Who stabilized the U.S. economy, Obama or Bernanke?

November 17, 2009

Ed Yardeni votes for The Chairman, but now he thinks the Federal Reserve need to change course:

I believe that the Fed did in fact avert a financial meltdown and an economic depression by flooding the financial system with liquidity, and by lowering the federal funds rate to zero. I believe that all the efforts to deal with the financial crisis by the White House and Congress–including TARP, PPIP, and ARRA-were counterproductive and offset some of the effectiveness of the Fed’s responses. On PBS NewsHour last Friday, Sheila Bair, the level-headed head of the FDIC, said that TARP was a huge mistake: “I think at the time it sounded like the right thing to do…but I just see all the problems it’s created.” She implied that had she been consulted by Hank Paulson and Ben Bernanke, she would have tried to dissuade them from pursuing this approach.

I think that the Fed should raise the federal funds rate to 1.0% to demonstrate some confidence in the economic recovery. A zero rate was justified by the effort to avert a financial meltdown and a depression. Now it may be doing more harm than good.


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I am most concerned by the bubble in securities and commodities assets that has come as a result of the post-Lehman financial crisis and recession. Having taken us all down this road, I am unable to see how the Fed will extricate itself without popping the balloon. For example, what should we expect will happen when the TALF and PPIP programs for legacy CMBS ends, removing high leverage low cost financing-I am confident that we will see prices fall as spreads widen in response to a more correct allocation of risk, from the public’s pocket to the CMBS bond investor. Same goes for Treasuries.

Posted by charles cecil | Report as abusive

Stabilized the economy? Are you kidding me? The economy is far far far far from stable. oBama and Bernanke or destabilizing our economy and devaluing our currency more and more everyday.

Posted by jason | Report as abusive


Posted by Camron Barth | Report as abusive

Bernanke did.

Posted by Camron Barth | Report as abusive

What are you smoking? Our Economy is tubed and Obama and his cronies are throwing it lead weights.. Everything Obama is doing despite what he says is to tank our economy to usher in George Soro’s plans for a new world economy…

Posted by Ballistic45 | Report as abusive