When representatives of American power encounter officials in less rich countries, they are prone to suggest that any failure to reach the highest standards of living is due in part to weak political governance in general and the failure of effective oversight in particular. Current and former US Treasury officials frequently remark this or that government "lacks the political will" to exercise responsible economic policy or even replace a powerful official who has clearly become a problem.
There is much to be said for this view. When a minister or even the head of a strong government agency is no longer acting in the best interests of any country - but is still backed by powerful special interests - who has the authority, the opportunity, and the fortitude to stand up and be counted?
Fortunately, our Constitution grants the Senate the power to approve or disapprove key government appointments, and over the past 200 plus years this has served many times as an effective check on both executive authority and overly strong lobbies - who usually want their own, unsuitable, person to be kept on the job.
Unfortunately, two massive failures of governance at the level of the Senate also spring to mind: first, the strange case of Alan Greenspan, which stretched over nearly two decades; second, Ben Bernanke, reappointed today (Thursday).>
Greenspan, as you recall, was worshiped as some sort of economic magician. Even his most asinine comments were seized upon by a legion of acolytes. Instead of providing meaningful periodic oversight, every Senate hearing was essentially a re-coronation.
And now we can look back over 20 years and be honest with ourselves: Alan Greenspan contends for the title of most disastrous economic policy maker in the recent history of the world.
Some on Wall Street, of course, would disagree - arguing that the financial sector growth he fostered is not completely illusory, that we have indeed reached a new economic paradigm due to the Greenspan tonic of deregulation, neglect, and refusal to enforce the law. Prove the ill-effects, they cry.
What part of 8 million net jobs lost since December 2007 do you still not understand?
And now the same Greenspanians and their fellow travelers rally to the support of Ben Bernanke's troubled renomination. Certainly, they concede that Bernanke was complicit in and continued many of Greenspan's mistakes through September 2008. But, they argue, he ran a helluva bailout strategy after that point. And, in any case, if the Senate had refused to reconfirm him - financial sector representatives insist - there would have been chaos in the markets.
Take that last statement at face value and think about it. Have we really reached the situation where the Senate as a body and individual Senators - accomplished men and women, who stand on the shoulders of giants - must bow down before financial markets and high-ranking executives who are really just talking their book?
Here's what markets really care about: credible fiscal policy, sufficiently tough monetary policy, and the extent to which big banks will be allowed to run amok - and then get bailed out again.
Reappointing Ben Bernanke solves none of our problems. In fact, given his stated intentions, a Bernanke reappointment implies larger bailouts in the future - thus compromising our budget further with contingent liabilities, i.e., huge payments that we'll have to make next time there is a crisis. What kind of fiscal responsibility strategy is this?
Rather than messing about with a meaningless (or damaging) freeze for part of discretionary spending, the White House should fix the financial system that - with too big to fail at its heart - has directly resulted in doubling our net government debt to GDP ratio from 40 percent (a moderate level) towards 80 percent (a high level) in a desperate attempt to ward off a Second Great Depression.
If you think we can sort out finance with Ben Bernanke at the helm, it was sensible to reappoint him. But when the time comes for members of the Senate themselves to be held accountable, do not be surprised if people point out that pushing Bernanke through - come what may - was the beginning of the end for any serious attempt at reform.
Ultimately, sensible democratic governance prevails in the United States. Sometimes it takes a while.
Mike Stark: The Bernanke Confirmation: Incompetence, Indifference and Institutional Inertia
The Fed is an impersonal and opaque institution. We all know it is there, but not very many people understand its role in our economy. Senators are no exception to the general rule.
Richard H. Smith: Breaking News (From 1948): Banking Mogul Ousts Fed Chairman
That's not the way to take out a Fed chairman. If history is any guide, it's not up to the people. It's up to the banks. Just ask Bank of America.
I would like to hear the president say, "Never have so many done so much for so few who needed so little. Now is the time for those who benefited from the bailouts to contribute to rebuilding our economy."
Bernanke Reconfirmed by Senate, But Bigger Challenges Remain
Senators slam Bernanke, then confirm him to 2nd term as Fed chairman
The link is not to a statement by Bernanke. It's not even to a news article about a statement by Bernanke. It's to a blog post that opposes reconfirmation without referring to any particular statement of his.
Just because the text is blue, it doesn't mean the assertion is documented.
The voting public experienced this folly by re-electing Bush Jr, and learned from the mistake of ignoring his disastrous Iraq invasion and his disastrous 2nd term. And therefore the next time, the public chose the ultimate outsider: Barack Obama, who promised change, as a stranger in a strange land of pseudo-legit corruption.
Thus there is increased exasperation and frustration, as the Senate performed a symbolic remake of 2004 by re-electing Bernanke. Lack of accountability in government is provoking a great deal of distrust.
Bernanke may have done a good job of pulling the US back from a worse crisis, but this is an unmeasurable and comparable hypothetical. Yes, he may be a great guy, but that does not mean he was the right person for a 2nd term. His background, connections, and worldview made the impending, systemic rottenness of the financial system invisible to him, until all hell broke loose. An outsider would have been the appropriate choice.
This is why so many with vested interests want the US with a weakened Fed, especially if that Fed chair actually is the smartest man in the room.
So ask yourselves, which country told the Chinese to dump Fannie and Freddie bonds in order to accelerate the crisis? Which country actually sold the insurance without assets at AIG? Which countries financial institutions are trying to poach our best people? Which countries create havens for terrorist money and tax dodging?
Lastly which country has only 5-6 of the world’s 50 largest financial institutions?
The former are “NOT the US”; the latter is the US. Two types of people calling for the Fed to become weaker. 1. Politicians covering their own 100% culpability in order to get reelected and; 2. Vultures and financial terrorists from ROW hedge funds, sovereign funds and dark pools.
Congress is 100% at fault for the seven million jobs not Bernanke.
Unfortunately, when that time comes, it will come after great hardships and with a hard shock that will shake this country deeply.
Unfortunately is is misleading in stating re-appointing Bernanke is somehow bad (it isn't), that the process of Bernanke being re-appointed is a failure of government (it is exactly the opposite, a re-affirmation of the success of the government we've created), and an implication that more and worse economic hardships are to come (explained by absolutely nothing the author has written, with no facts to support, only a vague snippet of if-it -happens-I'll-be-there-to-say-I-told-you-so).
We've been through a major crisis, the worst in the better part of a century. Our President is working hard... far harder than his detractors on both the left and right would ever allow... to pull us out of this mess, and the repubs are in lock-step in their efforts to see him fail and aided by cowards in his own party. I firmly believe we will succeed, that Obama will succeed. This article is just another in a long stream of pronouncements about how this policy won't work, or that plan won't fix things, or this or that person in their place of authority is just a big failure in the making. Don't believe it. Obama - and Bernanke - will help us get through this. Will mistakes get made? Probably. But on balance, more right will be done than wrong, more good than bad, and in the end we will prevail. The sky is not falling.
financial behemoths who, when operating well, together provide for the employment of tens of thousands of workers throughout the nation and world and trillions of $$s in trade revenues to our country, but when faced with disater, require many billions of $$s in bailouts to keep them afloat.
Sic Semper the world we live in. You can accept it as it is, or you can advocate for some nonsensical change to the world circa 1800s, with the good and bad that comes with it, and accpt the decades of 75% or so unemployment and civil wars and rampant crime and mass starvation that will go along with utterly destroying the current system in favor of some sort of agrarian, economically unsophisticated, no-central-control, zero montary policy democracy. Just understand that other growing world powers will enthusiastically look to fill in the power vacuum. I'd start practicing Cantonese. Just a suggestion.
Articles like this provide for a 5 minute bit of knee-jerk, wouldn't-it-be-great-if-things-were-different silliness, the Huffpo equivalent of the old couple on the porch reminiscing about how great things were pre-bailout days. (Cont)
The one "solution" (I'm being a bit liberal with the word) the article proposes is that "The White House should fix the financial system". This is a bit like saying the solution to tension in the Middle East is that the White House should help everybody get along. High unemployment? I expect the author could write an article giving us a brief critique of Greenapan's policies, and then propose something deep and meaningful, like "The White House should help to find everybody a job".
"If you think we can sort out finance with Bernane at the helm...." Sigh. Look, here's how it is: we live in an age where the world financial system is inextricably linked at every level, introvertly and extrovertly, with the actions of tens of thousand of large institutions throughout the entire world effecting each other in a manner unimagined just a few decades ago. It is what it is. Unless you wish to add your name to the lunatic fringe yearning for the de-evolution toward a fantasy world in which all large (one imagines anything larger than a corner bank run by George Baily as "large") financial institutions are cast down, that no bank exists save for the collection of small savings accounts and the providing of small personal home and auto loans, and no enormous international corporations are entwined with (Cont)
Simon Johnson was an economist with the IMF where he saw this same scenario being played out in countries all over the world. What exactly is your expertise that is greater than his?
TARP money went to pay claims against AIG CDS insurance without reserves.
CDS values rose to 10 times to world GDP.
The slightest downturn in the home loan the banksters were betting on, and the AIG insurance whipsawed the economy.
Just who do you think the government works for? Hint... it isn't "the people"...
it worked.
and would still be working if DAMNED GREEDY SOULS didn't work for 96 years to destroy America from within.
the FED