Tales from the Trail

Jamie Dimon managed to turn a multibillion-dollar trading loss into a winning moment.

The CEO of JPMorgan came sailing into the Senate office building this morning with a smile, and gave a pitch-perfect performance in explaining how a small group of traders in its London office screwed up a hedging strategy so badly that they lost at least $2 billion.

Dimon was apologetic, but not groveling. He stood his ground, but was not combative. He gave the impression he was an open book, but managed to give precious few details about how much the trading loss has grown.

He came off as so in-control that senators asked HIM for advice about how Washington should police Wall Street.

Investors gave Dimon rave reviews, sending the shares up 1.5 percent while the overall bank stock index closed down for the day.

U.S. Federal Reserve Chairman Ben Bernanke attends the International Monetary and Financial Committee (IMFC) meeting during the spring IMF-World Bank meetings in Washington April 21, 2012.

“I’d be looking for somebody new.”

Those words from the U.S. Republican presidential candidate Mitt Romney may give Federal Reserve Chairman Ben Bernanke some pause – or at least thinking about some other job prospects if the GOP frontrunner wins the Nov. 6 election.

As we report,  Romney, a former business executive who’s made the economy the cornerstone of his campaign, has made it clear that if he wins the White House he will try to replace Bernanke. The Fed chief’s term ends in January 2014 – a year after the next president takes office. Although Bernanke was nominated by Republican President George W. Bush, Democratic President Barack Obama give him second term in 2009.

U.S. Republican presidential candidate Newt Gingrich bows his head in prayer before speaking at First Redeemer Church while on a campaign tour in Cumming, Georgia, February 26, 2012. REUTERS/Tami Chappell

Earth calling Newt: When the biggest news of your presidential campaign is the penguin biting your hand at the zoo, it’s probably time to pack it in.

Even though Newt Gingrich’s odds of winning the Republican nomination were about as long as those of realizing his dream for a moon colony, the 68-year-old seemed to enjoy himself to the end. “I never got the sense that he was quote-unquote down,” said adviser Charlie Gerow. “I got the sense on a couple of occasions that he was tired. Really tired.” And really in debt. His campaign spent $4.3 million more than it brought in.

Some great news for all you borrowers today from the Fed. Interest rates are likely to remain around zero until at least late 2014. That’s later than previously expected, and to put things in perspective, it’s nearly two years into the term of the president who will be elected in November.

What it tells us is that the economy is still very vulnerable. Ben Bernanke said as much today: “I don’t think we’re ready to declare that we’ve entered a new, stronger phase at this point.” He left the door wide open to further Fed stimulus via bond purchases.

And Bernanke was almost apologetic about what this interest rate outlook means for another large swathe of the population: the savers. Take Maggie Smith, not the actress but a 74-year-old from New Jersey who watches her interest income on savings stagnate while home and car costs go up. After more than five years of rock-bottom rates, it’s no wonder she feels like she’s “being punished” for being prudent.

We’ve created a quick and dirty word cloud of what Fed Chairman Ben Bernanke said in his historic press conference this afternoon. Words he used more often are larger than less-used words. For bonus points try to find the word “jobs” in there:

Update: Looks like Paul Krugman and Ezra Klein took note of our our cloud. Thanks for the links guys  - we’re glad to help out anytime!

Word cloud created using Wordle.net.

Has hell frozen over? Are pigs flying? Is the sun rising in the West?

Don’t rub your eyes, it’s real. The Federal Reserve chairman, that oracle of monetary policy, will hold FOUR news conferences a year.

The first will be on April 27 after a two-day FOMC meeting. It marks the first time in the nearly 100-year history of the central bank that a Fed chief will deign to hold a regular media briefing. It’s almost too tantalizing to contemplate.

After years of reading the tea leaves following these monetary policy setting meetings, reporters will actually get to ask questions of Fed Chairman Ben Bernanke immediately after THE DECISION is made.

The wrangling continues over the Bush-era tax cuts. President Barack Obama said he was confident Democrats and Republicans could break the deadlock and reach a deal soon. But with time running out, there is something of a game of chicken being played by the two sides. Each is watching to see who blinks first, and with the economy still struggling, both know the stakes are high.

Texas Republican Congressman Jeb Hensarling warned of the risks of failure:  “In a lame duck session, a lame duck Congress should not turn our economy into a dead duck economy.”

Let’s just hope they don’t duck the issue.

Here are our top stories from Washington today…

White House memo outlines new anti-leak measures

The White House has set up a special anti-WikiLeaks panel after the embarrassing flood of State Department cables leaked by the website, and its proposals include teams of inspectors who would prowl government agencies looking for ways to tighten security. A four-page draft memo circulated by the White House says President Obama’s national security staff has created an “Interagency Policy Committee for WikiLeaks.”

Happy Thanksgiving! Washington Extra will return on Monday.

Here are our top stories from Washington today…

U.S. vows unified response to North Korea, eyes restraint

The U.S. urged restraint following a North Korean artillery attack on South Korea and vowed to forge a “measured and unified” response with major powers including China.

For more of this story by Phil Stewart and Andrew Quinn, read here.

N.Korea pulls U.S. back to a “land of lousy options”

North Korea‘s artillery attack on South Korea poses the second test in three days of Washington’s vow that it will not reward what it deems bad behavior with diplomatic gestures, and underscores that options are limited without serious help from China.

For more of this analysis by Paul Eckert, read here.

Bernanke’s plea for fiscal help goes unanswered

Federal Reserve Chairman Ben Bernanke’s unusually blunt plea for fiscal help will probably go unanswered, leaving the economy too limp to put people back to work any time soon. Bernanke has warned that the country is on an economic trajectory that will leave millions unemployed or underemployed for many years, and he said there were limits to what the central bank alone could do to help.

Now that the midterm elections are history, Sarah Palin is setting her sights and rhetorical skills on the Federal Reserve and its easy money policy.

On Twitter, the former Alaska governor and possible 2012 presidential contender said she would begin a round of discussions at school events to teach children about quantitative easing to prepare them for the results of the Fed’s plan to boost the sluggish U.S. economy.

“Today:trade speech;tmrw school event 2 start discussing QuantitativeEasing w kids around US so they prepare 4 Feds experiment w their future,” Palin tweeted.

Congress might not get much done in the next two years, but boring it won’t be. Certainly not with Ron Paul as likely head of the monetary policy (aka Fed oversight) subcommittee in the House.

Today, Paul the elder told Reuters correspondent Andy Sullivan that he was looking forward to his new “very, very important” role. The Fed, he said, was ”way too independent” and “totally out of control.” Quantitative easing – the Fed’s controversial program to purchase government securities – is not just lousy economics and lousy monetary policy, he said, it is “central economic planning at its worst.” More here.

Expect more fireworks from other conservative Republicans in the coming Congress, people who believe the Fed is enabling excessive government borrowing through its purchases of government debt, that it is printing money to finance the deficit. Then there is Darrell Issa, likely head of the oversight committee, with the subpoena power to be at least as much of a thorn in Ben Bernanke’s side than either of the Paul clan. It will be interesting to see if any of them can get under the skin of the normally unflappable Fed chairman.