Bernanke Part 2 of 2: Leaders Lead, or Just Say No
The world would be a much better place if people had listened to Tom last August:
Now some elite opinion favors Ben Bernanke’s reappointment, but politicians are irritated over Fed stonewalling of bailout oversight and others (e.g. Dean Baker) point out that Ben Bernanke who put the Fed throttles to the firewall to save the world is also the Ben Bernanke who carried over Greenspan policy until it was too late. [links in original]
Not a strong enough source for you? How about the Internet’s Chief Bernanke Apologist? Brad DeLong last August:
I am surprised that he is being reappointed. I would have thought that the combination of people angry because he has given too much public money to the banks and people angry because he didn’t stop the recession would together make him damaged and that Obama would want to bring in a fresh face–never mind that Bernanke had no way to try to lessen the recession save by policy steps that inevitably involve giving money to the banks.
Tom also dealt with that:
To which the obvious response is, duh, who says it has to be one or the other? A reality-based critique of the bailouts allows them to be both effective at saving the world and unconscionable screw-jobs that kept an array of bad actors from paying for their greed and incompetence. (The latter clearly feeds a lot of the underlying sentiment of the tea partiers, even if it’s ultimately the greedy and incompetent who are marshalling it.) However, considering Team Obama’s political tone-deafness, it’ll be a pleasant but major surprise if they let Bernanke go back to Princeton for some R&R.
And DeLong himself (today) moves the goalpostsnotes where the problem is centered:
[Bernanke] is no longer the academic intellectual who advocates inflation targetting. He is, instead, the voice for the consensus of the Federal Open Market Committee–and a member of that committee who can, by his own internal arguments, move that consensus at the margin. So he is going to reflect that consensus….[A] Fed chair who doesn’t reflect the consensus in public has less power to move the consensus in private. From my perspective, I don’t think that there’s anything wrong with Ben Bernanke’s (private, intellectual, academic) analysis of the current situation. What is wrong is that the FOMC consensus is wrong—and Bernanke’s public statements reflect that wrong consensus. So here I tend to blame Obama more than I blame Bernanke for the recent character of Bernanke’s public statements–for the fact that Fed policy and rhetoric right now is not more Gagnonesque, because Obama could have done things over the past year to move the FOMC consensus that he has not done. [emphases mine]
This is a true statement—but it is no less true now than it was in August, and Ben Bernanke has been the ostensible leader of the FRB since then—and, indeed, since 2.5 years before then, as the crisis was unfolding.
In the past four years, Bernanke has “led” the Federal Reserve. And even those who are not sympathetic to Steve Keen’s interpretation of Bernanke’s flaws (h/t Yves and Naked Capitalism, who printed it themselves as well) would have to agree that the sounds coming from the Fishers* and Hoenigs, not to mention Bernanke himself, are more reminiscent of Morgenthau than Volcker.
Which should have been the death knell for his renomination. To turn Brad DeLong’s statement on its side: Ben Bernanke has been unable to lead and change the consensus of the Federal Reserve Board, even marginally, to be more in line with what Ben Bernanke, the skilled economist, knows would be a better policy.
Leaders lead. Ben Bernanke hasn’t and doesn’t.* For that alone, he should be replaced, and Janet Yellen nominated to replace him.
*This one was reprinted, without several of the cronyism acknowledgements, in the WSJ comics section today. I prefer the original.
**The similarity to the Canadian Liberal Party’s selection of Celine Stephane Dion as their leader should not be overlooked. That they had the good sense to replace him after one term is a sign of sanity the Obama Administration would have been wise to consider. (That they compounded the mistake by replacing him with a pro-torture American conservative is a mistake from which one would expect the Obama Administration could and presumably will learn.)
I read recently that not reconfirming Bernanke would signal that the wheels are coming off, and the wagon is already a little out of control. Considering that the Obama team puts PR concerns up front, I think this consideration alone is enough to ensure that Bernanke stays.
Krugman has a piece today on the Obama State of the Union speech which he expects to be depressing. Obama has turned out to be a vast disappointment to liberal in general. Here I think the problem is this: the idealistic liberals in the Democrat party loved the idea of a “first black President” so much that they forgot how racist the US really is. They imagined that once he was elected US racism would vanish by magic. On the contrary, very aware of the racism just below the surface that awaits him and in fact that has come out openly at times against him, he has become timid and subservient to his enemies. This was not supposed to be the outcome, but it is. Hillary would have been a better choice in spite of her looney episodes simply because she is white.
warprofiteers=warmongers
“I read recently that not reconfirming Bernanke would signal that the wheels are coming off…”
And confirming him would signal that we’re content to keep driving on four flats.
You forget Angry Bear, business wants him and good for business is good for the country. At lest that what we have been told.
MM,
If Obama had passion for the issue of racism, he would use the term “working-class” more often. He instead almost invariably uses “middle-class” instead, as if these terms are inter-changable. To those of us who are truly working-class, and who understand how divisive racism is, this is tell-tale sign of betrayal. I knew which side he was on from the start.
Which should have been the death knell for his renomination. To turn Brad DeLong’s statement on its side: Ben Bernanke has been unable to lead and change the consensus of the Federal Reserve Board, even marginally, to be more in line with what Ben Bernanke, the skilled economist, knows would be a better policy.
I don’t think the bolded assertion is obviously true. Any chance that you might expand on that point?
11 Big Surprises for the Next Decade
A Third Party Emerges In The United States– When Obama’s first and last term ended the American public was fed up with anything that had to do with the elite- Wall Street, the big banks, Congress, the Senate, the Federal Reserve and both of the big parties. As a result a third party emerged which managed to get a large amount of seats in both houses. The party’s candidate for president got 25% of the votes in 2012 and won the election in 2016. The third party fundamentally changed the way politics is done in Washington and resulted in a large change in United States foreign policy. A lot of countries where left to deal with their problems alone. At the beginning, this policy caused havoc and even chaos in different countries around the world which suddenly where shocked by the shortage of American financial and military aid.
China Bubble,
For every dollar the developed nations spend on aid, they receive a return of $3. It will be the US consumer who be ‘shocked’, because on a per capita basis, the US consumer ranks 20th in aid given. And whether the words ‘military’ and ‘aid’ are compatable… I am doubtful about that too. I enjoyed the rest though.
“how racist the US really is”…
Maybe. But we are about to find out how much more racist the French are when they won’t let people wearing a Burka ride public transportation (even if they paid their taxes on time). This is one backdoor way to control France’s immigration problem.
I agree that it’s not obviously true. But: DeLong is pushing blame for the Fed Govs’ “wrong consensus” onto Obama for not nominating a more receptive audience. This is a counterfactual claim that Bernanke would have more effect on the Fed consensus with a different Fed Board of Governors. Maybe, maybe not. Ken is noting the more direct implication that Bernanke has seemingly not had much effect on the existing governors, notwithstanding his academic expertise and additional influence via the Chair position.
One other thing, while the Fed Govs may like to act unanimously, they don’t always do so. I would argue that if Bernanke thinks the Board consensus is wrong in a time of serious crisis, he’s doing nobody a favor by acting as if he can do nothing other than parrot that consensus.
Obama’s problems have nothing to do with racism in American. His problems arrise because he betrayed his base. They wanted less war, and they got more war. They wanted the Government to step in and help the poor people. Obama stepped in and helped the rich people. Yet you want to blame whitey because a black man has proved a Jewish lackey. Better analysis please.
Rascism is not Obama’s problem, it’s his lack of guts. Or perhaps it’s because he sold out to the corporatists that run our government. Either way he is proving himself a failure. No where near FDR stature, or TR stature, or even Jimmy Carter Stature at this point in time. He’s either a sellout or a fucking wimp.
One can only wish a third party arises to end this slow motion ahem “trainwreck”.
Ken:
Judging by the extent of the public’s knowledge on the Senate Healthcare Bill (evidenced below) residing in the House, I would drop the public as a qualifier for the renomination of Bernanke as the Fed czar. What do you believe the right course to be?
> There was no other way for the FED to assist in limiting the recession than by giving public money to the banks.
Maybe, but on a macro level, shouldn’t it have not really mattered so much who the money was given to. Why not give it to people who deserved it more in one way or another, and let the failed instututions that contributed to creating the mess be creatively destroyed, as the invisible hand would have done without the assistance of the visible one?
The main idea of bailing out the banks was to preserve aggregate demand, no? The FED thought that had to be done by preserving the banking system. But sweeping it away and starting fresh, while doing something else to preserve aggregate demand, might that not have been a possibility?
I guess there was some notion of having the US Govt get a higher rate of expected return on its investments – like, why did Warren Buffet get 15% preferred bonds, while the US Govt got 5%. The US govt’s intervention greatly assisted Warren (who I still admire) and everyone else who invested in otherwise risky assets since a year ago. And I suspect we will never get a clear accounting of all the ways the government applied bailout funds; TARP being just the tip of the iceberg.
Why would you admire Warren Buffet when he aided and assisted in the theft from America of Billions of dollars? USG payed heavily to bailout AIG, that in turn payed heavily to bailout Goldman Sachs. He invested in GS with a sweetheart deal. Goldman Sachs became a bank holding company that could suck from the Fed window for loans at zip rates. Why admire a thief, unless you long to be one as well?
“Why not give it to people who deserved it more in one way or another, and let the failed instututions that contributed to creating the mess be creatively destroyed, as the invisible hand would have done”
Sounds like it won’t be hard to convert you to libertarianism. You are almost there. It will just take some time for you to realize that Progressives and Republicans are both part of the plutocracy.