Despite all the rhetorical flourishes and grandstanding engaged in by that once august body, the U.S. Senate, when it came time for the rubber to meet the road, they voted overwhelmingly to reappoint Ben Bernanke to a second term as chairman of the Federal Reserve. Let us be clear as to what those 70 senators voted for, in deciding to support President Obama's preference that Bernanke remain at the helm of the Fed. Failure on a monumental scale has been conspicuously rewarded.
While Bernanke's predecessor has been rightly condemned for his loose monetary polices and dogmatic conviction that unregulated market fundamentalism is always correct, the current Fed chairman has demonstrated continuity with those now discredited policies, along with a numbing myopia in failing to see a train wreck coming, despite ample warning.
In October 2005, Ben Bernanke appeared before Congress, only days before being nominated to succeed Alan Greenspan. Growing concern had already emerged regarding the unsustainability of what was obviously a massive housing asset bubble, in large part facilitated by the Fed's easy monetary policies, fully supported by Bernanke. When questioned on the perception that the residential housing market was a growing danger to the nation's economic health, the supposedly brilliant and perceptive Ben Bernanke stated that the escalation in U.S. housing prices did not constitute an asset bubble, and was in fact based on sound economic fundamentals.
Sound economic fundamentals?
In an earlier post, I described Bernanke's statement to Congress in 2005 as the worst economic prediction in recorded history. Yet this same flawed individual has now been anointed by the U.S. Senate to have another go at deconstructing the U.S. economy. A proven failure now has another four years as head of the world's most powerful central bank, with executive powers that in many respects exceed those of the president's, with virtually no meaningful legislative oversight.
The justification for reappointing Ben Bernanke rests on a flimsy pretext. He supposedly saved the world from a global financial meltdown after the collapse of Lehman Brothers in the fall of 2008. This ignores his conspicuous role as a principle architect of the global financial and economic crisis. In effect, he is glorified for indebting generations of Americans yet unborn for covering the costs of his colossal errors in judgment. Furthermore, the Senate has failed to take cognizance that the very debt load they salute Bernanke for creating as part of his "heroic" rescue mission has laid the seeds for a far more dangerous phase of the global economic crisis. The risk of a paralyzing sovereign debt crisis is growing, raising the threat of national insolvency. The current fiscal crisis in Greece, and the economic purgatory being experienced by the people of Iceland, are clear warning signs on the economic horizon of what lies in wait for the American people. Maintaining Bernanke as Fed chairman magnifies the risk that a sovereign debt explosion will occur, creating a whole new level of economic devastation across the United States.
The lopsided vote by the U.S. Senate in favor of reappointing Ben Bernanke was a clear triumph for the disaster-prone Ben Bernanke. As for the American people, this result is nothing less than a total, unmitigated defeat.