The case against Bernanke

January 25, 2010

From AEI’s Desmond Lachman:

Bernanke’s sole claim for a second term rests on the masterful and bold way in which he prevented the U.S. economy from falling into the abyss following the Lehman debacle in September 2008. However, this begs the question as to who led us to the abyss in the first place. Throughout 2006, when the worst of the sub-prime lending was taking place, Bernanke was conspicuously silent in sounding the alarm about the dangers of the U.S. housing bubble. Similarly, he was painfully slow in recognizing how severe the fallout from the bursting of the housing bubble would be and he displayed the poorest of judgments in allowing Lehman to fail in as disorderly manner as it did.

If there is one more item that should sink Bernanke’s bid for a second term it has to be his recent statement that the Federal Reserve’s extraordinarily low interest rate policy between 2001 and 2004 contributed little to the creation of the largest U.S. housing market bubble on record. The Senate would do well to ask itself whether the economy’s interests would be best served by again choosing a Fed chairman who seems to have learned so very little from the Federal Reserve’s past monumental mistakes.

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Bernacke was singing the praises of the economy in June 2008, along with King Paulsen.

Three months later they were in Bush’s office declaring the world as we know it would end if Bush didn’t immediately grant them the power of gods.

Maybe Ben isn’t as brilliant as people would have you believe. Or at the very least, he either isn’t a very good forecaster or he’s an outright liar.

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