Fed Chairman Ben Bernanke may have been Time magazine’s Man of the Year, but he hasn’t convinced senators he’s the man for the job, with Democratic Senators Barbara Boxer of California and Russ Feingold of Wisconsin voicing their concern about Bernanke’s nomination by President Obama to continue to serve as Fed Chairman.
In a statement, Sen. Feingold outlined his concerns regarding Bernanke’s nomination:
“A chief responsibility of the Chairman of the Federal Reserve is to ensure a sound financial system. Under the watch of Ben Bernanke, the Federal Reserve permitted grossly irresponsible financial activities that led to the worst financial crisis since the Great Depression. Under Chairman Bernanke’s watch predatory mortgage lending flourished, and ‘too big to fail’ financial giants were permitted to engage in activities that put our nation’s economy at risk. And as it responds to the crisis it helped to usher in, the Federal Reserve under Chairman Bernanke’s leadership continues to resist appropriate efforts to review that response, how taxpayers’ money was being used, and whether it acted appropriately. When the full Senate considers his nomination, I will vote against another term for Chairman Bernanke.”
Tellingly, Wall Street executives predicted a dire market reaction if Bernanke’s confirmation fails. “A decision to kill the Bernanke nomination will cause a large and disturbing upset in global financial markets,” said economist Joseph Brusuelas. “Not just equities, but the dollar and interest rates will be immediately impacted.” Wall Street lobbyists in Washington said they were quietly making the case for Bernanke on Capitol Hill but were hamstrung by the politics. Because Bernanke has been criticized as too close to Wall Street, they said, the surest way to seal his fate would be for financial lobbyists to make a full court press to save his nomination.
The fact that Wall Street executives and lobbyists are putting on the full court press to save Ben Bernanke’s nomination as Chairman of the Fed speaks volumes about who he’s really looking out for.
McCain also said he was planning on voting against Bernanke. Nonetheless, the “market” is pricing a 90% chance of confirmation for Bernanke:
http://www.intrade.com/?request_operation=main&request_type=action&checkHomePage=true
Frankly, imo the guy has been a disaster. He’s killed the dollar and set us up for some hyperinflation in the process. After all, at somepoint China is going to want a return on their investments. It’s these short term economic fixes that are subjecting us to future pain. But enough of my diatribe for now.
Id, I don’t presume to be an expert on economics, but I’ve been less than impressed with Bernanke. I tend to agree with what you said regarding the short-term economic fixes we’re seeing; they’re only saving the pain for another day.
I think you can trace this recession back to 1998 when the Fed bailed on Long Term Capital Managment.
http://en.wikipedia.org/wiki/Long-Term_Capital_Management#1998_bailout
Had the fed let it fail there is no doubt that the I banks such as Lehman would have been hurt badly, but they would have licked their wounds and still been in business today. They would have de-leveraged and the credit default swaps would not have taken down the entire country.
Instead, the Fed infused massive amounts of cash into the market causing irrational exuberance a/k/a the intenet bubble. When that bubble burst the Fed again attempted to delay the pain and rastically cut interest rates causing a bigger housing bubble.
There’s a clear pattern each bail out gets larger and larger and each bubble burst gets more dangerous.
At some point people need to let the market work. Recessions are a normal part of the business cycle and are useful for clearing out inefficient and fraudulent businesses. By continuing to prop these businesses up we are risking healthy businesses and the fiscal security of the entire Country.