[argentine soccer fan]

Considering the financial turmoil, one might expect that President Obama, who ran on a platform of change, might have brought a new face to the Federal Reserve. But he reappointed Ben Bernanke, the man President Bush originally selected, for another four years.

Do you agree with this decision?

I think he did the right thing, for a number of reasons that we can discuss, but one of the key issues for me is the fact that Bernanke is so strongly opposed the monetization of the debt.

In times of crisis and large deficits, monetizing the debt (ie printing money specifically to buy debt instruments that the government issues) can be an easy way out, and I feared that it might appeal to president Obama as a way to be able to finance his ambitious programs without significantly raising taxes.

But Bernanke is adamant against it, and his reappointment is a signal that president Obama is not going in that direction. And of course I am relieved. I saw first hand in Argentina what happens when you monetize the debt. It leads to huge inflation and a significant devaluation of the currency.

[CHICO13]

I too think he made the right decision. Now he needs to keep his eye on the ball for looming inflation. His critics say he didn't see the recession coming quick enough, I discount that due to the falling dominoes of the housing market. But he's very astute, he'll deal with inflation beforehand IMO.

[argentine soccer fan]

Originally Posted by CHICO13

I too think he made the right decision. Now he needs to keep his eye on the ball for looming inflation. His critics say he didn't see the recession coming quick enough, I discount that due to the falling dominoes of the housing market. But he's very astute, he'll deal with inflation beforehand IMO.

The critics are right, he didn't see it coming soon enough. But to be fair, neither did anybody else who might have been considered for the job.

[steve-o]

Originally Posted by argentine soccer fan

The critics are right, he didn't see it coming soon enough. But to be fair, neither did anybody else who might have been considered for the job.

Change you can believe in. You bet your ass.

[CHICO13]

Originally Posted by steve-o

Change you can believe in. You bet your ass.

Didn't Bush appoint Bernanke?

[Barbara]

Originally Posted by CHICO13

Didn't Bush appoint Bernanke?

That's sort of steve-o's point. Because when Obama said he'd change things I guess he meant he would change everything, whether it needed changing or not. Or, more likely, steve-o had nothing substantive to add to the conversation but decided to take the opportunity to mock Obama.

I have nothing substantive to add to the conversation so I took this opportunity to mock steve-o, thus bringing balance to our little BSP&CE universe.


Seriously, I have no idea if this is a good idea or not. A lot of people who know more about this than I do are okay with it. I hope they're right.

[steve-o]

Originally Posted by CHICO13

Didn't Bush appoint Bernanke?

You don't say.

(That and my OP were, if you haven't noticed, extremely sarcastic responses. That's all the non-constructive comments I have on this issue.)

[argentine soccer fan]

Originally Posted by Barbara

Seriously, I have no idea if this is a good idea or not. A lot of people who know more about this than I do are okay with it. I hope they're right.

The thing is, I think he's the right man for the job but I still think we'll face very tough economic times, regardless of what the fed does. There are some things the fed can do to influence things, but there are economic forces much stronger than the fed at work here.

If things get bad, he may be made into a convenient scapegoat, and of course there will be always be things that he does that can be second-guessed.

For example, people question the results of the rushed October bailout, when the financial meltdown happened. But what was the alternative? What would have happened had the action not been taken?

Ask ten economists and you might get ten different answers, but I can say for myself that while my small business is still struggling, and while Citibank may still be behaving like a dick, I am nevertheless thankful that Citibank is still there and that they still provide me with a line of credit today. Otherwise I'd probably be looking for work along with hundreds of thousands of other small business owners who'd be in the same predicament.

I think under the circumstances Bernanke is taking for the most part reasonable steps to try to deal with the crisis, and Obama is doing well to trust him to continue.

[Txtriathlete]

Heli Ben is an idiot. Only in government can you screw up so bad and keep your job. If he was running a firm he would be in court and probably in jail. The fact that he didnt see the crisis coming is failure in itself.

Ben has been so wrong so many times, that its almost funny. Sadly, this isnt a laughing matter.

Im not as pissed off about Ben's reappointment as I am about Volker's sidelining by the administration post election. I understand that you cant change everything, but if the economy is the biggest issue on the agenda, then why keep the same clowns that didnt see this coming.

[bojendyk]

Bernanke has also been incredibly inventive in his solutions to the crisis. There's a reason why Nouriel Roubini and Paul Krugman are among the people who support the reappointment of Bernanke.