Right up there with CFR and going to the UN over Iraq, Bernanke is a clear Bush Administration error – and Obama is set to repeat it. Mish’s gets a quote from John Hussman which nails what is wrong with this:
“Our forecast is for moderate but positive growth going into next year. We think that by the spring, early next year, that as these credit problems resolve and, as we hope, the housing market begins to find a bottom, that the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace.”
Ben Bernanke, Federal Reserve Chairman
On Friday, investors took great cheer in an optimistic statement by Ben Bernanke suggesting good prospects for economic growth ahead. We might be inclined to place a sliver of credibility in Chairman Bernanke’s assessment – if not for the fact that the quote above wasn’t from last week at all, but rather, hails back to November 8, 2007, just before the recent recession began. You might recall that the S&P 500 was pushing 1500 at the time. The implosion of the global credit markets was still just a slight rumble…
…the resources used in the recent bailout were not just free money tossed out of a helicopter. Only a partial-equilibrium economist thinks that way. No, this was an allocation of trillions of dollars of real resources that could be spent improving access of poor families to health care, finding cures for life-changing diseases, providing better education, and reversing the crowding-out of productive private investment. A public servant willing to act this carelessly with the resources entrusted to him, and so strongly in defense of fellow bankers, frankly does not deserve the job. Most likely, we will face the same credit issues a few quarters from now, given that the lull in the adjustable-rate reset schedule is near its end. We continue to expect a fresh acceleration of credit losses as we enter 2010. It would be best if we faced these challenges with more thoughtful leadership.
For the life of me, I really can’t figure out just why anyone thinks we can borrow our way out of a problem based upon irresponsible borrowing. Its like I went to Freddy “Knuckles” Corleone to borrow money to pay off the debt I have with Chuck “Kneecapper” Malone. Stop borrowing. Cut spending to be in line with revenues. Start encouraging private investment in productive enterprises. Its going to hurt, no matter what we do – Bernanke’s problem is that what he’ll do is hurt us worse. Not only should he not be re-appointed, we should consider criminal charges based on gross negligence.
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