Blaming Bernanke under the political scam ~ re: How Will Bernanke Fit Into Obama's Economic Plans?
Blaming Bernanke under greenspan/paulson/bush decade old grand scam is senseless. Obviously, they were holding the bad news until they are ready to get out of white house as we heard recent massive bad news. The entire political/economic news is manipulated, so, what is true is that millions of Americans are in financial crisis and many around the world -- while a few hands have taken trillions out of many.
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CNBC.com | 26 Nov 2008 | 04:26 PM ET
As President-elect Barack Obama continues to name members of his economic team, it raises the question of where Federal Reserve Chairman Ben Bernanke fits into the plan.
Under normal circumstances, it would probably be premature for Obama to say whether he will nominate Bernanke to a second term when his current one expires in January 2010. Obama himself has not commented on Bernanke's future since being elected, nor has his transition team.
But given the severity of the financial crisis—as well as media reports and speculation about a possible successor—there is growing talk about why Bernanke might not be headed for a second term and what it might mean for the markets.
A lot of that has to do with Bernanke’s job performance, the connection between party affiliation and appointments and tendency to clean house during tough times.
“Bernanke finds himself in a situation where he risks being personified as a cause of crisis as opposed to being a captain who got caught up in a storm,” says Eric Dezenhall,founder of Dezenhall Resources, a damage control expert who's represented CEOs facing criminal prosecution and corporate crises.
At the same time, the president-elect also needs some measure of continuity and a key player who spans the old and new administrations.
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Obama achieved that in naming New York Federal Reserve Bank President Timothy Geither, who’s been at the center of the financial crisis with Bernanke and Treasury Secretary Henry Paulson.
“Geithner is really a workout guy,” says Gerry O’Driscoll, a former vice president at the Dallas Fed as well as Citigroup, now with the Cato Institute. “You do want someone who knows how to do that. Obama needs continuity. He thinks Bernanke is tarnished.”
In other words, Geithner’s gain is Bernanke’s loss.
That scenario may be supported by other developments.
Shortly after NBC News reported last Friday that Obama had picked Geithner, Reuters quoted a Democratic source as saying the president-elect “may consider [former Treasury Secretary] Lawrence Summers as a successor to Bernanke."
Soon after, The New York Times also cited sources who said Summers could succeed Bernanke.
Speculation about such a scenario grew on Tuesday when Obama named Summers to lead the National Economic Council. That placed him in the White House as a key adviser, whose experience, Obama said, would help "navigate the uncharted waters of this economic crisis."
That Summers was named to a post whose stature has declined in recent years fueled speculation that he was waiting in the wings, ready to step up should Bernanke indicate he is ready to step down ahead of time or after his term expires.
“Larry [Summers] gets ready on all the projects, he gets briefed," says Scott Talbott of the Financial Services Roundtable, the trade group. "The Bernanke piece works nicely. You have 14 months to keep him on.“
Observers add that scenario also helps explain why Summers might take a job that is at best a lateral move from his previous post as Treasury Secretary.
That's not to say Summers has been promised the job, say observers.
There's "no reason for Obama to tie his own hands," says Donald W. Riegle Jr., who chaired the Senate Banking Committee during the early years of the Clinton administration. "He probably would want to see how Summers performs, how well he fits into the team, how skilled his insight is seen to be going forward."
Others say Obama’s decision to name former Federal Reserve Chairman Paul Volcker as chairman of a new panel to advise him on the crisis and the economy also suggests that Bernanke’s stock may not be that high.
In Wednesday's announcement, Obama called Volcker a trusted adviser whom he consulted throughout the long presidential campaign, adding that “fresh voices and new ways of thinking were needed.”
Volcker is considered a legend in financial circles and his stature has risen while that of his successor, Alan Greenspan has fallen. So has Bernanke’s, partly because of association; critics say he failed to sound the alarm about the housing bubble, especially after his predecessor had failed to.
More than enough economists and policy experts, however, say Bernanke is well respected and has done an adequate job under extenuating circumstances and has shown flashes of innovation, if not outright brilliance, at times.
“It’s not hard to make a case" for replacing him, says one critic, Dean Baker, co-founder of the Center for Economic and Policy Research, “Even if he (Bernanke] was doing a good job, you wouldn't want to be associated with the bad times."
Denzenhall takes a more strategic view: “To date, Obama's narrative has been the cool-headed ‘Team of Rivals’ brand. At some point, however, he'll have to show some muscle. Targeting Bernanke may be misplaced as an economic solution, but it may have some allure as a political one."
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