In a season of bizarre political happenings, none is stranger than the exaltation of Ben Bernanke as the natural successor to himself as Chairman of the Federal Reserve Bank. Obama seems primed to reappoint the establishment favorite in yet another declaration of his attachment to the status quo. Bernanke is being promoted from several influential quarters -- including some critics of the Fed's failings in encouraging the very policies and practices that brought the country's (and the world's) financial system to the brink of ruin. Nouriel Roubini for one. The economics fraternity is only a step behind Wall Street in the cheerleading.
Our collective near death experience has changed next to nothing in our deformed financial system. Now we seem about to keep in charge the man at the controls when it all went off the rails. Indeed, he is grasping for more powers for the Fed with the backing of Timothy Geithner, Larry Summers and Rahm Emanuel -- Obama's enforcer who been charged with riding herd on his economic advisers. The search for explanation of this phenomenon defies conventional reasoning. We must look to anthropology and social psychology for clues.
Bernanke has been assiduously casting himself for the part of the 'good German' in the epic financial scandal. The basically well-intentioned, decent and reasonable person caught in the coils of rather nasty goings-on. This is pure nonsense on the record. The more interesting question is why there is a widespread need to find such a person. There is something in us that resists the idea of unalloyed evil/badness in even the most disreputable governments. The yearning for redeeming individuals has reemerged. Ben Bernanke is the media's clear choice; so too for the economics profession. Quiet, soft spoken, and outwardly deferential, he is a natural. Moreover, he tells touching stories about his mother on 60 Minutes.
The real Dr. Bernanke, Chairman of the Federal Reserve since 2006 and de facto number two to Greenspan on the Board of Governors earlier, was dedicated to Maetro's line on unregulated financial markets, a true market fundamentalist, defender of financial 'innovation,' enabler of the bubble economy, a leading participant in all the louche crisis management decisions, a black knight who as this moment is doing everything he can to block whatever reforms are still on the table, an institutional imperialist who is moving heaven and earth to concentrate all financial oversight powers in the quasi-private Fed, and a disparager of the ethical and greed issues central to the crisis until that attitude became politically untenable.
Then there is the spectacle of most economists rallying around one of their own. A substantial majority of economists who have been polled by the Wall Street Journal favor his retention as head of the Fed. Is it conceivable that their dispassionate best judgment is that Bernanke is the best man in the country to steer our economy in the future? Even if we grade on a curve? What we are observing is an expression of the guild mentality among people who have gotten just about everything wrong for a generation. Ben Bernanke is the embodiment of the professional economist engaged in public life. Don't underestimate the degree of empathy. His exaltation is exaltation for all in the economics professional to some varying degree; his redemption is theirs.
All this anthropology may be off base. One thing is sure, though. With Bernanke ensconced for another term, keep your hand on your wallet -- and whatever is still in it.
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