Not so long ago, Bernanke’s predecessor as Chairman of the U.S. Federal reserve was regarded as the infallible Pope of Global Finance; His Excellency Alan Greenspan. Today, amid the volatility of the Global Economic Crisis, we now know better. The laissez-faire monetary policies of Greenspan, the fanatical easing of credit combined with a blind trust in de-regulation, led to the sub-prime mortgage disaster in the United States financial system. The contagion spread its toxicity globally, and now all that reside on this planet are experiencing the early stages of what promises to be a global depression that will stagger all economies, big and small.
What about the man now at the helm of the Fed, the professorial Ben Bernanke? His record from the time more savvy economists such as Nouriel Roubini were warning that a sub-prime disaster would cripple the global financial system unless policy-makers enacted decisive and coherent responses, has been dismal. History will ultimately judge Bernanke’s stewardship of the Federal Reserve as harshly as it currently does Alan Greenspan, now that all the collective rose-tinted spectacles have been removed. The past year has been a confusion of ad hoc improvisations at the Fed, clearly reflective of a man who has been overtaken by seismic financial and economic events.
Yet, Wall Street is still willing to be fooled again. Ben Bernanke testifies before Congress and the Senate Banking Committee, dropping hints that just “maybe” the recession will end in 2009 and recovery begin in 2010, and by the way the calamitously-managed U.S. major banks will not require nationalization, and a sizeable “sucker’s rally” is sparked on Wall Street. The Chairman of the Federal Reserve also offered this rhetorical sweetener, sure to warm the cockles of the hearts of the corporate tycoons who ran their major banks and financial institutions up the creek; the nation, says Bernanke, “ought not abstain from saving the financial system just because it rewards people who erred”. In other words, the vastly over-compensated and reckless engineers of our global financial demise need not fear the cessation of further bailouts and backstops from the U.S. taxpayers, on top of the trillions already placed on the line.
No matter how dire a situation is, or immense its complexities, an ultimate solution requires more than a “plan” or a “program.” It demands leadership from individuals of impeccable character, intuition, judgement and integrity. In other words, individuals count in this Global Economic Crisis. Ben Bernanke may mean well, however, his being a pivotal (and unelected) decision-maker in determining whether or not the United States and the whole global economy emerges from our current march towards calamity does not inspire confidence about our future.
In word and thought, Bernanke reflects a man detached from the real world consequences of his ineptitude and faulty analysis of the Global Economic Crisis. He must be residing in an alternative universe, since his policy responses and verbalizations are remote from the human affliction being created by this man-made global economic and financial disaster.
While Bernanke was delivering his congressional testimony with his typical studied and stilted cadence, the most recent S&P/Case Shiller house price index was released, indicating that the price of a single-family dwelling had fallen 18.5% in December, compared with the same month in 2007, the largest recorded decline since the index was created 21 years ago.
As has been said before, the path to hell is paved with good intentions. And no doubt with good intentions, Fed Chairman Ben Bernanke is leading us all into an economic inferno that may ultimately consume whatever sinews of economic recovery still exist.
