Wednesday, August 12, 2009

Chairman Ben holds a commanding lead in his bid for reappointment to the Fed -- of course, he's running unopposed


Housing bubble? Hmm, doesn't ring a bell with the
sages who want four more years of Chairman Ben.

by Ken

As you may (or then again may not) have noticed, Federal Reserve Chairman Ben Bernanke has been in active campaign mode for reappointment when his four-year term expires early next year. If you haven't noticed, it may be because there's so much noise on the political front, and it may also be because what you think doesn't matter when it comes to the choice of a Fed chairman. When you get right down to it, the only people whose views seem to matter are the tame-sheep orthodox economists -- you know, the people who at the very least missed just about everything that happened to bring the economy crashing down.

And no, they aren't by any means the only voices to be heard in the professional economics community. They're just the ones whose voices are heard in the establishment media -- notably, in this case, the Wall Street Journal. The last major text, of course, was the housing bubble that Bernanke's predecessor, 18-year Fed Chairman Alan Greenspan, insisted never existed, though he did do a tiny bit of hemming and hawing after the bubble that didn't exist burst. Economists like Nobelist Joseph Stiglitz and (now also Nobelist) Paul Krugman certainly noticed, and so did Dean Baker, co-director of the Center for Economic and Policy Research.

Dean has some thoughts about the intersection of Chairman Ben's reelection campaign and the WSJ on his Beat the Press blog at The American Prospect (cross-posted on HuffPost):

Isn't Missing an $8 Trillion Housing Bubble a Mistake?

Not according to the WSJ. It tells us that economists are near unanimous in thinking that Federal Reserve Board Chairman Ben Bernanke should be reappointed.

After telling us that the economists who it polled were nearly unanimous in believing that Bernanke should be reappointed as Fed chair, the article concludes:

"Though the economists were overwhelmingly supportive of Mr. Bernanke, they don't think his tenure was without mistakes. A slow initial response to the credit squeeze and the decision to let Lehman Brothers fail were cited as the biggest errors."

The article never once mentions Bernanke's error in allowing the housing bubble to grow to a size where its collapse would inevitably produce a disastrous downturn. Bernanke completely ignored the bubble first as a Fed governor from 2002 to 2005, then as head of President Bush's Council of Economic Advisors until he took over as Fed chair in January of 2006, and in his tenure as Fed chair until the collapse of the bubble brought on the downturn.

It would be difficult to imagine a more catastrophic mistake by an economic policymaker than missing such an enormous economic behavior. There are few people in any job who have ever committed such an enormous error. Yet, the WSJ never even mentions it. (Obviously another example of the soft bigotry of low expectations for economic policymakers.)

It would be interesting to see the results of a poll on Bernanke's reappointment of economists who did recognize the housing bubble and the danger it posed to the economy. -- Dean Baker

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At 1:42 PM, Blogger SPH said...


Bernanke was the only cause, I proved, of the Great Recession and probably acted on purpose. He had the knowledge (Bernanke is a renown specialist of The Great Depression he even wrote a book on the subject: Essays on the Great Depression.), the means, motive (The gigantic power he has received thanks to The Great Recession.), and opportunity.

Worse, in light of the exercise of the central bank extraordinary power by Bernanke, I argue that he poses a real immediate threat to democracy, peace, privacy and individual freedom.

Given the immediate dangers that are evoked in these lines I strongly suggest that you revoke Bernanke.

"I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan.

Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively.

However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed."

Prof. Ben Shalom Bernanke
Japanese Monetary Policy: A Case of Self-Induced Paralysis?
For Presentation at the ASSA Meetings, Boston MA,
January 9th, 2000.

"The slowdown in economic activity, together with high interest rates, was in all likelihood the most important source of the stock market crash that followed in October.

In other words, the market crash, rather than being the cause of the Depression, as popular legend has it, was in fact largely the result of an economic slowdown and the inappropriate monetary policies that preceded it.

Of course, the stock market crash only worsened the economic situation, hurting consumer and business confidence and contributing to a still deeper downturn in 1930."

Governor Ben S. Bernanke
Money, Gold, and the Great Depression.
At the H. Parker Willis Lecture in Economic Policy, Washington and Lee University,
Lexington, Virginia.
March 2nd, 2004

Revoke Bernanke: Sign the Petition to Request from President Barack Obama That Ben 'Systemic Risk' Bernanke be Removed From Office.


At 2:27 PM, Anonymous Anonymous said...

Why are not people like Bernanke, and all other government appointed clowns, elected by the people? They do more to run our lives than Congress.


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