Alternatives to Bernanke? Not from Obama.
January 25, 2010
– Comments (6)
Bernanke will be confirmed. That's my prediction.
The anti-Bernanke rhetoric this week is everyone's attempt to bow to popular anger over the bailouts of the rich and the 10% unemployment of the middle class. But there's one little problem - if not Bernanke, then who?
The first thing to consider is that if Obama nominates someone new, he has to take 100% ownership of them. If he puts Bernanke back in he can claim that he had to keep a Bush holdover for the sake of continuity throughout the crisis to allow smooth functioning of capital markets. Bernanke is less risky for Obama.
The next problem is that "Blame Bernanke" doesn't work very well. Obama picked Geithner as his Secretary of Treasury, so it's really hard to say the bailouts were Bernanke's fault, but Geithner is the good guy who looks out for the middle class.
Bernanke is obviously not the entire problem. Drawing attention to him is only going to draw attention to the larger problem, and then we'll remember that Senator Obama voted for the bailouts and didn't really do a whole lot as far as suggesting alternative solutions to the problem. During the crisis he pretty much kept his mouth shut about matters he didn't much understand and it worked well for him during the campaign. If he decides to open his mouth now he'll find himself suddenly the subject of a lot of criticism that he doesn't want.
Then there's the matter of the markets. The markets vote for Bernanke. If they don't get their way, they're liable to throw a little tantrum. That won't help the image of the "recovery".
So far during his Presidency, Obama has gotten away with blaming Bush for the mess and pointing to the future success of his stimulus bill. The stock market is forward-looking, and look how nicely it's performed since the stimulus was passed. If Obama (or his Democrats in Congress) fail to reappoint Bernanke and the market tanks, the Bush excuse and the forward-looking excuse go out the window.
Bernanke will be reappointed because Obama and the Democrats have no idea what else to do. They'll be smart enough to just go with the flow and shut up about the situation. They don't have any more to add to this conversation than they do to a discussion of rocket science. Just sit there, shut up, and listen, and then eventually agree with the guy who seems to be the most highly respected.
That would be Bernanke.
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