Personally, I don’t have any special animus for Ben Bernanke beyond what I hold for everyone who was in a responsible position and didn’t see the Housing Bubble in front of their faces. But, contra Krugman, I see a need to replace him as Federal Reserve chairman for symbolic and political reasons that go beyond core competency. Simply put, someone has to pay the price for the fact that our economy collapsed and people are out of work and losing their homes. Krugman is right that whomever is chosen to replace him has to be able to lead the FOMC, and that means the range of policy alternatives is rather limited, but that’s a cultural problem affecting all elements of government policy at the moment.
Since Obama renominated him, he’ll get no credit if he is forced to pull his nomination. But Democrats will get credit, and that is more important right now. Obama should really replace Summers and Geithner as well, as they have become toxic.
Start fresh, and a populist pivot will have some credibility. Stay with the old hands, and it won’t.
100% agree. Only thing (and not a ‘but’) is that after watching the Prez for a year, I’m not sure I can follow his thinking. There have been too many (to me) inconsistencies in decision-making for me to understand how he could say what he said during the campaign, then bring in the team he selected for his Cabinet.
As such, I have doubts that this ‘populist pivot’ is what we seem to think it is. While it might not be the best choice, I think I’ll sit back and wait to see which direction he takes this current attempt to regain momentum before deciding to jump on or torch this bandwagon.
(only other quibble: I’d add Rahm to the hit-list at the end of your post. I can’t trust that he’d be willing to work with Progressives, or provide good-faith advice to the President in that regard, which could serve to further damage Obama’s ‘street cred’)
I agree. Bernanke should not have been renominated.
Also, if Geithner gets tossed out, a way around the inevitable GOP block of the next SecTreas nominee would be by recess appointment of a genuine liberal. Too many conservatives have screwed up the economy. It’s past high time a liberal had a chance. Fuck bipartisanship.
…practical and political reasons. Combine this with President Obama’s belated but welcome move to curtail banking practices (not enough, but a good start) and possible passage (a longshot) of Cantwell-McCain to restore Glass-Steagall, and the Democrats will have a good paragraph in their narrative for the coming elections.
They also need a good jobs bill (much better than and 3x as expensive as the one that passed the House in December), but that will be a tough sell in Congress.
At any rate, the best thing Bernanke could do now is opt out. Thus, Obama doesn’t have to pull him and can replace him with a new face. Of course, getting a new face confirmed will have its own problems, but that might not be as bad as seeing substantial numbers of Democrats vote “no” on Bernanke.
Who do you nominate?
Stiglitz!!
We need nominees that stand a chance at getting through the confirmation process.
I doubt Joe Gagnon would make it through, but assuming Bernanke can’t, he’s my nominee.
Who is Joe Gagnon?
http://www.donkeylicious.com/2010/01/pivot-to-jobs-sack-bernanke.html
And why wouldn’t Stiglitz get through? because he cares about poor people?
I love this argument because it’s clear that the President has nothing better to do with his time than try to navigate senatorial holds on appointments and deal with idiot grandstanding in confirmation hearings. Nothing will reform the economy AND send a populist message to the public more than a 6 month nomination battle over treasury secretary.
Why didn’t Obama think of that?
/snark
As much as I want Geithner, Bernanke, Summers to go this is my concern. The Republicans will most certainly play politics. Orrin Hatch said this morning on State of the Union that he would vote for Bernanke basically because he was afraid of who Obama would nominate to replace him. Unless the Democrats have a strategy for getting around Republican obstructionism then the likelihood of getting a more progressive voice is pretty dim…
I’m indifferent. I supported Bernanke when he was nominated, as I thought he’s done a decent job during/since the crash. Bernanke acted swiftly and boldly, applying measures that not many other Fed chairs would have taken (as they were not conventional). This was why I supported his confirmation from the get-go.
Hearing him at his hearings, though, has changed my mind. He’s more worried about inflation than unemployment, he’s bought into the social security myth, and has actively talked about cutting that and Medicare (not lowering health care costs, the real problem with Medicare, but cutting it).
So Bernanke can f*** himself as far as I’m concerned. He could have given the proper answers during the hearing, but it’s obvious he’s learned nothing.
I don’t think Bernanke will be a bad Fed Chair in his second term by any means, but I don’t think he’ll be a particularly great Fed Chair either.
In reading Brad DeLong, though, I might move back to the support column:
There’s more in the link:
http://delong.typepad.com/sdj/2010/01/dont-block-ben.html
And DeLong is wrong. The Democrats can’t worry about that right now. Bernanke has said that he’s more concerned with something that’s non-existent(depending on the whims of the oil market excepted) right now .. then worrying about whether Americans have jobs … not to mention Bernanke cheered the bubble on at every stop(for those that don’t know .. Bernanke was at the Fed during the later part of Greenspan’s tenure .. and was Bush’s Larry Summers for part of the housing bubble) .. what DeLong misses is that Republicans will use that line no matter what .. what DeLong misses .. and I don’t know why .. is that Republicans will always project .. always!! .. it’s what they do!! .. they’ll find some way to bash Obama for being anti-populist .. or whatever their cause of the moment is
I don’t think the reality matters in this case. Bernanke may or may have done a decent job on limiting the crisis — nobody will ever know for sure. Problem is, he, along with Summers, Geitner, and others, has become the “proof” that Obama is in the pockets of the banksters, that he “never really wanted change”. Because he’s there, everything Obama tries to do on the financial front will be greeted with suspicion from both sides and increase the likelihood that it will crash and burn. We can’t afford another protracted and ultimately failed struggle.
It may not be fair, but Bernanke has to be persuaded to spend more time with his family and a reform-minded Democrat has to take his place. Whatever his merits, Obama made a mistake in nominating him.
“Start fresh, and a populist pivot will have some credibility”
Nobody outside of washington and in the blog-pundit swamp gives a shot about the treasury secretary.
How about, to be populist you arrest some bank officers for fraud and stomp on corrupt government officials and make a fight over bank taxes. You know, do something meaningful and populist instead of giving in to republican demands and firing your own appointees and then begging the Senate to confirm a replacement?
Except you might have to fire Geithner if he’s actively trying to stab you in the back
Sigh. The left is always the last to know. In January I argued that in Obama’s place, I would waste money trying to calm down WS and stop the banking collapse and move on more important things like the green energy investment and then turn on the banks when I had the chance. I was widely derided by “leftists” for dreaming about 29 dimensional ninja chess because “leftists” seem in love with tactical stupidity.
Boo:
I hope everyone understands why K-Thug is going soft on Bernanke. It’s because Bernanke used to be his boss at Princeton. If Greenspan was chair right now, I’d be willing to bet that Krugman would call for someone else to be Fed Chair, but that’s only my guess.
Bernanke didn’t see the problems coming. Is that really the type of person you want running the Fed?
As far as his handling of the crisis. I disagree that he’s done a good job. We’re going to pay the price for what’s been done.
We’ve papered over the problems but they are still there and will be until we force real change. We should have liquidated the management of the banks and broken them into littler pieces as part of the bailout. They should have been bankrupted. They were insolvent. Taxpayers bailed them out. The problems were never fixed. They’re still out there as our Sword of Damocles.
The Fed’s easy money created the problem. Bernanke was part of this. He needs to go.
I’m a big supporter of Obama and he certainly was dealt a tough hand, but his handling of the financial crisis was sub-optimal. He should have followed Volcker’s advice from the beginning. Geithner and Summers need to go as well.
– Curtis
I agree with everything in your comment except that first sentence. Given Bernanke’s background and experience at the Fed, he had to see the bubble for what it was and he had to see what the inevitable result would be. I think he and Paulson knew they were inflating a bubble, and I think they knew that sooner or later it would pop. No one in their positions could be naive enough to think otherwise.
I think for most of 2008 they were doing everything in their considerable power to postpone the inevitable collapse past the elections, in hopes of electing another Republican president. In the very same week that Obama began to pull decisively away from McCain in the polls, out of the blue Paulson and Bernanke suddenly discovered this massive existential threat to our economy, as if it had appeared out of nowhere. Coincidence? I think not.
Is that really the type of person you want running the Fed?
Are you sure about that?:
http://delong.typepad.com/sdj/2010/01/the-internets-chief-bernanke-apologist-officer-speaks.html
As DeLong says, there was thought to be a bubble in 1996, but it didn’t actually occur until 1999.
Yes it was possible to see, but I do not think it’s as easy as everyone is making it out to be. “No one could have predicted” isn’t true, but I also don’t think Dean Baker is correct with his “obviousness” shtick.
Never mind 1996 or 1999, how about 2001 to 2007? By 2006 at least it was obvious to anyone who was paying attention that we were in a monumental bubble that could not be sustained indefinitely. By 2007 people I work with who don’t pay attention to such things were talking about ninja mortgages and flipping houses. Common wisdom was that it was all musical chairs and sooner or later the music had to stop. If common joes like us could see that, it’s not possible that Paulson and Bernanke could not.
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Chinese aggressive marketing policy and double digit growth will signal the United States demise in the wake of California bankruptcy.
See my diary – Iceland the Poster Child for Neocon Fiscal Policy
(AlterNet) Oct. 21, 2008 – Iceland, despite its coalition governments and Nordic social values, became a poster child for neoconservative economic policies inspired by Milton Friedman during the past decade. Friedman himself visited Iceland in 1984 and participated in what was described as a “lively television debate” with leading Socialists. This inspired a generation of young conservatives who came to power through the Independence Party in 1991 and have run its government through different coalitions since then.
Friedman may be dead now, but the economic and financial collapse of 2008 is becoming a real-life battleground of his theories against those of the other giant of 20th century economics, John Maynard Keynes.
Keynes’ analysis was complicated and nuanced. The work for which he’s best known, The General Theory of Employment, Interest, and Money, provided a theoretical basis for the economic reforms of the New Deal era — investments in public works and deficit spending that helped countries recover from the Great Depression.
While Friedman’s narrow form of money supply monetarism was quickly abandoned in the early 1980s, most governments have relied primarily on monetary instead of fiscal policy for stabilization of their economies over the past few decades. This turned Alan Greenspan, former head of the U.S. Federal Reserve and an advocate of Friedman’s policies, into the most important economic policy maker in the world …
"But I will not let myself be reduced to silence."Wasn’t Friedman a micro-economist? I remember seeing an interview with him a few years ago(it was taped before he died obviously .. and even then .. I thought he was clueless … because there is a difference between macro and micro .. and I don’t think Uncle Milty understood macro as much as he should .. even the basics
Friedman was once a great economist all-around, but he left the field and joined the Partisan Hackery Committee that Greenspan belongs to (Greenspan being another who allowed politics to overcome economics).
I’m not sure when the transition happened exactly, but the man who led the Chicago School was not the same person when he died. He embraced markets, libertarianism Austrian economics, over all sound macro-economics. Sad state of affairs, especially because his work was cited during this period of insane partisanship.