Will Obama, Bernanke triumph or forces of nature?
Posted on 28 January 2010 with no comments from readers
It is hard not to have some admiration for President Obama and his struggles against Washington and Wall Street, but he increasingly looks like a hapless outsider rather as Jimmy Carter once did.
The same might also be said of Ben Bernanke, chairman of the Federal Reserve now up for reappointment. ArabianMoney is constantly amazed by the faith of readers in this man who they think can keep stock markets up while simultaneously saving the global economy.
Mea culpa
They have short memories. Mr. Bernanke is also the guy who kept interest rates too low for too long, and caused the financial crisis in the first place. And what is he doing again, why keeping interest rates too low for too long.
The problem is that this flies in the face of greater forces of nature, the laws of economics and the marketplace that can not be changed. And the more you push in the wrong direction the bigger will be the reaction back in the reverse direction.
Mr. Obama faces a similar problem with the banks of trying to close the door after the horse has bolted. Fixing the banking system with the Volcker Rule on banning banks from proprietary trading is too little, too late. The damage is already done. The cure will be painful too.
Indeed, Mr. Bernanke’s assurances that the US economy is now on some kind of a recovery path do look a bit thin, to say the least. The US housing market is still in deep trouble – with new and existing home sales at record lows in December – and mortgage resets mean probable foreclosures on millions of US homes this year and next.
US housing crisis
If it was the US housing market that caused this financial crisis – because prices became overinflated by mortgage rates set too low by the Fed – then surely we need to see a turnaround here before any real recovery is likely. From the housing perspective a double-dip recession is already in prospect.
President Obama’s State of the Union Address yesterday did little to remedy the ‘deficit of trust’ Americans now have in their leaders, as he put it, and the rally on the Dow Jones was suitably muted despite Mr. Bernanke’s upbeat talk earlier in the day.
But then against market forces mere mortals do not have a chance. Americans would be wise not to trust this kind of leadership.
no Comments posted by readers:
Well said, Peter!
As an American, I am ashamed of what our political “leaders” (both democrats and republicans alike!)have done over the past 15 years. I am especially ashamed of Obama’s empty promises and shallow rhetoric; but I have to give him credit for just one thing: his only strength lies in delivering great pep talks and campaign speeches.
Sadly, I was a strong supporter of Obama in 2008, and was drawn into his campaign pledge about “Change we can Believe in,” and “my Presidency will be the most transparent, most open, and most honest in recent memory.”
In reality, the fraud, corruption, repeated lies and subsequent cover-ups in his administration over the past 12 months have been “off-the-scale.”
That ol’ saying “Actions Speak Louder than Words” truly applies here.