From Roll Call via David Drayden and Atrios:
Ben Bernanke’s nomination to serve a second term as chairman of the Federal Reserve appears to be in peril. Bernanke is up for a second term at the Fed; his current term expires in 10 days on Jan. 31. A handful of Senators had previously threatened to filibuster the nomination, but this week the number of opposing lawmakers appeared to grow, further dimming his prospects for installment.
I don’t know enough to say what kind of a job Bernanke has done. But there’s no doubt that twenty years and numerous hagiographies of Greenspan ended in disaster.
Mr Furious
Screw him. Someone with a more agreeable philosophy should be available to also do an adequate job.
And Obama should be asking for Geithner’s resignation for his comments the other day.
A new financial team would be a glimmer of hope after such an otherwise apocalyptic week.
The Grand Panjandrum
As a strictly political move I understand the opposition, but in practice it makes little sense.
PeakVT
Three strikes for Bernanke: helped create the mess, thinks fighting non-existent inflation is more important than jobs, and thinks the way balance the budget is to cut SS. Unless Obama plans to follow up with someone worse (Summers, Geithner) then the Senate should reject Bailout Ben.
Elie
@The Grand Panjandrum:
Agree. Lets be careful here in the emotional wake of recent events…
BenA
I’m sort of in the better the devil you know camp… I doubt we’re going to get anyone much better, philosophically speaking, and Bernanke has shown at least some… acknowledgement that they were wrong.
If they did what they probably should do, and go off the reservation, it would probably freak out Wall Street… and in an election year, with an already fragile economy… that would probably make people nuts.
Definitely a damned if you do, damned if you don’t situation.
BenA
@PeakVT: I’m with you here… everytime I hear someone talk about fighting inflation or worrying about inflation I just roll my eyes and groan…. I was doing that 5 years ago… let alone now.
Matt in HB
The arguments against Bernanke seem to be from all over the spectrum. Progressives complain that he’s not doing enough to stimulate the economy and reduce unemployment (as if he can do so simply by choosing to do so). Conservatives fear he’s already done too much and the dollar will be worthless in 18 months if he’s reinstated. Almost everyone complains that he didn’t see the bubble or the magnitude of the trouble brewing, and so he should be canned. The gold bugs and Austrians just hate the idea of a Fed, paper currency, and fractional reserve lending, so they want to blow the whole system up. Based on that, he’s probably doing a fine job.
What I wonder from the Fire Bernanke people is: who next? Is there some economic magician just waiting in the wings who will solve all our problems just because he’s that much smarter and better than Bernanke? If so, please name him, so we can start a movement to get him installed and fixing shit ASAP.
Barry
Elie
“Agree. Lets be careful here in the emotional wake of recent events…”
No, we trusted Obama and the ‘moderate Dems’, and got screwed. Time for pitchforks.
Tom Hilton
Dayen, not ‘Drayden’.
PeakVT
@Matt in HB: Is there some economic magician
Nice straw man. Answer me this: why is it unreasonable to object to a person who stands against the (publicly stated) goals of the Democratic Party?
ETA: If you must have names: Janet Yellen or Paul Volker.
gwangung
One may be careful and precise with pitchforks.
Elie
@Barry:
Again Barry, just because part A may have been correct, the next step may not necessarily be to trash everything. Just saying we should be careful right through here when the reaction you just gave exactly, could lead to decisions that do not make anything better but worse. Lets avoid that ” we’ll show ’em” as a necessary corollary
gwangung
As long as we have someone better, no problem. No use chucking Bernanke only to get Greenspan redux.
Can Yellen pick up 60? (I’m pretty sure Volker can if he wants the job).
Matt in HB
Which goals of the Democratic Party does he stand against?
From my perspective, he’s doing what he can to manage the economy with the tools that he has. Unfortunately, the economic goals laid out for the Fed are sometimes contradictory — maintain economic growth and minimize inflation. There are limits to what he can do to promote growth, and it seems he thinks we’ve reached those limits. Additional efforts to stimulate aren’t certain to work, and raise the risk of an extended bout of inflation, which will be hard and painful to tame (see the early 80’s).
He’s walking a very fine line. So, to those who seem to think it’s just a matter of him not wanting to improve economic conditions I ask who’s ready to step in and do better? And, what do you propose they actually do that Bernanke refuses to do?
Matt in HB
As for Volker, he’s more of an inflation hawk than Bernanke. He was responsible for breaking the inflation in the early 80’s, so I doubt he’d be amenable to extra monetary stimulus now. If you’re in the camp that thinks Bernanke isn’t doing enough to stimulate, then Volker would probably be worse.
FWIW, I like Volker right where he is — off to the side whispering in Obama’s ear. He’s one of the key players supporting Obama’s assault on the too big to fail banks.
PeakVT
@Matt in HB: Actually, Volker has been pretty much sidelined by Summers. And he was an inflation hawk back when inflation was a problem. His various statements since the crisis in 2008 make me think he knows not to fight the last war.
Which goals of the Democratic Party does he stand against?
He’s for cutting SS to balance the budget.
Sentient Puddle
@PeakVT:
Which the Federal Reserve has sole power over, and will happen the day after Bernanke is confirmed! As for why he’s not doing it now, he just doesn’t feel like it.
debbie
@PeakVT:
But it was Volker who was standing behind Obama yesterday when he spoke about his financial proposals.
MikeF
Which statements? The ones I’m familiar with tell a different story. Bernanke has not been perfect by any means, but replacing him runs a very real risk of empowering the inflation hawks by putting of their own in charge. Would you run that risk over a dumb answer to an mostly-irrelevant question about SS? That’s Congress’ job, same as regulating the banks should be.
ThatLeftTurnInABQ
Put me solidly in the keep Ben camp. Yes, he is partly responsible for the mess (more by association with Greenspan than anything – by the time Ben came on board it was almost too late to take the punchbowl away without triggering GD 2.0). But now we have a situation where the Fed has an almost impossibly tricky job: to flood our system with just enough liquidity to prevent a global bank run, while maintaining credibility that they will pull back on that liquidity by just the right amount when the economy expands again so we won’t get either another huge asset bubble and/or hyperinflation. That is like gunning the accelerator in your car as you run up an icy hill, while trying to make sure that you don’t hit the crest of the hill with too much speed and wipe out sailing down the other side.
So far I don’t see anybody on the horizon from either the Keynesian or the Austrian camps who looks like they will be any better than Ben at pulling off this miracle. The Keynesians don’t have the cred to pull back on the accelerator when the time comes, and the Austrians just want the entire global financial system to crash and burn to the ground. I don’t trust either camp.
Hamlet
What is it exactly that people would like Bernanke to do?
He’s already put interest rates to zero and put a couple trillion to work trying to pump money into the system and keep long term rates down.
I didn’t like his handling of AIG, but he didn’t like it either. He did what he felt was necessary to keep the system from completely collapsing. Given the way things were going at the time, I’ll take the outcome we’ve gotten over what it looked like was going to happen at the time.
Employment is going to take a while to come back, no matter how hard everyone stamps their feet and whines “now, now, now”
We just have to slog through it folks.
Keep Bernanke.
Matt in HB
He’s for cutting SS to balance the budget.
Fortunately for Democrats, he doesn’t get to vote on that. And, as I recall, those thoughts were voiced in some congressional testimony as a response to direct questioning. He probably should have just dodged the question instead of answering it.
Plus, floating the idea that you might need to reign in SS spending at some point in the future as a response to significant budget problems just seems sensible, particularly to an economist who won’t have to make that vote, or work out the details.
mcd410x
Pretty sure we need jobs more than inflation control and Bennie. Maybe ask the voters about this one?
Calvin Jones and the 13th Apostle
Matt in HB & PeakVT:
I know Matt in HB was asking for names, so I have one. And I’ve been saying this one for months. Stiglitz!! He’d be perfect. And before anyone says K-Thug, he would never do it. Remember, “B-52” Ben was the one that hired him(or at least was his boss for a while) at Princeton. And besides, Krugman has already said he’s in no way interested in a government job. He’s too opinionated and isn’t into playing the political namby-pamby.
Calvin Jones and the 13th Apostle
@Hamlet: Except one of the mandates of the Fed is maximum employment. And did you see his testimony the other week(referenced elsewhere in this thread)? He almost laughed when someone asked about the jobs part of his mandate. The idiot is more worried about non-existent(at this point) inflation then he is getting the economy back on track. What can he do? Lend to small businesses. That’s what!! They lend to all the big boys. Why not the smaller ones. There is plenty he could do if he gave a damn(but he doesn’t!!).
mcd410x
… but I yield to calculatedrisk and atrios on this issue.
And since when is changing the head of the Federal Reserve “blowing things up?” If memory serves, incoming presidents usually do this … or amiwrong?
(Oops, I meant I, for one, welcome our bipartisan overlords)
Sentient Puddle
@mcd410x:
Oh now that would work out brilliantly. You’d get a large portion of the vote representing people who don’t know what the Federal Reserve does, and a bunch of teabaggers voting to abolish it. You’d be left with something like (and this is a generous guess here) 30% of the vote that is actually informed.
Matt in HB
I’m not an expert on every economist in the world, but what I know about Stiglitz makes me wonder would he do it? Could he get the votes?
His background isn’t in monetary economics (which some may view as a positive) and he’s apparently a bit prickly. He was certainly on the right side of a lot of the arguments about financial reform in the 90’s.
colby
I’m very open to dumping Bernake, IF the right person is next. Not just who SHOULD be it, but who would actually be nominated confirmed.
My guess, and I’d love to hear some other ideas, but my guess would be Summers. Remember, the smart money was on him through the first half of the year, and it seemed like Obama changed his mind at the last minute to calm down Wall Street.
Now, I dunno, maybe Summers would be good at this job (what are his views on monetary policy?). But liberals should think long and hard about HIM at the Fed before they enthusiastically shoot down Bernake.
Alex S.
I wonder who could get confirmed… I like the idea of Mr. Stiglitz, but would he make it? The Democrats need a few weeks to reframe themselves. Then they need to put some pressure on Scott Brown and the Maine ladies.
Nylund
I think I am in the Bernanke camp. His fouls ups are documented already. No need to rehash.
Three quick reasons.
1. I’m not sure who else could get confirmed that I’d prefer.
2. He’s done some pretty crazy things with the asset side of the balance sheet due to the restrictions of the lower zero bound he faces. I’d be hesitant to pass that baton to anyone other than Ben, the guy who pretty much wrote the book on quantitative easing.
3. Expectations are tricky things. What people think you may do can often effect things more than what you actually do. If people knew for certain that interest rates would stay low, or knew for certain that they’d go up, that would effect their behavior now even if current rates never change. Thus there is a real difference between having Yellen v. Bernanke at the helm even if they ultimately follow the same interest rate plan, purely because of expectations. Bernanke strikes me as interesting because in the past he’s kept interest rates too low for too long, but he’s also now being called an inflation hawk (despite not actually raising rates). He can credibly claim to go in either direction. He can control people’s expectations of him in a way Yellen never could. That might turn out to be important during this touchy economic period where he’s going to have to hit the gas and the breaks at the same time in just the perfect combination.
geg6
@Matt in HB:
Paul Volcker. SATSQ.
geg6
@Matt in HB:
You haven’t been paying attention to Volcker lately, then. He’s a more stimulus, the better hawk now.
debbie
@ colby:
Summers? Why not just open the doors to a shared-power arrangement between Blankfein and Rubin?
b-psycho
Good. He should’ve been fired first thing after the inauguration.
Matt in HB
@geg6:
I have not seen anything from Volker to indicate that he thinks Bernanke hasn’t been accomodative enough in his handling of the crisis and its fallout. Volker seems to be spending his time lobbying for significant structural reform and arguing for a strong regulatory role for the Fed. Which is right and good and entirely different from suggesting more easing from the Fed is needed. I don’t have an RSS feed to all things Volker, so I may simply have missed things, but I’d be surprised (to say the least) to find him calling for more aggressive easing at this point in time.
les
Is there any reason a new Fed honcho won’t just join the two hundred appointments currently in limbo, held by assholes?
EriktheRed
People like Greenspan don’t seem to realize that Atlas Shrugged is a fairytale and that the worldview it espouses is just as utopian as Communism.
From their delusions we all end up suffering in the end.
Wile E. Quixote
@Matt in HB
Your faith in Bernanke is touching, however it’s misplaced. Bernanke is corrupt, the fact that the man wants to cut Social Security to balance the budget and never once mentioned cutting our ridiculous defense budget is all the evidence that anyone should need to see that the man is just another member of the Wall Street über alles crowd that has fucked our country so badly.
tcolberg
I don’t know what people want out of Ben Bernake. I don’t know how people are complaining that he’s not doing anything about unemployment unless they don’t understand how the Federal Reserve works. The Federal Funds Rate is at 0.25% – the Fed is out of tools to stimulate the economy. If he starts raising rates while the economy is still in the tank, then we’d have a problem.
@Wile E. Quixote: Who cares if he would cut Social Security. He has no power over Social Security.
colby
@ debbie:
Yeah, that was pretty much my point. I suspect Summers would be Obama’s next choice for the job (though I have no special knowledge, and am willing to be convinced Obama would/the Senate would confirm someone else). So don’t we want to think long and hard about yanking Bernake?
I guess if Bernake’s successor was about the same as him, yanking Bernake would be good politics. But at least a lot of liberals would have to consider that there’s worse choices out there, and that they might be toward the top of the list.
Jim
Ben B. is a sacrificial lamb, people are pissed and he is the only one available for a beating.
He does share culpability as he was a member of the Federal Reserve during the Greenspan years, but his actions when the crisis broke were laudable. The chairman of the Fed Res is not the position to be going off and creating bank policy, which should be the treasury and the WH. Which is also where our problem resides.
God forbid that Ben gets the ax and the despicable Larry Summers is nominated. Obama is stupid enough to do that.