Wrong Man

BBernanke is just not the right fellow for this key job at this important time.

Background: This last Monday, TheFundamentals referred you all to an article about the path less travelled by the taxpaying citizens of the state of Texas. A few key decisions jump out to even a casual reader and a non believer. Debt is not the way to go. Deficits, which lead to debt, are not the way to go. Pandering to special interests – be they business, unions, lawyers or teachers and government employees are NOT the way to go. These easy paths are not leading to peace in the valley. They are headed for a dead end gulch, a cliff, a drop-off to overdo the terrain metaphors. The path less travelled that is so difficult for the politician is really not all that difficult. It just requires a certain amount of commitment and perseverance and, this is the really important component, LEADERSHIP.

Ben Bernanke is not a leader. He is not the pathfinder that the US desperately needs now. Neither was his predecessor – AGreenspan. AGreenspan and BBernanke will not be treated well by historians. We finally got rid of the former; time for the latter to retire.

Let’s look at the objectives of the Federal Reserve. From their website http://www.federalreserve.gov/

Today, the Federal Reserve's duties fall into four general areas:
· conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
· supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers
· maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
· providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system

The top three duties are key. They are the ones that matter. BBernanke is a complete failure on all three. Maximum employment, stable prices, moderate long term rates, safety and soundness of the banking and financial system and risk in the markets. Ben gets an F for failure in all three. He has failed miserably on all the key objectives. The fourth objective is operational. It’s done by computers and software. Even Bernanke is smart enough to not meddle in that arena.

This job is supposed to be above politics. This job is supposed to look out for you and me. This job is to stand up to foolish politicians who want to look good and feel good and get reelected. This job is to say no. This job is to take away the punch bowl and slow down the party. This job is critical to the financial well being of this nation. This job is the cop, the adult, the parent to stop the children from going too far. This job is not to participate in the revelry, cavort with the coeds, be one of the gang. This job is not the “designated driver.” This job is to make sure all the others can drive home safely. If a person wants this job, they are not the right person for the job. If a person lobbies for the job they are disqualified, prima facie, from the key qualification for the job and that is the backbone to rise above criticism, set limits, keep the limits and act like an adult. Bernanke lacks this key characteristic.

Mr. Obama's mistake in this selection will be excused as the act of a politician. However, it speaks volumes about his economic naivete and very limited leadership skills.