Bernanke Likely to Be Ousted by Obama in Favor of Summers

What would you think if your boss said you are doing a "fine" job? Fine is satisfactory. It's not bad, but it's not good either. Fine means you should be doing better. Fine means your job is in jeopardy. Fine means you should be thinking about shopping your resume.

If you have a contract, you probably won't be fired and you probably won't be asked to resign. But when your term expires, you probably won't be asked to stay on. After all, there are plenty of other people out there who could do a fine job, too.

This is Ben Bernanke's predicament. President Obama, a man who is extremely careful with his words, recently said the Fed Chairman is doing a "fine" job. Earlier today, after Bernanke was grilled by Congress about what he did or did not say to Ken Lewis regarding the Bank of America acquisition of Merrill Lynch, the White House said it has "confidence" in Bernanke. Sounds like another lukewarm endorsement.

I think Bernanke is cooked, which is too bad. I think Bernanke did an excellent job of responding to the economic crisis. Bernanke will complete his term, which expires in January, but it is becoming increasingly clear that he will not be reappointed. It looks like Obama wants his own man at the Fed--namely Larry Summers. Summers probably wanted to be Treasury Secretary, but Tim Geithner got that job. I think Summers now wants the Fed chairmanship, and I think Obama wants to give it to him.

Comments

[athena:]

Yikes! The potato chip guy running the Fed!

Jun 25 08:34 PM

[Moon Kil Woong:]

Ummm... a fail to see how to qualify helicopter Ben as doing a good job. He has duplicated Greenspan in every way but worse. Rather than low interest rates for a prolonged time now we have Zirp fed funds rates. Rather than slow erosion of the US dollar and a jobless recovery we have a fast erosion and a jobless collapse.

It is true he inherited a mess but really, his QE monetizing policies are not helping. They are keeping bad banks and bad assets alive to continue to wreak economic pain and preventing a reallocation of resources for a recovery. They are raising the specter of inflation before we even get out of the current recession. They have arbitrarily distorted the whole economy much like a giant black hole distorts space and time. They have, in combination with 8 years of a reckless Bush Jr. Congress and now a reckless Obama Congress helped do what Communism failed to do: ruin the fine capitalist free market economic system the US was built on.

Personally, I consider his tenure a failure. It is true the test was hard but failing to even adress the problem is not acceptable. He used the Fed to attempt a power grab asking the Fed for even more power it's incompetent to handle (paying interest on deposits, buying Treasuries, blowing up its balance sheet without any restrain whatsoever, and asking to be in charge of too big to fail institutions). Come on! The Fed can't even manage interest rates correctly without making a mess. Bernake should asked to be relieved of its duties not given more power.

Jun 25 10:12 PM

[PastTense:]

Larry Summers is clearly one of the top dozen people responsible for the current economic catastrophe--first as Clinton's Treasury Secretary where pushed legislation breaking down the Glass-Steagall separation of investment and commercial banking--and later at Citibank where he pushed them to take on more and more risk.

Jun 26 12:56 AM

[Nathaniel C:]

I like the idea of getting rid of Bernanke who has commited many crimes as Fed charimen (illegal government intervention and manipulation of the free market). However, I am not thrilled with Summers as a viable replacement. I like the idea of bringing back Volcker. He was serious about preventing inflation compared to helicopter Ben who openly says he wants to debase the US dollar by 3-5% per year.

Jun 26 02:42 AM

[speculari:]

I say to hell with Bernanke, Summers, Volcker and, even the great clarinet player Greenspan. Let's stop messing around with this position and go right to the edge of doom with a really great appointment - let's say Alistair Darling, or perhaps Al Franken. What about Barney Frank? None of these guys are doing anything currently, are they?

Jun 26 09:30 AM

[Jordan Lindsey:]

While I agree with your opinion that Ben's time is up and he will not be around for another term I strongly disagree with your view that you "think Bernanke did an excellent job of responding to the economic crisis."

The Fed caused the crisis first through maintaining artificially low interest rates and then by removing liquidity.

Bernanke himself has taken responsibility for the Fed causing the great depression which was also carefully crafted to consolidate the banks and has just been done again once again to consolidate the banking system.

JPMorgan: Number One Bank in America; today's headline. It is no coincidence JPMorgan (who is the Fed; research Federal Reserve creation and ownership) got to buy all of Bear Stearns good assets at bargain sale prices for pennies on the dollar.

While Bernake, Paulsion and Garthner have pulled off the greatest heist in American history and the world you are patting Ben on the back.

In the same way the rest of the herd now realizes Allan Greenspan the "Maestro" is the cause of the crisis by maintaining artificially low interest rates Bernake will be blamed for the inflation that is to come from running the printing press.

Write, call fax and e-mail your local representative. Ask them to support the “Federal Reserve Transparency Act of 2009” (H.R. 1207). Audit the Fed. We need more transparency, not less. For more info visit www.opencongress.org/b...

Jun 26 10:39 AM

[Yurasis_Dragon:]

We need someone with Integrity running the show. Some who knows what's going on, and is not greedy.

Warren Buffet, anyone??

Jun 26 03:43 PM

[Gregman2:]

You may be reading too much into things.

Jun 26 05:06 PM

[Northstar10000:]

Summers will be great at bring on an economic winter. Can't wait to get my Obama puts. Can you imagine the games that will be played to get the current set of fools reelected come Nov of that year. You will have winter right thru the Summer !!!

Jun 27 02:09 AM

[johnbee:]

To date Bernanke has single handedly and by a hairs breadth saved the skins of Americans and many other people in the world by his actions. His remedy is still in the balance.
Don't stop him now. Its only the greedy banking community trying to get back in business on their own without Bernanke's controls that are trying to usurp him, and look where that got us. Alzheimers seems to be the order of the day in Wall Street.


On Jun 26 02:42 AM Nathaniel C wrote:

> I like the idea of getting rid of Bernanke who has commited many
> crimes as Fed charimen (illegal government intervention and manipulation
> of the free market). However, I am not thrilled with Summers as a
> viable replacement. I like the idea of bringing back Volcker. He
> was serious about preventing inflation compared to helicopter Ben
> who openly says he wants to debase the US dollar by 3-5% per year.

Jun 27 06:02 AM

[Grruff:]

We'll be lucky if we can stay close to 5% inflation. I figure more like 20% in a year or two. And each 1% of inflation raises the prices of US-made goods by 1% and reduces jobs as well - we're already priced out of the world markets. Our private sector will be decimated by another 20% inflation.
If they can control inflation that well, why don't we have controlled deflation instead? Then every 1% would be 1% lower price for our goods, and more jobs! 5%/year deflation for 4-5 years would put our economy back onto a strong footing. I'd be glad to take a 20% pay cut if the goods I buy also cost 20% less. But Uncle Sam would have to cut his budget as well!


On Jun 26 02:42 AM Nathaniel C wrote:

> I like the idea of getting rid of Bernanke who has commited many
> crimes as Fed charimen (illegal government intervention and manipulation
> of the free market). However, I am not thrilled with Summers as a
> viable replacement. I like the idea of bringing back Volcker. He
> was serious about preventing inflation compared to helicopter Ben
> who openly says he wants to debase the US dollar by 3-5% per year.

Jul 27 12:45 PM