Ben Bernanke Has Passed His Sell-By Date

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Simon Constable

Jan. 28, 2010, 12:01 a.m. EST · Recommend (1) · Post:

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By Simon Constable

NEW YORK (MarketWatch) -- Just because the U.S. Senate will almost certainly confirm Ben Bernanke for another term as Federal Reserve chairman doesn't mean it should.

Here are two reasons why it shouldn't: one for those for those who think he's doing a bad job, and the other for those who think he's a crisis manager par excellence.

Reuters

First we have his lack of candor:

When Bernanke says low interest rates weren't the cause of the housing bubble, he is at best being disingenuous. Instead, he points to lax lending standards as the key fuel for inflating home prices.

But the truth is rather different.

His assertion is similar to claiming that it isn't the fall from a skyscraper that breaks your bones, but the sharp stop when your body reaches the street.

Low interest rates and lax lending standards are also closely related. They are just two symptoms of loose money. Lax lending standards were the response to healthy banks being awash with cash and most creditworthy borrowers already fat with debt.

So to put more money to work, bankers lent to increasingly dodgy borrowers. Indeed, that is what you would expect during a period of loose monetary policy.

For those who lauded Bernanke's performance during the financial tornado, how about remembering the way we set up this Republic -- don't leave any one person with too much power.

Sky News reports on "Enron," a popular new musical in London about the fall of the infamous energy company. Courtesy Sky News.

Late last week, some pundits seemed to suggest that the failure to reappoint Bernanke king of the Fed would send the markets into free-fall.

The implication was that no one else could possibly fill his by-now enormous shoes. Or more simply, Bernanke has supreme power to make or break the markets. That alone should have those who believe in checks and balances up in arms.

It is also worth remembering that the Fed consists of 12 regional banks, each with a president. Maybe one of those gentlemen or ladies could step into the breach in a post-Bernanke world.

Simon Constable is a Dow Jones Newswires columnist and host of the News Hub Web Show. This column first appeared on Dow Jones Newswires.

You can't get rid of these guys....They own us....They feed off of us.....and they...never die....Even if you replace Bernanke...another vermin like him will take his place....Look at the current Sec. of the Treasury.....Just the same as the last one...The both testified today that neither one of them were at fault and each of them did what was right...and it was not there doing....etc....etc..."

- stevelbs | 12:37 a.m. Today12:37 a.m. Jan. 28, 2010

President Barack Obama has a lot in common with his fellow countrymen -- he's had a pretty rough year.

10:31 p.m. Jan. 27, 2010 | Comments: 46

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