Wednesday, December 16, 2009

A fitting Man of the Year

Time Magazine names their man of the year: Ben Bernanke.

I agree with them. As I and respectable economists (i.e. the ones who were right) such as Paul Krugman and Nouriel Roubini have repeatedly pointed out in the past, Ben Bernanke has done everything that a central banker is supposed to do when faced with a potentially Depression-scale crash of the money supply. The Federal Reserve and the FDIC are the only two of our national institutions that have behaved exactly the way they're supposed to behave in the kind of crisis we find ourselves in. The rest of our government -- the regulators and the legislators, the courts and the Cabinet members -- eh, not so much.

Yes, Ben Bernanke did not suddenly come up with a solution to the unemployment problem. He's a central banker, not a Congressman. His job is to maintain a stable money supply, he cannot provide the kind of fiscal stimulus needed to soak up the excess capacity in the economy and put it to work building infrastructure, Congress has to pass the laws to do that and the President has to actually spend the money that Congress allots for that purpose. But maintaining a stable money supply is no small thing. Without that, we'd be truly fucked, in a deflationary spiral that would not stop until we were back at a barter economy -- which, in case you haven't notice, is woefully inadequate at the task of creating and maintaining a technological civilization.

In short, Ben Bernanke saved civilization. He made some mis-steps here and there, but he's human, not friggin' Jesus Christ incarnate, for cryin' out loud, and the one thing Ben has been is pragmatic -- if something he did was not working, he did something else, exercising powers the Federal Reserve had been granted since 1913 but had never before exercised (a probable cause of the Great Depression, that). Unlike Obama and the Nobel Peace Prize, Ben Bernanke truly is deserving of the Man of the Year award. As for the conspiracy theorists (and Barney Frank): You're full of shit. All that needs sayin', thankyouverymuch.

-- Badtux the Appreciative Penguin


  1. Well, if your willing to give Big Ben a pass for all this shit happening on his watch in the first place - he did nothing to prevent it, and then mopped the sewage up later, then OK.

    My nominee is Joe Lieberman.* He, single-handedly, is doing more to fuck up this country than any randomly chosen dozen republicans. Amazing power for a man without a party.

    JzB the I am not kidding trombonist

    * keeping in mind other illustrious past winners: Adolf Hitler, Joszef Stalin, and the Ayatollah Khomeini.

  2. Jazz, the shit happened on Alan Greenspan 's watch, not Ben's, Ben just got the aftermath. And most of the "shit" happened at non-bank institutions like Countrywide Finance, AIG and Goldman-Sachs, not at Fed-regulated banks -- of the 20 biggest sub-prime lenders, one (1) was regulated by the Fed.

    Remember, Ben Bernanke is a *central banker*. He has direct control of the money supply and indirect control of national banks. He has no (zero) control over anything else. It's annoying that both conspiracy theorists who conclude the Fed is part of a conspiracy to defraud Americans via its actions, and Fed bashers who say the Fed should have somehow magically waved a magic wand and made institutions it did not regulate behave, seem to agree on one thing: the Fed is all-powerful, all-knowing, and has infinite capabilities. In reality, the Federal Reserve System is a collection of *banks*, not some all-powerful institution. Bernanke's job is control of the money supply, not creating laws. Bad laws, not bad actions by the Federal Reserve, caused this problem. So blaming Ben is silly.

    - Badtux the Economics Penguin

  3. Hmmm. I was under the distinct impression that much of the shit had occurred post February, 2006. And his prior gig: a member of the board of governors of the Federal Reserve System.

    From the Roubini article you linked previously:

    Mr. Bernanke, a Fed governor in the early part of this decade, supported flawed policies when Alan Greenspan pushed the federal funds rate (the policy rate set by the Fed as its main tool of monetary policy) too low for too long and failed to monitor mortgage lending properly, thus creating the housing and credit and mortgage bubbles.

    He and the Fed made three major mistakes when the subprime mortgage crisis began. First, he kept arguing that the housing recession would bottom out soon (it has not bottomed out even three years later). Second, he argued that the subprime problem was a contained problem when in reality it was a symptom of the biggest leverage and credit bubble in American history. Third, he argued that the collapse in the housing market would not lead to a recession, even though about one-third of jobs created in the latest economic recovery were directly or indirectly related to housing. Mr. Bernanke’s analysis was mistaken in several other important ways. He argued that monetary policy should not be used to control asset bubbles. He attributed the large United States current account deficits to a savings glut in China and emerging markets, understating the role that excessive fiscal deficits and debt accumulation by American households and the financial system played.

    So, not only was he complicit in Greenspan's fuck-ups, he has a rather impressive list of his own fuck-ups to complement them.

    At that, I'm not actually dissing the guy very much. He's bright, and he's done some good things. But I am saying that too little, too late is not a great track record. And there are other economists would very likely have done better sooner, probably including both Krugman and Roubini.

    So, yeah, when his back was to the wall he did what Krugman wanted him to. I'd buy him a beer, but I wouldn't canonize him. Man of the year? Meh!

    JzB the wants to have a beer with Bernanke at the White House trombonist

  4. More "Man of the Year" Meh!

    From Krugman.

    JzB the why fight inflation while were in deflation trombonist


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