Did Bernanke not see all the signs out there that told us that the market bubble that was created was ready to burst?
Did he not see that the complex mortgage market was giving people the chance to get excessive loans that in normal conditions they couldn’t afford to pay?
Did Bernanke not see that the ballooning deficit was a destructive threat to the long term health of the American economy?
The Chairman of the Fed failed to see all this problems, or maybe he saw them but did not addressed them properly. In either way he is the one to blame for the upcoming recession.
Confidence is the key to any high profile job, when if you make a statement you reassure the market and the general public that you are in charge, that you know what to do, that you are a leader. But if your statement does not give confidence, then your are not suited for the job.
How the ballooning deficit gets any better with a 150 billion dollars more in debt?
When tax cuts were implemented Bush told us that they would had helped the economy to get stronger, they would had helped to get more jobs, they would had put billions in people´s hands. But now that we see that neither of those things happened, and more so, that were are falling into a recession. What is the idea of making those tax cut permanent? Does Greenspan knows about this?
Lets say that Bernanke is not the one to blame for this crisis, in a hypothetical case lets say that he was never in favor of letting the market fix itself, he never agreed with Greenspan on keeping interest rate low, which brought us to this problem. Then to whom should we turn our frustration against?
Lets talk about the big picture, as any good economist would know, you must seek a long term benefit over the short term one. With the upcoming elections and with the economy in bad shape any lack of effort by the Fed could lead to a disaster outcome against the Republican party, since Bernanke was Bush´s choice for replacing Greenspan.
This means that the Fed could act as if wanted or supported any measure that keeps the economy from falling apart until the elections are over, risking a long term commitment to do the right thing.
Lowering interest rates now that the dollar is on a stunning decline is reckless, this means that people will seek to change their holdings in dollars to a more secure currency such a the euro, furthering lowering the exchange rate between the dollar and any major currency in the world.
So what if instead of lowering the interest rates by 0,75 percentage points, Bernanke would of reassured the market that a further decline of the dollar, the huge deficit and the looming inflation were a bigger risk than the current recession.
In that way we would have known that he is truly committed to a long term recovery of the economy. But since he didn’t we know what Bernanke´s truly motives are: keeping the economy alive by any means possible, not taking into account what terrible damage it posses to the long term health of America.
With interest rates down and tax cuts, or rebates, or any other mean of placing money into people´s hands, Congress, Bush and Bernanke are doing the only thing that they could have done to damage America and therefore the world, subsequently we will have this short term measures that disperse the hopes of getting out of the economic slowdown.
People lost their confidence in the green buck; when people don’t want to sell things to you, you are in big trouble, when people don’t want to do business with you, you are also in big trouble. So now you have one of the worst measures in recent history, as if the government couldn’t do any more wrong, having a weak dollar is reviving the notion that America has lost its place as the undisputable leader in the world.
But it is easy to criticize Bernanke when we all pretty much know what the outcome of the current situation will be. So I should take also the risk of being right or wrong on how the economy and the world will be in the following months, so in any case I will be proud of making the correct judgment as any competent economist will do, or I will fall into my own words being wrong.
But for now I will keep it short. I will say that the economy will fall into a recession, the dollar will fall even further, more and more foreign countries or foreign investors will jump in and buy more and more American holdings. The unemployment rate will grow, the housing market will get worst, the 150 billion wont do any good to the economy, and neither Congress, Bush or Bernanke could save the debacle before 2008 ends.
Its all about being negative, but in my next column I will talk about the steps that could be taken in order to improve the long term performance of the economy and the only way in which America could regain its position as the undisputable world leader.
Did he not see that the complex mortgage market was giving people the chance to get excessive loans that in normal conditions they couldn’t afford to pay?
Did Bernanke not see that the ballooning deficit was a destructive threat to the long term health of the American economy?
The Chairman of the Fed failed to see all this problems, or maybe he saw them but did not addressed them properly. In either way he is the one to blame for the upcoming recession.
Confidence is the key to any high profile job, when if you make a statement you reassure the market and the general public that you are in charge, that you know what to do, that you are a leader. But if your statement does not give confidence, then your are not suited for the job.
How the ballooning deficit gets any better with a 150 billion dollars more in debt?
When tax cuts were implemented Bush told us that they would had helped the economy to get stronger, they would had helped to get more jobs, they would had put billions in people´s hands. But now that we see that neither of those things happened, and more so, that were are falling into a recession. What is the idea of making those tax cut permanent? Does Greenspan knows about this?
Lets say that Bernanke is not the one to blame for this crisis, in a hypothetical case lets say that he was never in favor of letting the market fix itself, he never agreed with Greenspan on keeping interest rate low, which brought us to this problem. Then to whom should we turn our frustration against?
Lets talk about the big picture, as any good economist would know, you must seek a long term benefit over the short term one. With the upcoming elections and with the economy in bad shape any lack of effort by the Fed could lead to a disaster outcome against the Republican party, since Bernanke was Bush´s choice for replacing Greenspan.
This means that the Fed could act as if wanted or supported any measure that keeps the economy from falling apart until the elections are over, risking a long term commitment to do the right thing.
Lowering interest rates now that the dollar is on a stunning decline is reckless, this means that people will seek to change their holdings in dollars to a more secure currency such a the euro, furthering lowering the exchange rate between the dollar and any major currency in the world.
So what if instead of lowering the interest rates by 0,75 percentage points, Bernanke would of reassured the market that a further decline of the dollar, the huge deficit and the looming inflation were a bigger risk than the current recession.
In that way we would have known that he is truly committed to a long term recovery of the economy. But since he didn’t we know what Bernanke´s truly motives are: keeping the economy alive by any means possible, not taking into account what terrible damage it posses to the long term health of America.
With interest rates down and tax cuts, or rebates, or any other mean of placing money into people´s hands, Congress, Bush and Bernanke are doing the only thing that they could have done to damage America and therefore the world, subsequently we will have this short term measures that disperse the hopes of getting out of the economic slowdown.
People lost their confidence in the green buck; when people don’t want to sell things to you, you are in big trouble, when people don’t want to do business with you, you are also in big trouble. So now you have one of the worst measures in recent history, as if the government couldn’t do any more wrong, having a weak dollar is reviving the notion that America has lost its place as the undisputable leader in the world.
But it is easy to criticize Bernanke when we all pretty much know what the outcome of the current situation will be. So I should take also the risk of being right or wrong on how the economy and the world will be in the following months, so in any case I will be proud of making the correct judgment as any competent economist will do, or I will fall into my own words being wrong.
But for now I will keep it short. I will say that the economy will fall into a recession, the dollar will fall even further, more and more foreign countries or foreign investors will jump in and buy more and more American holdings. The unemployment rate will grow, the housing market will get worst, the 150 billion wont do any good to the economy, and neither Congress, Bush or Bernanke could save the debacle before 2008 ends.
Its all about being negative, but in my next column I will talk about the steps that could be taken in order to improve the long term performance of the economy and the only way in which America could regain its position as the undisputable world leader.
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