Bernanke Again!
by Hiland Doolittle
Two men firmly committed to increased transparency have decided to remain on the team that hopes to lead the U.S. Recovery and stave off the possibility of choking inflation. President Barack Obama has crossed political parties once again and will reappoint former Princeton University economist Ben Bernanke to lead the Federal Reserve. The move received global support and gives the U.S. government the perceived stability that improving markets are desperate to see.
Bernanke’s current appointment ends February 1st 2010. During his handling of the country’s largest recession, Bernanke has received both high praise and severe criticism. Two of Bernanke’s most severe critics have been Democratic Senator Chris Dodd of Connecticut and Republican Richard Shelby of Alabama. Dodd is Chairman of the Senate Banking Committee. Both men will pose stern questioning at the upcoming confirmation hearings.
Obama’s support for Bernanke has never waned publicly. However, there has been speculation that White House economic advisor and former Treasury Secretary Lawrence Summers was a strong candidate for the position. The current trajectory of the recovery and the public’s support for Bernanke’s transparent handling of delicate matters definitely contributed to President Obama’s decision.
Around the world, Bernanke is held in high regard. With the U.S. economy seemingly stabilizing, Bernanke’s extension should help to keep momentum moving in a positive direction.
The Challenges
Bernanke has drawn praise for his bold decisions and actions expanding the Federal Reserve’s role in dealing with the massive economic reversal. At the same time, he is criticized for not seeing the recession’s handwriting on the wall and for the dramatic transformation of the Federal Reserve in the face of the crisis.
Bernanke’s detailed familiarity of the Great Depression has served the country well in the current situation. Bernanke stepped beyond the Fed’s veil to work closely with Treasury’s Timothy Geithner to deal with the AIG and Bear Stearns failures and the collapse of Lehman Brothers. His aggressive actions were instrumental in stabilizing the country’s financial institutions.
Critics would say that he overstepped his bounds and that the Federal Reserve has far surpassed its defined role. One of Bernanke’s challenges will be to return the Federal Reserve to that role as protector of the currency.
In the wake of a projected $9 trillion 10-year budget deficit, the Fed will be challenged to control inflation. Controlling inflation will play a large part in Bernanke’s exit strategy. In the upcoming hearings, Congress is sure to press Bernanke to define this strategy.
The Federal Reserve
At the time of Bernanke’s current appointment, the chairman inherited a position that was characterized by its strong independence and occasional disdain for market conditions. Bernanke’s predecessor Alan Greenspan had chaired the Fed through the country’s greatest growth sprint.
Many of Greenspan’s laissez-faire policies are deemed as causes of the recession. AS the depth of the recession unfolded, Bernanke originally seemed overmatched. In the Summer of 2007, the Chairman took the bull by the horns and began a series of bold moves to stabilize the financials, assist small business. His transition from Greenspan’s hands-off mandate to his own transparent action is hailed as saving the country and the world from another devastating depression.
Bernanke was creative, decisive and unflinching as he unveiled new monetary policy procedures and aggressive lending policies.
As the Chairman struggled to keep AIG and Bear Stearns afloat, he could not justify a bailout of Lehman Brothers. The company’s failure ignited harsh global reactions.
Along with changing the role of the Federal Reserve, Bernanke launched an unprecedented aggressive media campaign. The Chairman’s consistent and calm demeanor in the face of crucial challenges played well with a public unused to such visible presentations of facts and figures.
Before Bernanke checks out on the recovery and reshapes the Fed once again, he will work closely with Treasury’s Geithner to mend the housing dilemma, improve unemployment and re-grip interest rates. Along the way, there are sure to be a few surprises and the ever-present fear of another recession. Bernanke has won another term but sleepless nights lie ahead.
Tags: 2009 Stimulus Package, depression, dollar, Economy, exports, forex, GDP, Gold, housing, Inflation, interest rates, recession, Retail Sales, stimulus, Stimulus Plan, US Dollar, US GDP, US NonFarm Payrolls, US Retail Sales, US Unemployment
About the Author - Hiland Doolittle
Hiland is a professional writer with extensive entrepreneurial experience. He is a graduate of St. George’s School Newport, RI and the State University of New York at Albany where he majored in history. He has been active in the real estate business for 30 years and has founded and sold several businesses.
Hiland currently writes for several financial sites and is a published author of the novel The Last Parade. He has recently completed a manuscript for a children’s book entitled Sami and The Minnow Man.
