I came across this commentary from Fareed Zakaria on CNN yesterday. It is titled “Bonus For Bernanke?” :
http://www.cnn.com/video/#/video/us/2010/01/31/gps.bernanke.bonus.cnn?iref=allsearch
I mildly or strongly disagree with most of the assertions made by Fareed Zakaria in this piece. The reason that I post it is that it contains a very good, concise representation of ideas from supporters of Ben Bernanke’s performance.
back to <home>
SPX at 1073.87 as this post is written
I would like to make a couple of comments regarding the speech Ben Bernanke gave on January 3. It was titled “Monetary Policy and The Housing Bubble,” and the pdf link can be found here:
http://www.federalreserve.gov/newsevents/speech/bernanke20100103a.pdf
I could make a significant amount of comments regarding this speech, as I partly or fully disagree with many of the points presented.
I will, however, briefly comment on a couple aspects of the speech. First, from page 21:
“Although the house price bubble appears obvious in retrospect–all bubbles appear obvious in retrospect–in its earlier stages, economists differed considerably about whether the increase in house prices was sustainable; or, if it was a bubble, whether the bubble was national or confined to a few local markets.”
I agree with the general premise that bubbles aren’t always obvious. As I said in my December 2 post, “Some bubbles are harder to spot than others.” As far as the housing bubble was concerned, in my opinion it was a relatively easy bubble to identify as it occurred, based upon a variety of characteristics.
Second, from page 22:
“That said, having experienced the damage that asset price bubbles can cause, we must be especially vigilant in ensuring that the recent experiences are not repeated. All efforts should be made to strengthen our regulatory system to prevent a recurrence of the crisis, and to cushion the effects if another crisis occurs.”
I think it can be strongly inferred from this excerpt, as well as other statements that he has recently made, that he doesn’t believe there are asset bubbles currently in existence. My analysis indicates otherwise, as I discussed in my December 2 & December 16 posts.
SPX at 1136.43 as this post is written
Here are two articles on Ben Bernanke that I found interesting. There is much I could comment upon in each. I disagree or otherwise have differing opinions on various statements in these articles; however, I do feel the stories are valuable as they present an in-depth look at Ben Bernanke from a historical and philosophical perspective.
The first is the Time Magazine “Person of the Year” story of December 16:
http://www.time.com/time/specials/packages/article/0,28804,1946375_1947251_1947520-3,00.html
The second is titled “Bernanke’s Philospher” and is found in the December 2009 Reason.com:
http://reason.com/archives/2009/11/17/bernankes-philosopher
back to <home>
SPX at 1102.47 as this post is written
In his December 7 speech, Ben Bernanke made the following comments with regard to the role of The Federal Reserve. For now, I will post an excerpt I found notable, and may comment upon it at a later date:
“In all of these efforts, our objective has not been to support specific financial institutions or markets for their own sake. Rather, recognizing that a healthy economy requires well-functioning financial markets, we have moved always with the single aim of promoting economic recovery and economic opportunity. In that respect, our means and goals have been fully consistent with the traditional functions of a central bank and with the mandate given to the Federal Reserve by the Congress to promote price stability and maximum employment.”
back to <home>
SPX at 1113.69 as this post is written
Ben Bernanke gave a speech on Monday at the Economic Club of New York. Here is the link:
http://www.federalreserve.gov/newsevents/speech/bernanke20091116a.htm
I found his comments on unemployment to be noteworthy:
Here are some excerpts:
“In addition to constrained bank lending, a second area of great concern is the job market. Since December 2007, the U.S. economy has lost, on net, about 8 million private-sector jobs, and the unemployment rate has risen from less than 5 percent to more than 10 percent.6 Both the decline in jobs and the increase in the unemployment rate have been more severe than in any other recession since World War II.7
Besides cutting jobs, many employers have reduced hours for the workers they have retained. For example, the number of part-time workers who report that they want a full-time job but cannot find one has more than doubled since the recession began, a much larger increase than in previous deep recessions. In addition, the average workweek for production and nonsupervisory workers has fallen to 33 hours, the lowest level in the postwar period. These data suggest that the excess supply of labor is even greater than indicated by the unemployment rate alone.”
also:
“The best thing we can say about the labor market right now is that it may be getting worse more slowly.”
also:
“As the recovery becomes established, however, payrolls should begin to grow again, at a pace that increases over time. Nevertheless, as net gains of roughly 100,000 jobs per month are needed just to absorb new entrants to the labor force, the unemployment rate likely will decline only slowly if economic growth remains moderate, as I expect.”
SPX at 1110.32 as this post is written
On Tuesday President Obama made remarks upon nominating Ben Bernanke for a second term as Fed Chairman. The remarks can be found here:
I would like to comment on some of the phrases President Obama used in these remarks.
President Obama says, “The man next to me, Ben Bernanke, has led the Fed through one of the worst financial crises that this nation and the world has ever faced.”
and later:
“Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and out-of-the-box thinking that has helped put the brakes on our economic freefall.”
and later:
“But taken together, this “bold, persistent experimentation” has brought our economy back from the brink.”
_____
In the second phrase, I found the use of the word “approached” to be odd.
However, the greater significance in the above phrases is the reference to ”bold action and out-of-the-box thinking” and “‘bold, persistent experimentation.’” I was surprised to see the word “experimentation” mentioned; one would usually not think of an economy being “experimented” upon. However, the description is probably accurate given what has transpired. Perhaps the bigger question is whether the “experiment” has ended? Has it been a success?
With regard to this “out-of-the-box thinking” and “‘bold, persistent experimentation’” I would like to refer to a speech Janet Yellin (President and CEO, Federal Reserve Bank of San Francisco) gave on January 4, 2009. In it she said that with regard to the Federal Reserve actions: ““Furthermore, many of the interventions are novel, so no straightforward methods are available to quantify their effectiveness. There are also no clear guidelines for the Fed to gauge the appropriate size of its interventions and few precedents for the Fed to use in communicating its policy stance to the public beyond announcing new programs and describing their terms in detail.”
SPX at 1030.98 as this post is written
With the announcement that Ben Bernanke will be nominated for a second term as Federal Reserve Chairman, I would like to make a few comments.
First, a brief review of some of the comments others have made with regard to Ben Bernanke’s tenure. Here is a quote from Paul Krugman, as seen in the following August 10 Bloomberg story:
“I think Bernanke has done a really good job,” Krugman said. “He failed to see this coming and he was behind the curve in early phases. But he’s been really very good in the sense that it’s really very hard to see how anyone could have done more to stem this crisis.”
Krugman’s opinion seems to be largely in line with sentiments recently voiced by many other economists.
As well, other popular thoughts on Bernanke seem to be summarized well in this article:
http://online.wsj.com/article/SB125120274221856591.html
My thoughts on Bernanke haven’t changed. I have periodically remarked on him; those remarks can be found in the “Ben Bernanke” category listed along the right side of the page. Perhaps my June 10 post is the best summary of my thoughts:
http://www.economicgreenfield.com/2009/06/10/in-ben-we-trust/
As well, I will say that I feel that there have been many significant aspects of Ben Bernanke’s actions that have gone unnoticed, and/or have not been commented upon by anyone.
I will continue to comment on Ben Bernanke on an intermittent basis.
SPX at 1027.76 as this post is written
On July 26th Ben Bernanke said, “”I was not going to be the Federal Reserve chairman who presided over the second Great Depression.” The quote and associated details can be found here:
I found the quote interesting primarily as it once again underscores the popularity (or should I say fixation) that many people, including prominent economists, have in comparing (and associating the characteristics of) our current period of economic weakness with that of The Great Depression. As I wrote in my July 13th post, I think that viewing the two periods similarly is not only incorrect but perilous.
SPX at 987.48 as this post is written
I found this blog post from James Hamilton to be interesting:
http://www.econbrowser.com/archives/2009/06/on_grilling_the.html
especially when he says this:
“But it is another matter to question Bernanke’s intellect or personal integrity. As someone who’s known him for 25 years, I would place him above 99.9% of those recently in power in Washington on the integrity dimension, not to mention IQ. His actions over the past two years have been guided by one and only one motive, that being to minimize the harm caused to ordinary people by the financial turmoil. Whether you agree or disagree with all the steps he’s taken, let’s start with an understanding that that’s been his overriding goal.”
___
I like to think of the role of the Fed Chairman in a different light, especially with our current economic situation. I believe that perhaps the two most pertinent questions are:
1. Does Ben Bernanke have a full understanding of the economic situation we find ourselves in?
2. What can (and should) he do about it? Especially considering the concepts of Sustainable Prosperity and America’s Economic Future? (both of which have been extensively referenced on this blog)
SPX at 900.4 as this post is written
Recently various people have given high marks and effusive praise for Ben Bernanke’s performance during the Financial Crisis. Here is a sampling:
“Bernanke’s Handling of US Crisis Gets Strong Mark” :
From Jack Welch:
“I think he saved the system, I think he’s a national hero,” Welch said. “I think Bernanke seems to be a guy operating on a clear intellectual framework. This guy’s done a hell of a good job.”
Attributed to Abby Joseph Cohen:
“She also said that history is likely to show that Fed Chairman Ben Bernanke has been an “extraordinarily effective” leader during the current crisis, the worst U.S. recession since World War Two.”
From Warren Buffett:
“The urgency has moved away from a total meltdown of the financial sector which we faced last fall. I’ve never seen anything like that. But I would give enormous credit to the people there. (Federal Reserve Chairman) Bernanke did a fabulous job.”
http://www.cnbc.com/id/31526815/
There are other examples as well. I could comment extensively regarding this praise and “high marks” for Bernanke, and might do so in the future.
However, for now perhaps the main question that comes to mind is whether by commenting in this fashion these people are presupposing that The Financial Crisis is over and that we are indelibly on the road to recovery?
SPX at 918.90 as this post is written