Bernanke - Hero or Heal?

[slaternuthink]

With the stock market back at all time highs, I see Dr. Bernanke lauded in the press as a "hero". Really?

Is'nt that a little like praising him for saving the house from an infero, while ignoring the fact that he was the arsonist that started the fire?

 

[donheff]

I think he has been a pretty good Fed Chair. Read The Alchemists, Three Central Bankers and a World on Fire, to get a good feel for how he responded to the crisis. The author clearly thinks Bernanke did well but I saw in the paper the other day that he doesn't think Obama should should re-nominate him.

 

[hsv_climber]

We will find out in 10-20 years....

 

[anethum]

I would consider Greenspan one of your so-called arsonists, not Bernanke.

 

[ziggy29]

Bernanke inherited a pretty bad hand. Do I agree with all he has done? No; in particular I think he seems hell-bent on suppressing interest rates at ridiculous levels for too long (though I agree it was necessary for a while). But I think he was thrown into a virtually no-win situation by his predecessor, where he had to choose between global depression and years of debt and pain for savers to prop up Wall Street.

 

[GrayHare]

I would consider Greenspan one of your so-called arsonists, not Bernanke.

+1

 

[Hamlet]

This is really true. Everyone thought Greenspan was a genius, but he laid a good portion of the groundwork for this crisis.

I think Bernanke has done a good job, but the real test will come when conditions normalize.

We will find out in 10-20 years....

 

[Tadpole]

I think BB will turn out more hero than heel. But, pardon me while I must curse him occasionally anyway.

 

[seraphim]

I don't know. the QEs forced a lot of people into equities, which was good for the stock market, but I wonder if it's not going to backfire when they stop the purchases. Many investors are already avoiding bonds, looking for better sources of income. When interest rates rise, what going to happen? And, eventually, isn't the stock market going to come back down? I guess I just hate seeing an administartion artificially manipulating the markets.

 

[bjorn2bwild]

It is only natural to love the bartender when they are passing out free drinks.
Both recent Fed heads are too activist for my comfort level. The present situation has an uncomfortable "mission accomplished" feeling.

 

[Katsmeow]

I think he has done a reasonably good job although I don't agree with everything he has done (I think he has focused too much on inflation rather than considering unemployment).

 

[explanade]

He was primarily concerned with preventing deflation, which hit not only equities but real estate.

Obstructionism in Congress wasn't going to permit further fiscal stimulus while aggregate demand has been moribund.


US economy is doing better than Europe, which didn't implement stimulative policies or pump out the money supply like the Fed has.

 

[heeyy_joe]

Interestingly, sequestration's foot on the brake of the economy buys Ben more time for his fiscal policy and will keep the economy from overheating too quickly.

Proving once again, politics makes strange bedfellows...

 

[growing_older]

Freudian slip? He's the hero who healed the financial system after poor controls allowed some very dangerous situations to develop. If the hyperinflation that has been predicted for the last three years ever shows up, then he can be a goat, but it's long overdue and may not be his problem if the recovery keeps muddling along mildly.

 

[ejman]

Hail to the healing hero who ain't no heel. (not yet anyway...)

 

[traineeinvestor]

Bernanke inherited a pretty bad hand. Do I agree with all he has done? No; in particular I think he seems hell-bent on suppressing interest rates at ridiculous levels for too long (though I agree it was necessary for a while). But I think he was thrown into a virtually no-win situation by his predecessor, where he had to choose between global depression and years of debt and pain for savers to prop up Wall Street.

+1

There will always be winners and losers from Fed policy. Under Bernanke, the winners have included holders of bonds (especially longer term bonds), equities, real estate, borrowers and employees. The losers have been people accumulating assets and people on fixed incomes.

People with cash in the bank have benefitted in being less exposed to bank failures but suffered with negative real interest rates.

Personally, it has been something of a mixed bag for me - it's nice seeing my investments appreciate in value and knowing that I am paying less than the rate of inflation on my mortages but somewhat irritating knowing that I am missing out an opportunity to acqurie assets at lower prices. If Bernanke wants to get a "hero" vote from me, he'll have to figure out how I can have it both ways.

 

[AndrewJackson]

Anyone who believes that Fed Policy is correct in any shape or form doesn't understand the dynamics of a free market. Outcomes will always end up worse when you have ONE man FIXING the price of the most abundant and important commodity on the planet, money.

If there were ever an honest chairman, here is what they would do:

1. Sell bonds to get balance sheet to pre crisis QE levels.
2. Forgive the remaining debt owed by the US that is held on its books.
3. Remove any operations to fix the price of money and let a completely free market take over.

 

[sheehs1]

I trust Bernake to have made the right decisions (among the worst of 2 or many evils) and to continue to do so a LOT more than I trusted Greenspan. Greenspan was a academician that had blinders on sitting in his ivory tower while the paths to destruction were created. Can't blame Greenspan for ALL of it but he certainly had his part.

Most don't have all the information, data or an educated understanding of the fluid and working parts of how the global economy engine fires and I, for one, will not armchair quarterback Bernake (too much anyway). I'll take a deep recession over a 1929 Depression any day. I'll take a softer ride down to some form of stability than a plummet in a heartbeat.

 

[joebloe]

I thought it was all Bush's fault?

 

[explanade]

Bernanke is an academic too.

But I will trust him more than the "free market" of Wall Street profiteers who caused all the destruction and had to get bailed out -- who incidentally are looking to continue trading in derivatives, even if they have to go offshore to places like the Caymans which do not have regulatory oversight over these practices.

 

[imoldernu]

http://www.usdebtclock.org/
Top right of clock for Time Machine.

 

[eridanus]

U.S. National Debt Clock : Real Time
Top right of clock for Time Machine.

Does Bernanke set the budget?

 

[HFWR]

Outcomes will always end up worse when you have ONE man FIXING the price of the most abundant and important commodity on the planet, money...

Federal Reserve System - Wikipedia, the free encyclopedia

The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous privately owned U.S. member banks and various advisory councils.[13][14][15] The FOMC is the committee responsible for setting monetary policy and consists of all seven members of the Board of Governors and the twelve regional bank presidents, though only five bank presidents vote at any given time (the president of the New York Fed and four others who rotate through one-year terms).

 

[ejman]

Anyone who believes that Fed Policy is correct in any shape or form doesn't understand the dynamics of a free market. Outcomes will always end up worse when you have ONE man FIXING the price of the most abundant and important commodity on the planet, money.

I see, so you'd rather have a current day one man such as JP Morgan come to the rescue?. Here is a bit of history you may not be aware of

Panic of 1907 - Wikipedia, the free encyclopedia

 

[slaternuthink]

To earn Hero status from me, I need a fed master that can referee the market, not be the market.
Assuming that no one knows the correct price of anything without a well fuctioning market, a hero fed will restore order as quickly as possible and let the market price assets and risk.

Bernanke was a natural hand-off from Greenspan. I think it is too easy on him to say that he inherited the crisis. He was present during the pre-crisis.