Oh what a tangled web of deception… This time, you will not believe what you read - alas it is all true!
Bernanke lunched with Wall Street before Bear rescue, a Bloomberg.com headline says.

… The luncheon at the New York Fed gave Bernanke a chance to hear from chiefs of some of the biggest U.S. financial companies and hedge funds in the middle of his most tumultuous month as central bank chief. The meeting came hours after he announced plans to lend $200 billion of Treasuries in exchange for debt including mortgage-backed securities….

another reads: Volcker Says Fed Interventions Risk Political Battles

May 14 (Bloomberg) … Fed gets political with market interventions, Volcker warns… The Fed has created three new instruments since December to alleviate credit strains, including direct loans to nonbanks for the first time since the Great Depression. Chairman Ben S. Bernanke and his colleagues also aided the takeover of Bear Stearns Cos. by JPMorgan Chase & Co. and took on mortgage and other securities as collateral from securities firms….

But wait, its gets a lot worse:

May 12 (Bloomberg) — U.S. and European banks and financial institutions have “enormous losses'’ from bad loans they haven’t yet recognized… “Based on information I see,'’ it will take at least a year before all losses are realized, and some financial institutions may fail, Rubenstein said at a breakfast meeting of the Institute for Education Public Policy Roundtable in Washington. He didn’t name any companies….

HSBS leading the pack?

May 13 (Times.uk) Knight Vinke, the activist investor, launched a fresh attack on HSBC yesterday, accusing Europe’s biggest bank of flattering its US sub-prime losses by failing to write down $30 billion (£15 billion) worth of mortgage assets….

So, we understand the following move…

May 13 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said financial markets remain unsettled and the central bank will increase its auctions of cash to banks as needed. While markets have improved, they remain “far from normal,'’ Bernanke said today in a speech to an Atlanta Fed conference at Sea Island, Georgia. “We stand ready to increase the size of the auctions if further warranted by financial developments.'’ …

Paul Volkers knows what comes next:

Former Chairman of the Federal Reserve Warns yesterday that the United States could face a 1970s-style period of skyrocketing inflation if investors lose confidence in the buying power of the U.S. dollar. “We are back in the 70s or worse if confidence in the Federal Reserve is lost. . . . If there is a real loss of confidence in the dollar, then I think we are in trouble. That is something that has to be watched,” Volcker told the congressional Joint Economic Committee… (May 15 2008)

Who is going to stop them?

(May. 12 - MSNBC) You probably thought nothing-down mortgage loans disappeared in the wake of the American subprime lending crisis, which has ensnarled much of the world in a credit crunch. They didn’t. Even more surprising, many Americans can still buy homes with nothing down thanks in large part to the federal government and a legal loophole that lets builders and bankers ensure a steady stream of asset-challenged borrowers for taxpayer-insured loans.

With quietly expanded powers, the Federal Housing Administration is already offering the next-best thing to nothing down on a house: a payment of just 3.0 percent will get practically any American with a pulse and a job a mortgage of up to $729,000, at least until the end of this year…. more

Let’s keep in mind the Maestro’s latest assessment…

(May 14 - MarketWatch) — U.S. home prices will likely bottom out in early 2009 after the market absorbs excess inventories, former U.S. Federal Reserve Chairman Alan Greenspan told audiences in Asia Wednesday, according to news reports. Greenspan, who spoke by video link to audiences in Hong Kong and Singapore, said the current pace of liquidation will accelerate, but excess supply won’t be eliminated until early 2009, according to Dow Jones Newswires.

Flash back…

“We’re not about to go into a situation where (real estate) prices will go down. There is no evidence home prices are going to collapse.”~~Alan Greenspan, May 21, 2006

So you will now know what to expect when you hear the word “economy”, won’t you? - Please dear readers, remember that when you’ll be voting… Is Who Becomes the Next President All That Matters? D. Schechter asks