Blog Posts by Aaron Task

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With two debates down and two to go, there's a lot of talk about who's winning and losing, about "style points" and, of course, intense scrutiny on what's been said. But let's take a moment to reflect on what hasn't been discussed or hasn't gotten nearly enough attention at the halfway point of the debate cycle:

The Fed & Ben Bernanke

There have been two debates and no mention of the Federal Reserve? How is that possible? The economy is the biggest issue of this campaign and the Fed is playing a huge role in the economy so it's hard to fathom that not one question has been asked about Ben Bernanke & Co. and none of the candidates have brought up the central bank.

One theory is that the "average" American doesn't care about the Fed, know what it does or who Ben Bernanke is. I think that underestimates the intelligence of the American people. They might not understand the intricacies of monetary policy but they do know they're getting almost no

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Whether it's stories about Facebook hitting 1 billion users or Twitter's influence on the election, barely a day goes by without some report on the importance of social media.

B.J. Mendelson turns the conventional wisdom about social media in his new book, Social Media Is Bullshit.

While the title is clearly designed to be provocative, the book is actually a fairly sober and analytical look at social media, which Mendelson says is "a term coined by marketers to repackage and resell stuff to you."

Despite the endless hype, scant few individuals become famous on social networks and fewer still make money from it, he says. While Facebook and the like are good for reconnecting with old friends, they should be used for entertainment purposes only — if at all, he says.

"People hear 'think before you Tweet?' The real question is 'do I even need to be on Twitter in the first place?,'" Mendelson says. "Unless you're a big brand, big celebrity or big media

China's economic juggernaut has been hobbled by Europe's recession and America's sluggish recovery. Export orders declined at the fastest pace in 42 months in September, manufacturing contracted for an 11th straight month and China's purchasing managers' index (PMI) fell to its lowest level in nearly two years.

Combined with the long-term underperformance of the Shanghai Composite, such lackluster data is giving rise to concern about a "hard landing" in China. Longtime China bears such as hedge fund manager Jim Chanos and Forbes' columnist Gordon Chang have become more vocal lately — or at least have been given more of a hearing.

On Monday, the World Bank cut its outlook for East Asia, saying the China slowdown could intensify and last longer than currently anticipated. The World Bank cuts its outlook for Chinese growth to 7.7% in 2012 and 8.1% in 2013, down from 8.2% and 8.6%, respectively. A recent Reuters poll forecast China's annual growth would ease to 7.4% in the third quarter,

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Update: Ben Bernanke directly addressed critics of QE3 in a speech Monday afternoon before the Economic Club of Indiana in Indianapolis. Among the highlights:

• "The Federal Reserve's price stability record is excellent, and we are fully committed to maintaining it."
• "I'm confident that we have the necessary tools to withdraw policy accommodation when needed, and that we can do so in a way that allows us to shrink our balance sheet in a deliberate and orderly way."
• "The best and most comprehensive solution" to concerns about how QE affects savers "is to find ways to a stronger economy. Only a strong economy can create higher asset values and sustainably good returns for savers."
• "I sometimes hear the complaint that the Federal Reserve is enabling bad fiscal policy by keeping interest rates very low and thereby making it cheaper for the federal government to borrow. I find this argument unpersuasive. The responsibility for fiscal policy lies

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In her new book, Bull by the Horns, former FDIC Chair Sheila Bair gives a detailed account of the 2008 financial crisis and its aftermath. As you've probably heard by now, Bair is unfettered in her criticism of Tim Geithner, calling him the "bail-outer in chief" and suggesting the Treasury Secretary was more worried about protecting Citigroup (C) vs. protecting taxpayers.

But the book is more that just a Geithner-slam, even if that's been the bulk of coverage so far. Bair offering a series of recommendations for how to reform and strengthen the financial system, including abolishing Fannie Mae and Freddie Mac.

"The hybrid nature of Fannie and Freddie led to disastrous consequences," Bair writes. "Ultimately, both institutions need to be liquidated."

Given the role Fannie and Freddie play in the housing market — bigger today vs. before the 2008 crisis -- that's easier said vs. done, as we discuss in the accompanying video.

"There's no agreement on

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European stocks ended last week on a high note amid expectations Spain will soon ask for a bailout. The Financial Times reported Spanish Economy Minister Luis de Guindos is in talks with the European Commission and will ask for bailout funds on Thursday.

"If it goes according to plan, the announcement would be a plus for global stock markets, the euro, and peripheral sovereign bond prices," write IHS Global Insight economists Nigel Gault and Paul Edelstein.

Some of the enthusiasm waned Monday after German Chancellor Angela Merkel rejected her French counterpart's plan to introduce a banking union for the euro area sooner rather than later. Any banking union "has to be thorough, the quality has to be good and then we'll see how long it takes," Merkel said this weekend, Bloomberg reports.

There's also ongoing tension between Germany and Spain over the aforementioned bailout request (or lack thereof) and a big drop in German business confidence

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"Don't fight the Fed"

That's the message from the market in the wake of Thursday's blockbuster announcement of open-ended QE from the central bank.

After surging Thursday, major averages were rallying further Friday. In recent trading, the Dow (DJI) was up 0.5%, pushing further into multi-year-high territory.

[Related: Bernanke's Bazooka: Open-Ended QE3 Is "Very Aggressive" ]

"The Fed has got the pedal to the metal" and the market has "more gains ahead of it," says David Sowerby, a portfolio manager at Loomis Sayles, which has about $170 billion of assets under management.

Over the next three years, Sowerby predicts the S&P 500 (GSPC) can rise another 8% to 9% on an annualized basis thanks to the Fed's ultra-easy policies -- but also underlying fundamentals.

Yes, Sowerby worries the Fed may have overdone it and about the fiscal cliff as well. But "the backdrop remains good for investors," he says, based on the bottoms-up view of the market.