Having gone from a sure renomination, to a doubtful one, Ben Bernanke’s fate ought to be attracting a great deal of attention in punditland. I have to think that at the end of the day, Bernanke will be confirmed, but that is increasingly growing uncertain. The consequences, if he is not confirmed, would be deeply worrisome; the Dow would tank, further recession-fighting measures would be thrown into doubt, and the Fed itself would be thrust into turmoil. Make no mistake; Bernanke is one of the best people out there for economic situations such as the one we find ourselves in. He is a renowned scholar on the issue of the Great Depression, and how to prevent another one, and given the fact that there exists a not-inconsiderable possibility that we may find ourselves slipping into a double-dip recession at some point, it would behoove the Senate to confirm Bernanke, stop playing populist games with his confirmation, and let him do his job.
Instead, we have Democrats like Barbara Boxer, Russ Feingold, and Bernie Sanders coming out against Bernanke’s renomination. To be sure, there are Republicans who are working against the nomination, and who have placed holds on the nomination. Those holds ought to be released, but once they are, it would only take a swing of a few Democratic votes to ensure that Bernanke would have the necessary 60 votes to prevail over a filibuster, and secure renomination. As though to make matters worse, Senate Majority Leader Harry Reid, while supporting Bernanke, says that his support is “not unconditional.” One would think that at this point, Reid would have enough information to definitively fish or cut bait, but apparently, the Majority Leader has decided to cynically play both sides on the issue.
Just in case you didn’t believe me when I wrote that a lot rides on the Bernanke renomination, economically . . .
Economists warned that a rejection of Mr Bernanke could be seen as a threat to the central bank’s independence. US Treasury yields were little changed but stocks fell more than 2 per cent.
“A No vote on Bernanke would be viewed by markets as adding yet another uncertainty in an already fluid economic and policy environment,” said Mohamed El-Erian, chief executive of Pimco, the world’s largest bond investor.
Chris Dodd, the chairman of the Senate banking committee, said a No vote would send the economy into a “tailspin”.
Perhaps President Obama would care to abandon his populist, headline-grabbing fight against Wall Street, and pour whatever political capital he has left into an activity that would actually do something positive for the economy–saving Ben Bernanke’s renomination. The White House has been relatively silent on this issue. It is high time for that silence to come to an end.
UPDATE: Abso. Lutely. No. Way. It is especially hysterical for any pundit to opine that with a Chairman Krugman at the helm, “[n]o one would question the independence of the Fed”. Really? Krugman wouldn’t work in lockstep with the liberal Democrats in Congress, and across the country, synchronizing his moves perfectly with their political desires? What color is the sky in Simon Johnson’s world?