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.