instance, attempt to explain how the world got into the state it is in (thanks to the very central banks that Stelzer is defending). Additionally, the article does not offer any radically new arguments for defenders of central banks to use.

The strategy is simply to push the thesis downfield (as we have discussed previously) and to thus realign the conversation so that it acknowledges the miserable reality of the economic situation with more frankness than previously. This is not so much a strategy however, as a cosmetic adjustment, the reapplication of an old playbook. The elite seems out of ideas. Could war be summoned as a final resort? (We have asked before.) Yet because of nuclear weapons, it may not be feasible to apply war as broadly or as violently as in the past.  

The Internet continues to expose the promotional fictions that were so successful in organizing Western society in the 20th century. True, there are those who would argue that technology is ushering in an age of extreme control. But here at the Bell we have argued that technology is in a sense conspiring AGAINST those seeking total control of the West's sociopolitical systems and populations. Or at least that technology cuts both ways.

Conclusion: We suggest, as we have before that those who wish to be successful in the 21st century – professionally and from an investing standpoint – become dedicated meme watchers draw their own conclusions about the progress of elite fear-based promotions. From our perspective the elite is struggling and such articles as this one – analyzed above – do nothing to dissuade us.

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