Bernanke, victim of populism or incompetent?

@High Seas,

How are your meds working out for you these days ?

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@Thomas,

Quote:

dyslexia wrote:

Bernanke, victim of populism or incompetent?

Victim of populism, and in the wrong place at the wrong time.

The financial crises started because Greenspan, along with the four US presidents he served under, had made two big mistakes: (1) They failed to regulate the emerging shadow banking system. And (2) they removed too many of the New-Deal regulations that had stabilized the traditional banking system before Reagan. By doing so, they set up the system to crash, and allowed big investment banks to take the economy hostage if they failed.

Sure -- when investment banks did fail and did take the economy hostage, Bernanke chose to pay the ransom. Was that incompetent? Would the country be better off if he had put it through a second Great Depression instead? No and no. Bernanke was in a no-win situation through no fault of his own, and he opted for the alternative that sucked the least. Life can be like that.

Thomas,
I agree with you for the most part. Three of the four presidents who Greenspan served under loosened the restraints that held our banking system in check, assuming that their successor would keep a close watch on how loose things were getting. The idea being that when certain red flags went up, the powers in charge, would tighten the reins just enough to steer the ship of state back on course.

I'm sure that Alexander Hamilton is spinning in his grave these days.

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NEW YORK (MarketWatch) -- U.S. stocks started higher on Monday, with the market bouncing back from a three-day rout as investors gained confidence Federal Reserve Chairman Ben Bernanke would be approved for a second term. The Dow Jones Industrial Average added 65.22 points to 10,238.20. The S&P 500 Index added 9.21 points to 1,100.97. The Nasdaq Composite Index rose 14.61 points to 2,219.9.

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@Thomas,

Thomas wrote:

dyslexia wrote:
Bernanke, victim of populism or incompetent?

Victim of populism, and in the wrong place at the wrong time.

I'd say he was in the right place at the right time for us (although not for himself). Bernanke knew we had to do something very quickly. He got both Bush and Obama to do something that no party would like at a pace that was extraordinary by Washington standards. Did he nail the solution? Probably not, but when the car was heading toward the cliff, he grabbed the wheel and turned hard. Now we're in a ditch and looking at some repair bills, but we're not at the bottom of that chasm. If Bush were left to his own devices, would we be able to say the same? Can't say, but I'm not faulting Bernanke for taking hard, aggressive action when it was required.

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@hawkeye10,

LOL Hawkeye - you also serve as an adviser to that committee? Please make sure to introduce yourself by your online name.

Dys - Bernanke is a good second-rate economist, though no theorist. He did what he could given the mess he took over from Greenspan. I think he'll get confirmed, but the Treasury (both current and prior) Secretaries will have a lot of explaining to do. Anyway I'll be overseas and not posting for a while - if you want more info send me e-mail. You seem to have gathered quite a slew of experts here, Smile

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@engineer,

engineer wrote:

I'd say he was in the right place at the right time for us (although not for himself).

Good distinction there!

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Bernanke, victim of populism or incompetent?

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