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| Political Risk: The Bernanke Nomination and the Return of American Populism |
| 2010-01-27 |
| "Anybody who says we don't have to do anything, we can just keep on doing what we're doing, has got their head in the sand. Social Security and Medicare are both cash negative today. They are both headed for insolvency. Those who say we don't have to do anything, they are guaranteeing a disaster." Senator Kent Conrad (D-ND) In the last presidential election, the issues before the country were President George Bush and the war in Iraq vs. the promise of change via a young and untested Democratic Senator from Illinois named Barack Obama. The Federal Reserve and the banking industry were not even factors in the election. Today the Federal Reserve and the bailouts for the largest banks are the central issues in American politics. The upset defeats of Democrats John Corzine in New Jersey and Martha Coakley in Massachusetts, following the earlier Democratic loss in Virginia, were driven by the public's growing disgust with the management of the economy. The 2010 elections promise to be the most contentious and significant since the election of Andrew Jackson in 1828. For those of you who missed that particular episode in American history, Jackson was the first American leader who was actually chosen by popular vote and not selected by the nation's founders or their offspring. And one of the key issues which drove the hero of New Orleans into the presidency was popular anger at the central bank. The 2010 mid-term elections and the general election in 2012 likewise promise to see the unseating of an entrenched elite and the start of an extended period of political instability in America. Below we discuss why a "yes" vote for Ben Bernanke may doom members of the Senate in both parties who are up for re-election to defeat in November. The White House is telling members of the Senate that a vote in support of Ben Bernanke will not be a political liability. Indeed, in meetings and telephone calls, President Obama is urging a "yes" vote on Bernanke as a way to support the recovery of the US economy. The White House also claims that the defeat of Bernanke will be bad for the financial markets. But wait a minute. Fewer than 1 in 5 Americans support the re-nomination of Chairman Bernanke, a remarkable poll statistic since few members of Congress much less most Americans have any idea about the job responsibilities of Bernanke and other Fed governors. More, Chairman Bernanke was a Bush appointee, and then reappointed by Obama, so he is associated with two unpopular political figures. His confirmation is being managed by Linda Robertson, the former chief lobbyist of Enron. Chairman Bernanke is toxic measured in any political terms and is perceived as more friendly to Wall Street than Main Street by a 2 to 1 margin. A vote for Bernanke is an endorsement of all financial policies undertaken from 2007-2009. These issues are not going away, and will remain salient for the foreseeable future, especially as credit remains tight and the real economy continues to shrink. Indeed, the negative impact of the Bernanke years could doom President Obama and many incumbent members of the House and Senate. And while the markets might initially react negatively to a defeat of Chairman Bernanke's re-nomination, the impact of his continued service at the Fed in the weeks and months ahead may be far more problematic, both for global financial markets and political careers. Balance at the link. |
| Posted by:Besoeker |
| #1 But, he saved AIG which had all the Senate and House Pensions and Medical Coverage - so he's soo good.... |
| Posted by: 3dc 2010-01-27 20:16 |