2009-03-16

Ben Bernanke predicts end of recession

Ben Bernanke, the man who did not foresee the crisis, is now predicting its end:
"It depends a lot on the financial system," he replied. "The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis. We've seen some progress in the financial markets, absolutely. But until we get that stabilized and working normally, we're not gonna see recovery. But we do have a plan. We're working on it. And I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it will pick up steam over time."
Diversionary tactics:

Bernanke obviously knows that he is in the firing line of blame for this crisis. But look who he blames:

"Let me just first say that of all the events and all of the things we've done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with AIG. Here was a company that made all kinds of unconscionable bets. Then, when those bets went wrong, we had a situation where the failure of that company would have brought down the financial system," Bernanke said.

"You say it makes you angry?" Pelley asked.

"It makes me angry. I slammed the phone more than a few times on discussing AIG. I understand why the American people are angry. It's absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets, that was operating out of the sight of regulators, but which we have no choice but the stabilize, or else risk enormous impact, not just in the financial system, but on the whole U.S. economy," Bernanke explained.


AIG is one of many different financial institutions that made bad calls and ran close to the edge to gain more profit. Until the whole thing collapsed, we didn't know just how close to the edge these companies were. AIG, of course, deserves as much blame as it can get... but in Bernanke's case it diverts the attention away from his own failures.

Minimize failure:

"Does the Federal Reserve bear any responsibility for missing what was happening to the banks, as it was happening?" Pelley asked.

"Well, like other regulators, we probably could have done more. We've already done a lot of - put a lot of effort into reviewing our practices. And reviewing the bank's practices. We are trying to strengthen our regulation at every point that we can. So, I don't want to deny that we certainly could have done a better job, and others could have done a better job," Bernanke conceded.
Notice - nothing there about how the credit crisis caught Bernanke by surprise, asleep at the switch and with his pants down.

Why was it that so many of us knew that the whole thing was going to crash down while Mr B did not? He clearly stated in 2005 that there was no housing bubble.and when he finally admitted that one existed and had popped, he said that everything would be fine. Moreover, he still doesn't say much about Greenspan and the Fed's decision to pursue negative real interest rates between 2003 and 2005 (Bernanke was part of the Federal Reserve Board that made those decisions)

Bernanke is a smart man, but someone has to take the blame for the Fed's failure to foresee the current crisis. His errors of judgement are on the record. He must step down or be pushed.

1 comment:

Ron Lankshear said...

I now have an option to reduce the losses on my pension plans by lowering the amount I take out - there was a minimum amount but the Government has said we can take less. So if I can live on less I could have more in there fir when the market comes back BUT WHEN?


What I find amazing about AIG and other companies is the pollies screaming about the amounts the CEOs take out when the get sacked. There is nothing new in this - Boards have been doing this for ages. Why didn't the pollies do something before.