Wednesday, August 26, 2009

Ben Keeps His Job!

The big news yesterday was that Ben Bernanke was nominated to a second term as Fed Chairman.

Of course, the pundits were running wild on air and, today, in print.

But it probably all boils down to what one observer noted in a discussion on CNBC yesterday morning.

Basically, he opined that if Obama had nominated Larry Summers, and the economy didn't straighten out flawlessly, or anything else unexpectedly bad occurred in the financial sector, then the administration would own the result. Period.

This way, the president can try to cling to some last vestige of the prior administration, blaming them and then-, and still-Fed Chairman Bernanke for the mess. The logic is that Ben can stay to clean up the mess that occurred on his watch, with no new problems interjected by the new administration via a new Chairman.

It's a sensible explanation. And, God knows, Bernanke has prostrated himself humbly, and reflated the economy massively, in order to secure that reappointment.

Personally, I'm of the opinion that, because it's a nomination for the Fed Chairman, whether a "renomination," or not, Obama will still own the results.

If bad, one could argue that he should have changed horses from the guy who let things spin so badly out of control through, at the very least, a failure of the Fed's bank oversight function.

But, the die is cast. It would be unlikely, and a very important signal, if a Democratic Senate doesn't confirm Bernanke to another term.

The wait is over. Now, perhaps we'll see the hard work begin- raising interest rates and draining excessive liquidity from the US and worldwide economies.

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