Bush Names His Personal Accountant To Head Federal Reserve

By DHinMI

Well, not quite.  But close.  And I have to hand it to Pat Buchanan, he almost got it right.  [OK, the wags among you are probably adding "yeah, far right" on to the end of that sentence.]

Yesterday I was waiting on some friends to pick me up for an afternoon trip.  I had a little time to kill, and since I'm not a cutter and don't sniff glue, I killed some brain cells and occupied some time watching the McLaughlin Group.  When asked for predictions, Washington Times editorial page editor (and former Gingrich flack) Tony Blankly predicted that Bush would try to change the subject from Miers to a nominee to replace retiring Federal Reserve chair Alan Greenspan, which prompted Buchanan to quip "he'll nominate his personal accountant."  Well, like I said, he was close:

WASHINGTON (Reuters) - President George W. Bush was expected to announce on Monday that he has picked top economic adviser Ben Bernanke to succeed Federal Reserve Chairman Alan Greenspan, a knowledgeable source said.

An announcement was to come at 1 p.m. EDT. Bush told reporters there would be "an announcement soon" on his choice to replace Greenspan, whose 18-year tenure at the Fed runs out on January 31.

Bernanke is chairman of Bush's Council of Economic Advisers. He served on the Fed's Board of Governors for nearly three years before moving to the White House in June.

His move to the White House was watched with interest on Wall Street because of the belief that he was on the fast track to replace Greenspan.

Bernanke, a highly regarded monetary economist, has advocated steps toward greater policy transparency at the Fed and is a long-time advocate of inflation targets.

On first glance, Bernanke--about whom I admit I know nothing--doesn't seem to be the stunning mediocrity that Harriet Miers is (and that's a regretable insult to mediocrities everywhere).  But geeze, why are almost all of George W. Bush's nominations for important posts people from Texas, or at least people who served him in the White House? 

Maybe Bernanke is the exception, the anti-Miers/Spellings/Abu Gonzales, the former White House official nominated for a higher position who was actually qualified for that position.  But what's it say that a qualified former White House policy official would be an exceptioni?

Comments

[Gridlock]

Billmon made this joke aaaaaages ago... Unfortunately he did so in the form of a JPEG, so Gewgle's having a hard time locating it..

[Gridlock]

Billmon made this joke aaaaaages ago... Unfortunately he did so in the form of a JPEG, so Gewgle's having a hard time locating it..

[Gridlock]

Ugh, crappy typepad. If anyone has the power, feel free to delete the dupe.

WRT the topic at hand, if 22 indictments do come down there's going to be a lot of happy 'close advisors' lining up for their new jobs.. Odds on Secretary of State Beasley, anyone?

[Meteor Blades]

I trust Bush wasn't advised that somebody nominated for a job that 99% of Americans don't understand will do much to divert attention from Fitzmas.

Oh what I would have given if Harry Reid had followed this we-are-eager-for-the-hearings approach when Harriet Miers was nominated (instead of that bit about the "nice lady":

Washington, DC – Today, Democratic Leader Harry Reid released the following statement on the nomination of Ben Bernanke as Chairman of the Federal Reserve Bank:

"The job of Federal Reserve Chairman is one of the most critical positions in our government, steering the nation's economy and providing market stability. It is crucial that the Chairman of the Federal Reserve exercise independent judgment while focusing on monetary policy. I look forward to the confirmation hearings to learn more about Mr. Bernanke's views on how the Federal Reserve should
steer our economy free from political influence and interference.

"The new Federal Reserve Chairman will face many challenges. Middle class families are being squeezed between stagnating incomes and rising prices for health care, home heating, and education. In addition, the number of uninsured has skyrocketed, and job growth has remained disappointing. It will be important that Mr. Bernanke demonstrate that he is committed to guiding the economy to produce results for all Americans rather than promoting partisan policies that benefit special interests and an elite few."

Truth to power, perfectly framed.

[praktike]

I'm actually quite relieved ... I was pretty sure it was going to be not-Jenna.

[DHinMI]

praktike, did you mean "Jenna's sister?"

BTW, you still in Cairo?

[jonnybutter]

Live blogging Bernanke being grilled a little by a joint congressional commitee on C-SPAN:

Hinchy of NY (?) hammering home the Reid Meme: not everyone is sharing in the growth of the economy. L. Sanchez of CA, too.

Ron Paul is not a fan of paper money (surprise surprise).

Bernanke seems OK (a very superficial judgement, obviously). At least he's intelligent. I'm sort of with Praktike on this. Think of how much worse it could've been! Hell, Greenspan himself might be worse.

BTW, Praktike is, as always, everywhere, but yes, he still is physically in the middle east learning Arabic. For those of you who haven't had the pleasure, don't miss his wonderful posts from Egypt and elsewhere.

[saugatak]

Harriet Miers is not the best Supreme Court candidate out there. OTOH, I wouldn't call her mediocre either. She was the head of a large Texas law firm, President of the Dallas bar association, White House Chief Counsel.

Most people would consider that a pretty good resume . . . just not Superem Court material.

[Davis X. Machina]

Brad DeLong seems to think that Bernanke is not-awful.

[DHinMI]

saugatak: in context, she's mediocre. In fact, even as head of a large firm, I'm not sure she's all that hot. She doesn't appear to be all that savvy, not charismatic (and thus likely to generate much new business), she doesn't appear to have been an especially successful litigator, etc. She appears to have been good at the drudgery, and probably didn't make waves. So as president of a firm, maybe not mediocre, but on the other hand I'm not sure she was all that impressive.

[emptypockets]

He was Krugman's chair?

[praktike]

Yup, still in Cairo and in fact I'm at Beano's, a fine yuppie establishment. Thanks for the shoutout, JB.

As for not-Jenna, a.k.a. Barbara, I met her once or twice in college. Nice girl. Not someone who exudes intelligence, exactly.

[Mimikatz]

Wall Street seemed pretty pleased with Bernanke, since the averages are up almost 1.7% for the day. Partly they may be releived that it wasn't literally Bush's accountant, but a respected former Princeton economist who served 3 years as a Fed Governor. That makes him equivalent to an appellate judge, I think, even if he did serve 4 months as chair of the Council of Economic Advisers.

Of course Wall Street has been divided on Greenspan as well. Many refer to him as "Bubbles" because of his reluctance to pop the dot-com bubble or to even recognize the (regional) real estate bubble and the problem of interest-only loans marketed to people so they can buy more house than they can afford.

From what I read, Bernanke is supportive of the Bush tax cuts, more so than Greenspan has been in the last year or so as the full implications have become clear; more tolerant of inflation than Greenspan (after all, it allows the Gov't to pay back its debt with cheaper dollars); not as much of a deficit hawk as Greenspan and earlier more worried about deflation, which some people thought was an overdone concern. On the plus side (for me), he is supposed to be more flexible and more willing to use more tools than just interest rates. For example, Greenie could have tightened margin rates during the dot-com bubble and could have jawboned lenders more about loose lending practices. But he is, the Street seems to think, no more likely to allow something to take down the market in a really serious way. And he certainly will not be viewed as above criticism, the way many people treated Greenspan long after his thinking had started to ossify.

Greenspan has allowed rates to be low lately, but earlier in his tenure he kept rates high when lower rates would have allowed more employment. William Greider has been an especially harsh critic.

My hunch is that Greenspan will continue to hike rates at his last three Fed meetings, leaving at the end of January with short term rates at 4.5%, because he has less faith in Bernanke than the guy who was his first choice. If our foreign lender friends think that Bernanke is too loose with rates, (and Congress does nothing aboput the increading cumulative debt) they will surely put their money elsewhere. That is the big problem as I see it. Foreign confidence is necessary if we are to get out of this without too much damage. The alternative is a falling dollar, imports that are no longer cheap at the same time as rising oil prices, and profound shocks to our consumer-oriented way of life.

The advice is still rough seas ahead in '06 and '07, so pay down debt, live within your means, build cash reserves and appreciate the non-monetary things and the non-things in life.

[Zach]

Lots of economists were satisfied with the appointment.

http://online.wsj.com/public/article/SB113016826493177641-AdxRUwRlXyrhe_psrrY_u_dQKP8_20061024.html?mod=bloghttp://online.wsj.com/public/article/SB113016826493177641-AdxRUwRlXyrhe_psrrY_u_dQKP8_20061024.html?mod=bloghttp://online.wsj.com/public/article/SB113016826493177641-AdxRUwRlXyrhe_psrrY_u_dQKP8_20061024.html?mod=blog

[Zach]

That link worked well didn't it?

Max has the link here. If Max can stand him he ain't all bad.

http://maxspeak.org/mt/archives/001710.html

[Meteor Blades]

Yes, MimiKatz, we must be reading the same sources. The chief complaint I've heard so far is that he may not be quite as "independent" as Greenspan, whatever that means. Too much loyalty to Bush? And how would that be displayed exactly?

[RonK, Seattle]

Bush scores a few points here -- a feat made possible only by the soft bigotry of no expectations.

It's the only Bush decision in memory that wasn't an unmitigated disaster, which rocks everybody back on their heels.

Probably catch some static from the far, far, far right.

[slb]

bernanke is, actually, the exception to the bush incompetence/crony rule. he's well known, well respected. a big name in academic econ; highly competent when he was on the Fed. made much more of a mark than most Fed members. he only came over from the Fed mid-summer and is not a bush crony. of the three main folks mentioned for the post - hubbard and feldstein being the others - he is also probably the least ideological and partisan of the bunch. the mystery if there is one is why bush didn't pass him over for a crony, hack or ideologue. krugman did a column on him right before he went to the white house. his take is the same as delong's and i think virtually every other non-hack economist around - i.e, he is extremely capable. and for that matter probably far less of a partisan player than greenspan. he was the expected and by far most capable choice. the only questions were (1) why bush would ever consider him, and (2) whether bush would slide in a hack at the last minute in place of him. bottom line: bernanke would be a first rate and logical pick for clinton, gore or kerry as well as any non-nutcase republican. which, actually, does make bush picking him utterly inexplicable unless bernanke has a mellow bush-bonding personality and they share the same taste in pretzels or something.

[zeke L]

not really surprising that somebody actually competent for a change would be picked for fed chair. wingnut hacks are fine for undermining the federal government, but the fed, well now you're talking about money.

the folks who underwrite the GOP wouldn't sit still for somebody like snow in that job.

the way for us to use this development is the whisper campaign. ask the theocrats why the plutocrat wing of the party gets everything they want - roberts, miers, bernanke - but they're never going to see their people and issues taken seriously. psst! GOP is playin' y'all for suckers!