Thoughts On The Bernanke Re-Appointment
Politics / Central Banks Feb 03, 2010 - 01:43 AM GMTBy: Graham_Summers
The US Congress decided to re-appoint Ben Bernanke as Fed Chairman of the US Federal Reserve. This decision is completely and utterly insane.
Please understand, I do not use the word “insane” for humorous purposes, but as a factual observation. For there is truly no other way to look at Congress’ decision.
For starters, it is clear that the US populace is fed up with the bailouts/ stimulus madness that has governed US monetary policy for the last two years. If Congress’ less than 25% approval rating wasn’t clear enough, voters put a Republican Senator in Ted Kennedy’s former Massachusetts seat (one of the bluest states in the US).
That alone should have woken Congress up to the fact that voters are furious about what’s going on. And yet… Congress (with the urging of President Obama who himself is sporting the lowest approval ratings of any President in history at this point in his term) decided to re-elect the chief architect of the bailout madness: Ben Bernanke, man who has overseen the largest wealth transfer in history, from taxpayers to Wall Street Oligarchs.
If that’s not crazy enough, remember that 2010 is an election year! So many of the folks who put Bernanke back in place are up for election in 10 months or so. I can’t wait to see how they spin their Bernanke vote as a move designated to help the ordinary American taxpayer.
Aside from the career risk associated with putting Bernanke back in charge, let’s consider the man’s qualifications for the job. Setting aside any personal opinions of the man, we know for a fact that he:
- Failed to see the financial crisis coming
- Proclaimed time and again that the issues were “contained”
- Has bought more than $1 trillion worth of the same garbage toxic assets that took down every investment bank (save the ones that received direct bailouts via the AIG bailouts: Goldman Sachs)
- Was in charge of a Federal Reserve that used taxpayer money to pay WAY over market values for said junk assets
- Has leveraged the Fed’s balance sheet to 42 to 1 ($2.2 trillion in liabilities on $52 billion in capital)
- Openly juices the market during options expiration week
- Has overseen policies that resulted in the Dollar losing 11% of its value since he took office (it was 20% before the financial Crisis created a surge in demand for greenbacks)
- Cannot account for billions in dollars that were handed out to various banks/ financial entities
You get the general idea. Imagine you had a dentist who failed to notice that your teeth were rotten. Then imagine that once your teeth were actually rotten to the core and causing pain he pulled the wrong teeth, charged you twice the industry rate for his services, and then called you back to say he lost your check (after cashing it) and needed another payment at an even higher price.
Would you continue seeing this guy for your dental work?
Me neither.
And yet, Congress decided to greenlight Bernanke’s re-appointment. Like I said, the decision is completely and utterly insane. And it doesn’t bode well for the future of the Dollar OR the US financial system. A lot of commentators get far too technical in their analysis of the US’s financial issues.
The simple facts are that we have a MASSIVE debt problem in this country and you cannot solve a debt problem by sweeping it from the private sector onto the US’s public balance sheet. Similarly, you cannot solve a debt problem by issuing more debt. And yet, Congress has re-elected a guy who thinks these are the best means of combating a debt problem. Even more incredibly, they re-elected him despite the fact he didn’t even see the debt problem coming.
Like I said, completely and utterly insane. Get ready for Quantitative Easing 2.0 and a whole slew of other insane monetary policies.
Good Investing!
Graham Summers
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Graham Summers: Graham is Senior Market Strategist at OmniSans Research. He is co-editor of Gain, Pains, and Capital, OmniSans Research’s FREE daily e-letter covering the equity, commodity, currency, and real estate markets.
Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.
Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.
© 2010 Copyright Graham Summers - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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